Title: In PACA We Trust: Commercial Protection of Suppliers under the Perishable and Agricultural Commodities Act [redacted version] (2003 Third Year Paper)
Author(s): Susan Chen
Subject & Subject keywords: Food and Drug Law "PACA" "FDA"
Abstract:This paper evaluates recent developments in judicial application of the Perishable and Agricultural Commodities Act (“PACA”). Enacted by Congress during the Great Depression, PACA was originally designed to promote fair trade practices among buyers and sellers of perishable agricultural commodities (“PACs,” e.g., produce). In 1984, in response to supplier complaints that dealers were buying PACs but failing to pay or unreasonably delaying payment for these products, Congress amended PACA to establish a trust for PAC proceeds in favor of unpaid PAC suppliers. The idea was that a statutory trust would protect (typically) small suppliers against unscrupulous conduct by (typically) larger merchants and dealers, and generally minimize disruptions in the daily flow of these commodities. In the twenty years since, two contradictory developments have emerged in courts’ application of the PACA trust provisions. The first is an erosion of protection for suppliers through the use of traditional trust law principles in deciding PACA disputes. The second is an expansion of protection for suppliers through an increase in the range of commercial buyers to whom the PACA trust provisions are held to apply. Ironically, though both trends appear to stem from courts’ desire to facilitate commercial flow of PACs generally, the tension between the two may—at least temporarily— generate uncertainty that hampers PAC commerce.