PACA TRUST LEGENDS – DON’T GET CUT OFF!Filled under PACA, PACA Trust, Uncategorized on April 29, 2012 - no comments .
(This post applies only to US produce shippers who have PACA licenses and who include a PACA trust legend on their invoices.)
Most US shippers of produce have PACA licenses and protect their rights under the PACA trust by including a legend at the bottom of their invoices. If a US shipper has both a PACA license and a legend at the bottom of its invoice, then it qualifies for the special protections of the PACA trust.
But in this age of word processing programs and multiple copies, sometimes the PACA trust legend at the bottom of the page gets shortened or cutoff. The standard paragraph for PACA trust preservation gets shortened by one or more sentences. Regardless of the reason, these shortened PACA trust legends can have bad consequences.
Recently a creative lawyer for a PACA trust debtor reviewed the produce invoices for product received by his debtor client and discovered that the PACA trust legend had been cutoff, either by the word processing program or by multiple copies. The legend had been shortened to:
The perishable agricultural commodities listed on this invoice are sold subject to the statutory trust authorized by section 5(c) of the Perishable Agricultural Commodities Act, 1930 (7 U.S.C.499e(c)). The seller of these commodities retains a trust claim over these commodities until full payment is received.
This text is not all that is required by PACA regulations. The produce buyer’s lawyer argued that because the text of the PACA trust legend did not include all of the wording required by PACA regulations the seller did not have PACA trust rights. The court agreed and the seller became a regular creditor of the produce debtor.
So US produce shippers with PACA licenses and PACA trust legends on your invoices go check the copies of the invoices that you are sending to your receivers and be sure that you are sending complete PACA trust legends. Don’t be caught short, on your legends or on your PACA trust rights.