When dealing with quality or condition issues in the produce industry, providing an account of sales is the most efficient method to demonstrate how the product was handled when there is a breach of contract. If you need to claim damages, it’s good business practice to be ready to provide an Itemized Account of Sales. This detailed account must include the date of sale, quantity for each item sold, the price for each sale related to the load in question, and applicable expenses connected to the breach of contract, such as freight on board (FOB) transactions, the cost of the inspection, brokerage fees, and any other agreed expense. Documenting this information is key to proving your case. It displays the net returns and helps identify if the load was handled properly.
The Fruit and Vegetable Dispute Resolution Corporation (DRC), a trusted authority in the produce industry, emphasizes the importance of an Itemized Account of Sales in consignment transactions. It is the main requirement a consignee must submit to the consignor. However, we recommend that every buyer or receiver be ready to provide one if they need to claim damages or resolve a problem.
If an Itemized Account of Sales is unavailable and the method used to provide a return is not verifiable or satisfactory, be aware that other methods can be used to determine the fair value of the product that can be used. This flexibility means you can sometimes reduce the invoice value by the percentage of defects on the federal inspection, which may or may not represent actual losses.
DRC Trading Standards under section 6 indicate that “Sales Tickets/Invoices” shall be filed or stored for two years. If your client challenges the Itemized Account of Sales in an arbitration process, you may be asked by the arbitrator to produce the “Sales Tickets.” The sales tickets and expenses should match your Itemized Account of Sales information.
There are three different options for handling products received in deteriorated condition. Each option has its reporting requirements for submitting an account of sales. These options cannot be mixed in a single account of sale:
- Consignment or Open Sales, including Price After Sales (PAS).
- Damages (for breach of contract when parties cannot agree on terms of handling).
– USDA Market News or Agriculture and Agri-Food Canada Infohort available.
– USDA Market News or Agriculture and Agri-Food Canada Infohort not available. - Repacking or Regrading, also known as Labor and Shrink.
Here is a sample template of each Itemized Account of Sales for your reference.
For any questions or clarification about itemizing the account of sales, the DRC Help Desk is here to support you.
