Month: September 2019

Welcome New Members

In July, DRC welcomed the following new members:

• Goldenway Import & Export LTD (British Columbia, Canada)
• Multi Traders (Alberta, Canada)
• Ilyana Whole Foods (Ontario, Canada)
• Kwong Lee Farms (Ontario, Canada)
• Western Harvest (Québec, Canada)
• NFA International 2015 (Quintana Roo, Mexico)

DRC Membership: change in status

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

• 2 Ramirez Imports LTD (British Columbia, Canada)
• Me Gusta Imports Inc. (Ontario, Canada)
• TR International (Ontario, Canada)
• Fresh Durian (Alberta, Canada)
• Traffic Tech Inc. (Québec, Canada)
• Western Harvest Gardens (Québec, Canada)
• Kingswill Canada Ltd (Ontario, Canada)
• 2109350 Alberta Ltd (Alberta, Canada)
• Vortex Produce / VX (Ontario, Canada)
• Right Price Produce (Alberta, Canada)

For details regarding a change in status, please contact the office.

Important note: Following membership termination, the former member remains liable for claims arising prior to their termination if the claim is submitted to DRC by way of a Notice of Dispute within nine (9) months from when the claim arose or within nine (9) months from when the claimant ought reasonably to have known of its existence.

About DRC

DRC is a non-profit membership-based organization whose core work is business-to-business commercial dispute resolution for produce. 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 excepted from the regulations. Today, DRC has members in 14 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 the DRC’s Operating Rules and Trading Standards, DRC offers a comprehensive, tailored suite of tools to build the knowledge and capacity of members to avoid or resolve disputes, including education, mediation and arbitration. DRC has ability to impose sanctions and disciplinary actions towards members who do not conduct business in accordance with the terms of their membership agreement.

To date, DRC has resolved claims in excess of $83 million dollars. 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.

To learn more, reach out to our Help Desk at [email protected] or (+1) 613-234-0982 or visit us at www.fvdrc.com.

 

The grower and the grower’s agent duties and responsibilities should be stipulated in a written contract. In the absence of a contract, a grower needs to know that if an agent provides a written statement describing the terms and conditions (email, fax or mail) prior to the agent receiving the first lot, the grower is considered to have agreed to the terms stipulated in the written statement if the grower ships his produce to the agent after receiving a written statement to this effect.

An agent who does not have on file either a written contract or a written statement he has failed to prepare and maintain full and complete records.  An agent who fails to perform any specified task or duty, express or implied, may be held liable for any damages resulting therefrom.

Agents must be able to provide the grower with an accurate and detailed accounting covering all aspects of their handling of the produce and maintain records of all produce received and sold.

If the contract, or written statement, allows the agent to repack or regrade the product, the agent shall provide detailed results of all packing and grading operations, including the quantity lost through packing and grading and the quantity and quality packed out.

Pooling is not allowed unless a specific agreement with all growers in the pool is reached. If pooling is agreed upon, the accounting to each of the growers shall itemize the actual expenses incurred for the various operations conducted by the agent. This includes complete details of the disposition of the produce received from each grower including all sales, adjustments, rejections, details of consigned or jointed shipments and status of all claims filed with or collected from the carriers.

The agent shall prepare and maintain full and complete records of all details of the distribution as supporting evidence of a full accounting.  If an agent is working under a pool agreement with growers, the accounting shall show how the pool cost and pool sales prices were calculated. If the agent and the growers have agreed on a fixed charge to cover the various operations conducted by the agent, actual expenses incurred for stated services are not required to be shown in the accounting.

A grower’s agent may be held liable for any loss or damage resulting to growers due to his negligence or failure to perform any specified task or duty, express or implied, related to the transaction.

Aaron Tiger, LL.L, LL.B Attorney

Commercial Law, Litigation and Insolvency

Montréal, Canada

The views and opinions expressed here are those of the author, Aaron Tiger, of Tiger Banon Inc. attorneys, of Montreal, Canada, and do not necessarily reflect the views and opinions of the DRC. 

We are often asked, in our practice how to avoid becoming involved in a transaction where the produce buyer is a person who is not in good faith and who has no intention to pay for the produce. In the situation where the buyer intends to act in bad faith, it is the seller who must protect itself against the bad faith buyer.

Some recommendations to protect yourself against getting involved in one of these situations would be the following:

1. Do a proper credit search and/or report. While the various credit rating agencies, such as the Blue Book, do their best, it might be a good idea to also contact a local credit research agency in the buyer’s jurisdiction, in order to determine the creditworthiness of the buyer. Key questions to ask include:

• How long has the company been in business?
• Who is the real person behind the company and what is known about that person?
• Does the company have a real credit history going back a reasonable time in the industry?
• Did the seller investigate the credit references? There have been cases where the credit references were also persons also being taken advantage of; however, the seller never contacted the credit references.

Also call the DRC before you ship. They are knowledgeable regarding the persons involved in the industry.

2. Set a credit limit. It is preferable to lose money for only one (1) load rather than multiple loads. Until an actual payment is received from a relatively unknown buyer, a credit limit should be set. Remember some bad faith buyers may pay for a load or two in order to establish a relationship and then obtain further loads which will not be paid for. A cheque is not a payment until it has cleared your bank. A cheque from a foreign buyer’s bank to a US Seller may require 30 days to clear the buyers bank account.

If you have any doubts, ask for a bank draft and confirm the authenticity of the draft with the issuing bank, or, wait until the cheque has been confirmed by your bank to have been honored before sending another shipment. There are other forms of payment such a bank transfer which will assure that the funds are in the seller’s account. If the buyer advises you that a cheque has been sent, or sends you a copy a of cheque, or says they do not understand why you did not receive the cheque, consider putting a hold on any further shipments until a real payment confirmation is received. Establish a credit limit to minimize losses.

3. The PACA trust may not apply in Canada. In most jurisdictions in Canada, a trust or lien or movable security (in Quebec a ‘hypothec’) must be registered prior to the shipments being made. This security is certainly not as strong as the PACA, but it may result in some limited protection. It is advisable to contact an attorney in the jurisdiction where the buyer carries on business in order to determine what security could be placed on the assets of the buyer to protect your future claim.
4. If you feel you have been the victim of a bad faith buyer, contact your trade association, the credit rating companies or an attorney in the jurisdiction where the buyer carries on business as soon as possible. The longer one waits, the less chance there is of recovery. Furthermore, the bad faith buyer will continue to prey on more victims.
5. Purchase Insurance.

If you are shipping to a foreign jurisdiction, there are companies who insure payment, if the issue is non-payment and not an issue with the produce. The DRC can advise as to companies which provide this coverage.

IF YOU HAVE BEEN A VICTIM OF A TRANSACTION OF THIS TYPE, THERE ARE CERTAIN ACTIONS YOU MAY WISH TO TAKE;

1. If the supplier is a DRC member, they can contact DRC to file a claim. DRC can provide resolution for that claim through their arbitration process if the buyer is also a DRC member.

Should an arbitration occur and the buyer fail to comply with the arbitration decision and award, the next step is to contact an attorney in Canada to verify if enforcing the arbitration award in court is an option. Unfortunately, in many cases, by the time the DRC award is granted the buyer is no longer in business and is nowhere to be found.

2. Contact your local law enforcement and the FBI.

The authorities may not be able to do much in these cases for many reasons, due to overlapping jurisdictions, and the fact that the courts have often been reluctant to intervene in a business transaction. The courts may in many cases consider that in circumstances where a supplier sold merchandise and was not paid, the failure to pay may be deemed to be a civil matter between the parties and not a matter for the criminal justice system. It is still important to file a claim which may prevent a reoccurrence of the situation to another victim.

3. Seek advise from a local attorney in the buyer’s jurisdiction.

If the buyer is still operating, local legal counsel may be able to take a civil action to recover something, but the seller must act as quickly as possible once it knows of what had transpired.

We hope the above is helpful to you. The most important takeaway from this is you must remember to protect yourself and your own interests. Be aware of who you are dealing with and limit your losses with a strict credit policy.

Aaron Tiger has practiced law since 1978. In addition to holding a law degree from the Université de Montréal he also earned a second law degree from the University of Ottawa where he graduated Magna Cum Laude in 1992. Aaron has completed the Canadian Institute of Arbitrator arbitrator’s course as well as the DRC’s 2004 Mediation & Arbitration Training Seminar. He is fluent in both English and French.

The present is not meant to constitute a legal opinion on any matter. Please contact your attorney in order to obtain advice regarding a specific legal situation

The DRC welcomes members of the trade to submit articles for consideration for future editions of Solutions.

Representatives from DRC will be at Fruit Attraction in Madrid, Spain on October 22-24. This will be DRC’s second visit to the event and as Trading Assistance Manager, Jaime Bustamante, notes: “Our 2018 presence generated good interest in DRC and our services as well as a number of member leads”.

With members located in 17 countries¹, DRC is gaining increasing recognition as a global solutions provider when it comes to private, commercial business-to-business dispute resolution and trading assistance for produce entering the North American market.

Expanding international outreach through events such as Fruit Attraction, and others, is a strategic initiative intended to expand membership and assist trading partners with a range of matters such as:

• quality and condition problems
• contract of sale and issues related to breach of contract by either party
• transportation
• slow pay, partial pay and no pay disputes
• trade terms (INCOTERMS vs North American Terms)

DRC’s Trading Assistance professionals have achieved a high level of dispute resolution expertise over the past 20 years and are also able to assist exporters with understanding and navigating various import requirements. A comprehensive Frequently Asked Questions guideline has been developed specifically for companies located outside of Canada and is available HERE.

A presence at Fruit Attraction will extend exposure to DRC and its customized trading standards, member responsibilities and dispute resolution services to expand international membership.

Jaime Bustamante and Iryna Romanenko will be at Fruit Attraction and if you or your trading partners would like to meet with either of them, please reach out to confirm your interest and schedule a time to meet. ([email protected]; [email protected])

Fruit Attraction is organised by IFEMA and FEPEX, and this year will mark its 11^th edition and expects to host 1,800 exhibitors and 90,000 visitors from 135 countries.

 

¹ Source: DRC Membership statistics July 1, 2019