DRC Trading Standards – Section 8 & 9

Following our two previous articles (February and March) where we began analyzing DRC Trading Standards, this time we will examine Section 8: Returns, Rejections, or Credit Memorandums on Sales, and Section 9: Accounting for Discarded Produce.

Section 8: Returns, Rejections, or Credit Memorandums on Sales

This section does not refer to the action of returning, rejecting, or issuing a credit memorandum on sales. This section does outline the required information each of these documents must have, such as the buyer’s name, sales ticket number, lot number, date the allowance was granted, and amount of the credit or adjustment, including the reason or reasons these documents were issued. A notation must be made on the original sales ticket referring to the adjustment and showing where the credit memorandum is filed.

It is essential that these documents are approved by a duly authorized person. A duly authorized person does not have to be an owner or director of the company. Anyone within the company with the capacity to bind the organization, such as buyers or sellers, could be considered a duly authorized person.

Section 9: Accounting for Discarded Produce

There are several key elements to take away from this section. Such elements are:

  • determining if the product has any commercial value,
  • what you need to do when dumping more than 5% of the load,
  • who can provide a certificate regarding the disposition of the discarded produce and,
  • understanding the difference between witnessing the dumping of product versus getting a condition inspection confirming the product has no commercial value.

We recommend that you read this section of the Trading Standards carefully when you have an opportunity.

DRC initiative to review Canadian grade standards

DRC is preparing to lead an industry initiative to review Canada’s grade standards for the fruits and vegetables covered by the (CFIA) Canadian Grade Compendium Volume 2 – Fresh Fruit or Vegetables.

As is the case with all grade standards documents, the Compendium is the lexicon, or recognized language for describing fruit and vegetable commodities and associated defects.

A common lexicon is necessary in order for federal inspectors, buyers, sellers and others to communicate in a common language when they are separated by geographic distances.

DRC will work with industry stakeholders such as the Canadian Horticultural Council, the CPMA and others throughout the 18-month project to ensure fulsome and inclusive discussions as recommendations for change are developed. Review teams will also consider the corresponding US grade standards as part of the review. The Canadian and US fruit and vegetable grade standards are foundational to the DRC’s Good Arrival Guidelines and Trading Standards, which serve to establish liability in a mediation and arbitration process.

The overall objective is that in due course, DRC will take on responsibility for hosting the Compendium and coordinating future updates through a service agreement with the CFIA.

The provision of Incorporation by Reference (IR) within the new Safe Food for Canadians Regulations gives rise to the opportunity for the initiative.

Is this a transportation claim?

Q. We are having a friendly discussion with our strawberry customer about a load which arrived in Toronto, ON with marginal problems.   We both agreed the berries were sold FOB Good Delivery, and we further agreed the berries would not have more than 1% decay. The berries arrived at the destination pulping warm with 2% decay, but within the DRC Good Arrival Guidelines published on your website. We agree the berries did not meet our agreement and this is a transportation claim based on the warm temps.  The carrier has taken the position that while temperatures were a bit warm, the product made good arrival and he will not accept any claim. What is DRC’s position on this matter?

A.Jaime Bustamante. DRC’s Rules and Regulations are the default rules when the contract between buyers and sellers is silent regarding some of the terms and conditions. In this case, there was an agreement between the parties to modify the strawberry tolerances, specifically the decay part, from 3% total decay to 1% decay. Therefore, there is no question the product failed to meet contract terms upon arrival. In addition, it appears all the parties, including the carrier, agree there is a breach of contract due to the product being subject to warmer than desirable temperatures during transit. Technically, for a receiver to make a successful claim against the shipper, the receiver needs to prove that transit time and temperatures were satisfactory. It is possible that the warm temperatures during transit contributed to the deterioration of the berries, and thus made it fail to meet contract terms. Therefore, because transit temperatures were not satisfactory, this would not be a shipper’s claim.

The carrier’s argument that the product met DRC Good Arrival Guidelines is valid only when the tolerances indicated in the buy and sell contract are not modified. If the product had met the 1% decay tolerance, the carrier would not be at fault because the product would have met the buyer’s and seller’s modified Good Arrival terms even when exposed to warmer than desired temperatures.

Tamara (Tammy) McDowall joins DRC’s Team

The DRC is happy to welcome Tammy McDowall to our team as Manager, Communications and Membership. Tammy brings over 15 years of management experience. This includes spending a decade working in the Canadian healthcare administration and management field, comprising eight years working for Canada’s largest practice management company.  Some of her experiences include internal policy and international project development. Through all these experiences, Tammy has learned to engage others and excel in her ability to build relationships and rapport with individuals at all levels of an organization.

Despite her success in the healthcare field, Tammy has always had an interest in agriculture as she spent many of her childhood summers in the Caribbean with her grandmother learning to tend to a wide variety of fruit trees and animals on the family property.

Tammy went to the University of Ottawa and studied Criminology and Philosophy.  She has a wide range of interest, and in her spare time, she also enjoys going to the different museums and galleries around Ottawa, hiking in nature and cheering on her favourite sports teams.

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