There is considerable uncertainty surrounding the responsibilities of a buyer or receiver in cases where they need to dispose of a portion or the entirety of a shipment that no longer holds any commercial value upon receipt. Section 9 of the Fruit and Vegetable Dispute Resolution Corporation (DRC) Trading Standards clarifies:
“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…”
An “official certificate” is a federal inspection indicating a very high percentage of condition defects demonstrating no commercial value. It can now be discarded.
For instance, a buyer receives 4,000 cartons of mangoes in poor condition. An inspection by the Canadian Food Inspection Agency is requested and performed in a timely manner, showing 2% decay, 12% bruises and 5% shrivelling. Since the mangoes have more than 15% total defects, it means the shipment does not comply with DRC’s Good Arrival Guidelines. In this case, the buyer can choose to renegotiate the contract or claim damages.
After salvaging the product, the buyer submits an account of sales showing each lot sale less expenses. In the sales section of the liquidation report, 700 cartons were reported as discarded.
Should the buyer have requested an inspection showing the mangoes’ condition before discarding them?
The answer to this question is “Yes”. The buyer discarded 700 of the 4,000 cartons received. In other words, 17% of the entire load was disposed of, which exceeds the 5% threshold.
It is important to note that when disposing or destroying more than 5% of a load, an official certificate is required to demonstrate that the product has no commercial value. A dump certificate alone is not sufficient evidence, as it only indicates the amount of product disposed of or destroyed. Therefore, a government inspection is necessary to comply with regulations.
For more information or media inquiries, please contact:
Communications & Marketing Specialist
Fruit and Vegetable Dispute Resolution Corporation