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Payment Terms

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At The Time of the Deal

To be eligible for trust protection the correct payment term must appear on the invoice no matter what method of trust preservation is used. Unless there is an agreement in writing entered into before the transaction, payment terms are ten (10) days from date of delivery of the produce. It does not matter if there is an oral agreement as to different terms, or if there is a course of dealing in which the buyer or agent always pays beyond 10 days. Without a written agreement before the transaction, the payment period is 10 days. When there is no written payment agreement, putting "PACA Terms" on the invoice suffices.

If payment terms are extended by a written agreement, then the new payment term must be stated on the invoice to preserve trust rights. Payment terms entered into before the transaction that are beyond 30 days from delivery of the produce result in a loss of a seller’s or grower's trust rights.

After a Failure to Pay

If a seller or grower preserves its trust rights, and a buyer or agent does not pay, a seller or grower can agree to a payment plan for the past due amount, orally or in writing, without losing its trust rights. This allows sellers and growers to obtain payment informally without going to court, and without waiving trust rights. If the informal payment arrangement does not work, a seller or grower can still hire a lawyer and take legal action under the trust.




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