Invoices are important and incorrect invoicing can lead to legal problems. One serious problem arising in invoicing arises out of the PACA trust legend. The PACA trust provides many protections for produce shippers. Here is a sample trust legend:
“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 USC 499(e)(c)). The seller of these commodities retains a trust claim over these commodities, all inventories of food or other products derived from these commodities, and any receivables or proceeds from the sale of these commodities until full payment is received. NOTICE: Past due invoices shall accrue annual interest at the rate of 12% or at the maximum legal rate, whichever is lower. Receiver agrees that seller shall be entitled to collect reasonable attorney’s fees and expenses as part of an action to collect on this invoice. Actual attorney’s fees incurred in bringing any action to collect on this invoice and/or enforcing any judgment granted and interest shall be considered as additional sums owed in connection with this transaction.”
This legend does three things. First it preserves a right to collect interest from the receiver, at least in most jurisdictions. Second, it preserves a right to collect attorney’s fees in the event the receiver does not pay for the produce which was received and accepted. Finally, this legend preserves the shipper’s rights under the PACA trust, if and that is a BIG IF, the seller is a US shipper which has a current PACA license. Unfortunately, some foreign shippers mistakenly believe they can preserve their PACA trust rights by placing this legend on their invoices. They are mistaken. Recently a shipper in Utah which did not have a PACA license at the time of the transactions at issue lost its claim under the PACA trust by mistakenly believing that by including a paragraph similar to this one that it would have rights under the PACA trust. It was mistaken and the court dismissed its PACA trust claims. This is why you should have a PACA Lawyer on your side to help you navigate PACA law.
Foreign shippers CANNOT use a legend, like the one above to preserve PACA trust rights. They MUST send a trust notice to their US receivers. No trust notice, no PACA trust rights. We have seen a number of Canadian shippers which mistakenly include this legend on their invoices. They fail to send a trust notice and then discover that they have no PACA trust rights.
ADDITIONAL PROTECTIONS OF THE PACA TRUST
The benefits from the PACA trust are worth the steps necessary to become a PACA trust creditor. While PACA has some general protections for all produce sellers and shippers, the PACA trust provides protections that are not normally available to most sellers of merchandise.
Free Consultation with PACA Lawyer
When you need help from a PACA Lawyer, call Ascent Law for your free consultation (801) 676-5506. We want to help you.
Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506
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