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SOLUTIONS

Claiming Damages: The Power of an Itemized Account of Sales

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:

  1. Consignment or Open Sales, including Price After Sales (PAS).
  2. 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.
  3. 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.

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SOLUTIONS

Membership Update for August, 2024

New Members List | Membership Change in Status 

Welcome new members!

We are pleased to welcome the following 23 new members in August 2024. Here’s a list of who they are: 

50TH PARALLEL ESTATE LIMITED PARTNERSHIP, BC, Canada
9499-6527 QUEBEC INC., QC, Canada
ARTUS BOTTLING LTD., BC, Canada
AVO SELECT S.A. DE C.V. (Also d/b/a Avocado Zapotlan / Agro Gonamex), Jalisco, Mexico
COLOREXA SAC, Lima, Peru
DEEP ROOTS WINERY LTD. (Also d/b/a Deep Roots), BC, Canada
DIRTY LAUNDRY VINEYARD LTD., BC, Canada
EARLCO WINES LTD. (Also d/b/a Three Sisters Winery), BC, Canada
ELYSIA VINEYARD LTD. (Also d/b/a Lightning Rock Winery), BC, Canada
FANCY PAK BRAND (A d/b/a of 11750569 Canada Inc.), ON, Canada
FRUIT FUSION INTERNATIONAL INC., QC, Canada
I-DEFENSE INC., QC, Canada
LA FRENZ ESTATE WINERY LTD., BC, Canada
LA PYRAMIDS ET LA SPHINX INC., ON, Canada
LANGE FRESH SALES, INC. (Also d/b/a Lange Fresh Sales), MO, United States
MARIONETTE WINERY LTD., BC, Canada
MAVERICK ESTATE WINERY INC., BC, Canada
MCINTOSH FARMS LTD. (Also d/b/a SpearHead Winery), BC, Canada
NAZCHEL IMPORTS (A d/b/a of Evan James), ON, Canada
O’ROURKE FAMILY VINEYARDS LTD., BC, Canada
RPE CANADA LIMITED, MB, Canada
WESBERT WINERY LTD., BC, Canada
WESTERN FRUIT PACKERS INC., BC, Canada

To view a complete list of active membersclick here.

DRC Membership Change in Status

As of August 31, 2024, the following organizations no longer hold a DRC membership:

CANADIAN NORTH GROUP IMPORTS INCORPORATED, ON, Canada
EXPORTADORA CRUZ BAUTISTA SRL, La Vega, Dominican Republic
FRESH VER SAPI DE CV, Veracruz, Mexico
MITTAL IMPEX (A d/b/a of 10517232 Canada Inc.), ON, Canada
PROPUR INC., QC, Canada
ROCKS MILL FARMS, ON, Canada
SEQ MARKETING INC., QC, Canada
VPCUPE INC., ON, Canada

To view a complete list of inactive members, click here. This list includes members who resigned, were expelled, or were terminated in the last nine months.

For details regarding a change in status, don’t hesitate to connect with our Helpdesk.

About the DRC

The DRC is a non-profit membership-based organization whose core work is business-to-business commercial dispute resolution for produce. The DRC is a referee between parties when a purchase and sale do not go according to plan. Members adhere to a common set of trading standards and member responsibilities that promote fair and ethical trading for produce entering the North American marketplace.

In Canada, membership in the DRC is a regulatory requirement to trade fresh fruits and vegetables (i.e., buy, sell, import, export) unless accepted by the regulations. Today, the DRC has members in 13 countries outside of North America, and membership continues to grow annually. Anyone exporting fresh fruits and vegetables to Canada must sell to a DRC member.

In addition to its Operating Rules and Trading Standards, the DRC offers a comprehensive, tailored suite of tools to build members’ knowledge and capacity to avoid or resolve disputes. The DRC provides education, mediation, and arbitration services and can impose sanctions and disciplinary actions on members who do not conduct business in accordance with the terms of their membership agreement.

To date, the DRC has resolved claims worth more than $105 million. Although arbitration is available, 80% of these claims have been settled in an average of 26 days through our informal consultation/mediation services. Arbitration awards are court-enforceable in countries that are signatories to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards or subsequent conventions.

For more information about memberships, click here or contact our Helpdesk.

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Uncategorized

A little Due Diligence and Helpful Tips from The DRC

We talk about this every day here in the office. We question how our members get hooked on for so much money or find themselves in a complicated bind. The answer frequently follows the same pattern: our clients assume they know enough about their customers. With a DRC membership and a little due diligence, you can avoid putting your business at risk: 

  1. First of all, is your customer or prospect a DRC member? If you don’t know the answer to this question, take notice of the red flag waving in the air. We recommend you visit our website to find out if they are a member. If you are unable to find them in our public member list, contact our office, and we can help.
  2. If you discover your customer or prospect is a DRC member, contact our Trading Assistance Staff to find out if they are a member in good standing. Our Trading Assistance Staff can also provide additional information and guidance that you will find valuable.
  3. Have you ever requested references and checked on who those references are? Many firms find themselves with nonexistent references or later find out they have a bad reputation. References are only good if they are reputable.
  4. When someone contacts you on behalf of a company, ensure that the person is an employee or an actual company representative. We have often seen people believing they are dealing with the company receiving the goods when they are actually dealing with an intermediary.
  5. If your customer or prospect is in the United States, check out “The Perishable Agricultural Commodities Act,” also known as PACA. Here, you can find out the status of their PACA license.
  6. Is your trading partner in the Blue Book Services? If not, why not? If a firm is not listed, they are either not dealing with significant volume or could be a new business.
  7. Take the time to learn about the Blue Book Services’ rating system and credit scores. Being listed only means they are either members of the credit agency or they are conducting enough business to show up on “the radar screen.” A company listed without a rating does not mean their business status is “OK”; it could mean they are not ratable or the information on file is insufficient to establish a rating!
  8. Do the phone numbers, addresses, personnel, and EXACT company name match up with DRC’s records? If they don’t, this could be another red flag. 
  9. Are you doing business with companies that do not have a DRC membership? Or do they at least have a DRC arbitration agreement? If not, why not? You are exposing yourself to needless risk and expense should challenges arise.

Without fear of contradiction, many disputes could easily have been avoided by checking with the DRC and practicing some due diligence before the sale. Everybody “takes a chance” occasionally, but is it worth taking the risk? Consider a DRC membership as your risk mitigation tool.

Peruse the DRC website for more information. Should other questions arise, reach out to our Help Desk. We look forward to assisting you.

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