Author: DRC

Q. We recently delivered overseas product to our Toronto customer. Upon arrival, the receiver relayed concerns about condition including bruising and discoloration. Five days after the load’s arrival, our customer advised us that the product had been sold but they were seeking a significant adjustment. To date we have not received any documentation regarding the claim. If we make an offer to settle are we accepting that they do not need to prove damages and provide the proper documentation? What options are available to us?

A. (Answer provided by Jaime Bustamante, Trading Assistance Manager)
Consistent with industry and DRC Rules a valid claim has three parts:

1. The receiver must provide prompt notice of a problem. In this case, your customer appears to have complied.
2. The supplier must acknowledge a breach of contract or the customer must provide a federal inspection demonstrating a breach.
3. Should the inspection show product failed to meet contract terms or DRC Good Arrival Guidelines, the customer still needs to provide the method used to arrive at the offer. In our industry, the most common method is an account of sales quantifying monetary damages. In this example, neither appears to have been made available.

Therefore, to answer your question, you can accept or propose a settlement offer without documentation however you lose your ability to request proof in future.  Essentially, you are taking the customers word as fact, acknowledging and accepting the stated condition of the product and the return. If you would like a higher return, you can provide an offer/counter-offer clearly listing the amount you’d settle for and a response deadline with the clause that, should the offer not be accepted, you will be seeking payment in full. If the offer/counter-offer is rejected, the customer will be bound to pay the original invoice price less provable damages (most popular method is with a federal inspection and a prompt and proper account of sales). Lacking this documentation, an arbitrator (should it go to arbitration) would likely award payment in full.

Q. We are a Mexican grower/shipper but are not a member of DRC. We are negotiating a Marketing Agreement with a US distributor who is a DRC member. The Marketing Agreement includes an arbitration clause indicating that if there is a dispute we agree to use the services of DRC. If both parties sign this contract and encounter problems related to the contract, would we be able to immediately take action through DRC.

A. (Answer provided by Jaime Bustamante, Trading Assistance Manager): Prior to signing a contract, you have to make sure that the arbitration clause included in the Marketing Agreement follows the wording of our suggested DRC Arbitration Clause. While arbitration clauses can be modified or have additions, there are some parts that cannot be changed. You can give us a call and we can advise you on correct wording to the arbitration clause to help ensure that the clause is binding. Secondly, if, after signing the contract, you have a dispute, you would need to join DRC or pay the non-member fee to access our dispute resolution system. We will provide both parties with the options and procedures to resolve the issue through our dispute resolution system.

However, be aware that if one of the parties decides to take the dispute to a court of law, the judge will be the one deciding the avenue for recourse: DRC or court. In our experience, if the contract has a valid arbitration clause, the courts will enforce it and oblige the parties to go to arbitration.

To avoid involvement of the court for enforcement of the clause, DRC always recommends that before you begin a commercial relationship, you join or invite your customer to join DRC. If you become a DRC member and deal with other members both parties will be protected in case of a contract dispute.

Paola Gonzalez Diaz, Trading Assistance Officer will be taking on some additional communications and membership duties as Andrea Bernier, Manager, Communications & Membership departs on leave. Ms. Bernier leaves some big shoes to be filled and will be missed, while away, by staff and members alike. For additional information please contact:

DRC Help Desk | 613-234-0982 | [email protected]

While DRC has helped resolve disputes worth millions of dollars, we strive to counsel and educate our members about best practices in business so they may avoid disputes altogether. Our dispute resolution model is designed to reduce risk and facilitate trade between members. DRC provides dispute prevention education via confidential consultation, the DRC Help Desk, seminars, guest speaking opportunities, fact sheets, our Solutions blog, and more.

Did you know? The two most important things parties can do to help avoid disputes are: COMMUNICATE and DOCUMENT.

Clearly communicate your understanding and document the details of the transaction. To help you get started, DRC has included an example of a Contract of Sale.

On Tuesday, January 17^th, DRC was invited as a guest speaker at the Trade Facilitation Office (TFO) annual trade representative seminar at Global Affairs Canada. The topic for this year’s seminar was “Food Safety Regulations and Certifications: Are they considered non-tariff barriers to trade for developing countries’ Small and Medium-sized Enterprises (SMEs)?”. This topic is very relevant to almost all developing countries and one for which DRC provides support and facilitates trade. Trade representatives had previously shown an interest and requested more information on the subject. The audience for the event was comprised of trade representatives from developing countries, economic officers for high commissions and embassies, as well as, trade promotion agencies from both Ottawa and Montreal.

DRC Trading Assistance Manager, Jaime Bustamante, was on hand to represent DRC as a guest speaker. His presentation, “Commercial issues faced by countries when exporting to Canada”, was well received and strove to demystify some of the common issues being encountered by audience members. Patricia Rengifo Hidalgo Trade Specialist Office of Ecuador in Canada, Tammy Swicha, Director Food Safety Program Planning and Requirements CFIA, and CPMA’s Jane Proctor, Vice President, Policy & Issue Management, were also guest speakers. Canada Organic Association and Fairtrade Canada were also expected to participate on the panel discussion.

Issues that were addressed included the perspective of the developing country exporter, what are exporter limitations in accessing the Canadian market, an overview of the Canadian market for fresh fruits and vegetables, the importance of food safety from farm to fork, as well as highlights of Canadian regulatory framework as it relates to food safety.

If you are interested in DRC representation at an event or speaking engagement, please reach out to the DRC Help Desk at:

DRC Help Desk | 613-234-0982 | [email protected]

In case you missed the Note from the President Fred Webber, on Friday January 20 the Canadian Food Inspection Agency “CFIA” published the proposed Safe Food for Canadians Regulations in Canada Gazette Part I for a 90 day comment period.  We thank members for their continued support in moving Canada towards a single entity delivery model for dealers and dispute resolution.  The proposed changes under Division 2, sections 25 and 26 will have minimal impact on current DRC members.  The changes will mean some firms not currently holding a DRC membership will have to apply for membership in order to comply with the new regulations.  In other words some of your Canadian suppliers or clients may require a DRC membership once the Regulations are passed in Canada Gazette Part II. As the DRC moves towards a role of service provider to the CFIA, we will remain a neutral industry driven organization overseen by its board of directors and membership.

For more information, including the proposed regulations please visit: http://news.gc.ca/web/article-en.do?nid=1181099 .

You may also want to register to participate in the consultations on line or in person at: http://inspection.sondages-surveys.ca/surveys/CFIA-ACIA/proposed-sfcr-info-session/?l=en .

For more information please call or email the DRC Help Desk at:

DRC Help Desk | 613-234-0982 | [email protected]

If both the shipper and receiver agree that an inspection is not needed, do we still need to get an inspection when more than 5% of the product is dumped?

Q. We are an importer from Vancouver. We recently received 4000 cartons of mangoes from Mexico in poor condition. We immediately emailed some pictures of the load to the shipper and we agreed to have the mangoes repacked without obtaining a federal inspection. During the re-packing we lost 1000 cartons. After providing our repacking accounting to the shipper they rejected our liquidation and claimed they needed proof the lost cartons had no value. We have a dump slip indicating 1000 cartons were dumped. Is this enough to prove the dumped mangoes had no value?

A. (Answer provided by Jaime Bustamante, Trading Assistance Manager)
The answer is no – a dumping slip does not validate that the product dumped has no commercial value. The shipper was timely notified of a problem with the mangoes on arrival and you secured a repacking agreement without the need for a federal inspection. So far, you have covered your tracks. However, without an inspection, you have no indication of the extent of the damage of the product. When disposing of more than 5% of the product received, an official certificate is required demonstrating that the product has no commercial value.

Section 9 of the DRC Trading Standards state: “Reasonable cause for destroying or disposing of any produce exists when the commodity has no commercial value … The term “commercial value” means any value that a commodity may have for any purpose that can be ascertained by the exercise of due diligence without unreasonable expense or loss of time. When produce is being handled for or on behalf of another person, proof as to the quantities of produce destroyed or discarded in excess of five percent of the shipment shall be provided by procuring an official certificate regarding the actual disposition of the discarded produce…”

In most cases the “official certificate” is a federal inspection indicating the percentage of condition defects in the product to be disposed of is needed to provide evidence that the product has no commercial value as well as the actual disposition of the product.

On August 31^st, the Canadian Produce Marketing Association (CPMA) and the Fruit & Vegetable Dispute Resolution Corporation (DRC) hosted 23 embassies and 11 industry representatives at a luncheon event in Ottawa. Ambassadors, High Commissioners and Agricultural Minister-Counselors received valuable foundational information on how their vendors can ensure they are “export ready” and to encourage country delegation participation in CPMA’s upcoming Convention and Trade Show in Toronto.

Participants were impressed with the breadth of information provided and affirmed that events such as these are essential to continue engagement with the embassies and their commercial trade offices to facilitate the smooth export and import of fresh fruit and vegetables. This included understanding the seasonality of Canadian production so that international exporters understand when there are gaps in availability that they can fill.

Industry participants were pleased with the chance to discuss potential trade opportunities with the countries represented, and expressed interest in participating in future events.

Sam Silvestro, Walmart Canada & CPMA Chair, Fred Webber, DRC President & CEO, and Tanya Sefolo, Minister Plenipotentiary, South African High Commission.

Imports to Canada – Stats

We thought it would be fascinating to provide some statistics in this issue on some of the top imports to Canada. Statistic enthusiasts enjoy!

Source: Statistics Canada.

Source: Statistics Canada.

[1] Does not include potatoes
Source: Global Trade Atlas. (June 2015). Agriculture and Agri-Food Canada.

[1] Includes table grapes and wine grapes
[2] Includes dried
Source: Statistics Canada.

Source: Statistics Canada.