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Organic beef with a scent of citrus? No, thank you!

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Legal news
calendar 28 May 2014
globus Denmark

A buyer of organic beef was entitled to refuse to take delivery of the consignment, as it had a scent of citrus upon arrival. The scent originated from the cleaning of the trailer, which the frozen beef had been transported in. In spite of the fact that there had been no depreciation in the quality of the beef, the beef was sold at a lower price to a buyer in Estonia. The Danish Maritime and Commercial High Court ruled that the carrier was to compensate the shipper’s loss.

A Danish meat distributor (the shipper) had bought 20 tons of organic beef, which was to be transported from the supplier in Germany to the buyer in Sweden. The shipper contracted with a Danish carrier, who then engaged a driver from a Lithuanian company to perform the transport.

The Danish carrier had informed the Lithuanian driver that the trailer should be cleaned before initiating the transport. The driver did not personally participate in the washing process, but made sure that the trailer was washed prior to the transport, more specifically on the very same day as the loading took place.

Too much citrus scent emitted from the trailer

Upon arrival to the Swedish buyer, the trailer, the meat and the meat wrapping all emitted a strong scent of citrus. Because of this the buyer refused to accept the consignment. Subsequently, the meat was transported back to Denmark, where traces of the harmful chemical limonene were found in several samples of the meat. The amount of limonene was very small though, and as the meat had not been in direct contact with the chemical, it could still technically be sold under the term ‘organic’.

However, since a distributor has to document the history of organic goods, the shipper could not find anyone in Denmark who would want to buy the meat: No one in Denmark would buy ‘transport damaged’ meat. Therefore, the consignment was sold at a considerably lower price to a buyer in Estonia.

The Danish carrier, on the other hand, was of the opinion that the meat had not suffered any depreciation in value, as it was still edible and could be sold under the term ’organic’. It was the carrier's opinion that the shipper had not been obliged to inform potential customers about the amount of limonene, as long as the amount was under the threshold value. According to the carrier, the shipper had only described the meat as contaminated, due to fear of damage to reputation, if the meat was sold as ‘organic’ in Denmark and the story afterwards was disclosed. Because of this the carrier argued that the shipper could not claim compensation according to the CMR convention for the risk of suffering bad publicity and losing goodwill.

The Maritime and Commercial High Court: The organic meat was damaged

The Maritime and Commercial High Court stated that the original buyer had been justified in rejecting the meat, as a surveyor on the day of the rejection had concluded that there was a genuine risk that the meat would taste like detergent. Thus the meat was damaged upon arrival to Sweden.

The fact that the amount of limonene was under the permitted threshold did not change the obligation of a distributor of organic food, who is obliged to document the transport conditions and the content of limonene. The court stated that the shipper’s duty to disclose made it impossible to sell the meat as organic, for which reason the meat was to be considered damaged.

The carrier was therefore liable for damage to the consignment after it had been exposed to limonene during transport.

IUNO’s opinion

The judgment illustrates one of the numerous things a carrier can be held liable for – in this case that a trailer smelled too good!

It is worth noticing how the nature of a product can affect the depreciation of value; organic food products are sold at a very sensitive market, and a huge depreciation of merchantable value can happen very quickly. This judgment shows that there does not necessarily have to be depreciation in the quality of goods in order to depreciate the merchantable value and the depreciation in the merchantable value is the deciding factor in relation to the compensation for damage.

[Judgment of the Maritime and Commercial High Court on 5 March 2014, case no. H-66-12]

A Danish meat distributor (the shipper) had bought 20 tons of organic beef, which was to be transported from the supplier in Germany to the buyer in Sweden. The shipper contracted with a Danish carrier, who then engaged a driver from a Lithuanian company to perform the transport.

The Danish carrier had informed the Lithuanian driver that the trailer should be cleaned before initiating the transport. The driver did not personally participate in the washing process, but made sure that the trailer was washed prior to the transport, more specifically on the very same day as the loading took place.

Too much citrus scent emitted from the trailer

Upon arrival to the Swedish buyer, the trailer, the meat and the meat wrapping all emitted a strong scent of citrus. Because of this the buyer refused to accept the consignment. Subsequently, the meat was transported back to Denmark, where traces of the harmful chemical limonene were found in several samples of the meat. The amount of limonene was very small though, and as the meat had not been in direct contact with the chemical, it could still technically be sold under the term ‘organic’.

However, since a distributor has to document the history of organic goods, the shipper could not find anyone in Denmark who would want to buy the meat: No one in Denmark would buy ‘transport damaged’ meat. Therefore, the consignment was sold at a considerably lower price to a buyer in Estonia.

The Danish carrier, on the other hand, was of the opinion that the meat had not suffered any depreciation in value, as it was still edible and could be sold under the term ’organic’. It was the carrier's opinion that the shipper had not been obliged to inform potential customers about the amount of limonene, as long as the amount was under the threshold value. According to the carrier, the shipper had only described the meat as contaminated, due to fear of damage to reputation, if the meat was sold as ‘organic’ in Denmark and the story afterwards was disclosed. Because of this the carrier argued that the shipper could not claim compensation according to the CMR convention for the risk of suffering bad publicity and losing goodwill.

The Maritime and Commercial High Court: The organic meat was damaged

The Maritime and Commercial High Court stated that the original buyer had been justified in rejecting the meat, as a surveyor on the day of the rejection had concluded that there was a genuine risk that the meat would taste like detergent. Thus the meat was damaged upon arrival to Sweden.

The fact that the amount of limonene was under the permitted threshold did not change the obligation of a distributor of organic food, who is obliged to document the transport conditions and the content of limonene. The court stated that the shipper’s duty to disclose made it impossible to sell the meat as organic, for which reason the meat was to be considered damaged.

The carrier was therefore liable for damage to the consignment after it had been exposed to limonene during transport.

IUNO’s opinion

The judgment illustrates one of the numerous things a carrier can be held liable for – in this case that a trailer smelled too good!

It is worth noticing how the nature of a product can affect the depreciation of value; organic food products are sold at a very sensitive market, and a huge depreciation of merchantable value can happen very quickly. This judgment shows that there does not necessarily have to be depreciation in the quality of goods in order to depreciate the merchantable value and the depreciation in the merchantable value is the deciding factor in relation to the compensation for damage.

[Judgment of the Maritime and Commercial High Court on 5 March 2014, case no. H-66-12]

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