“Governed by PACA”Filled under PACA Law, PACA Trust Rights on June 5, 2014 - no comments .
“This contract is governed by PACA.” This sentence frequently appears in a product contract. But what does it really mean? Frequently the answer is little or nothing.
In Spanish, term for something that sounds good, but means little is the word “caramelo” or caramel in English. This terms refers to the fact that a caramel candy tastes but quickly dissolves into nothing. A contract clause that states that the contract is “governed by PACA” means very little if the protections of the PACA law are removed elsewhere in the contract. Many contracts that contain waivers of the basic protections of PACA and the PACA trust will also contain the “governed by PACA” sentence or something similar.
The lesson for any produce shipper is to read any contract carefully. Unlike other laws in the US or in other countries, PACA pretty much freely allows a party to waive any contract provision, like the right to inspection certificates, the duty to sell inventory in a timely fashion, the duty to promptly notify a shipper of problems with a load and most importantly the protections of the PACA trust. Don’t be tricked into believing that your contract protects you solely because you see a sentence that the contract is “governed by PACA.” This caramel will not protect you if you have waived the protections of PACA.