SPECIFICATIONS AND TRADING RULES FOR THE IMPORTATION
OF MEAT IN NORTH AMERICA
This Section contains definitions of certain terms and discussion of
certain subjects which are important and in some respects unique, to the
imported meat trade in North America. All of
these materials contain rules which MICA's Board recommends to be followed in
any situation where the contract has not provided otherwise.
I.Form of Contract
1.1 Contract creation. A
contract of purchase and sale shall be signed and sent by the Buyer to the
Seller, or the Seller to the Buyer, or both, and should be signed and
returned.However, failure of the Seller
or Buyer to sign and return the contract shall not defeat the contract nor
signify that the party disputes the terms and conditions in the contract of
purchase.Contract documents may be
1.2Partial delivery.Partial delivery by the
Seller establishes that the Seller is in full agreement with the stated
essential terms, including quantity, unless otherwise specified in writing.
such partial delivery the Buyer is confirming he is also in agreement with
of MICA guidelines. It is
recommended that every contract contain the following clause:
"This transaction is
governed by the terms and conditions embodied in the Specifications and Trading
Rules for the Importation of Meat into North America of the Meat Importers
Council of America, Inc., in force at this date."
is recommended that a MICA arbitration provision, as set out below, be included
in all contracts.If such clause is
included, arbitration will be mandatory if there is a dispute between the
parties.(SeeSection on Arbitration Rules.)
controversy or claim arising out of or relating to this contract, orthe breach
thereof, shall be settled by arbitration by the Meat Importers Council of
America, Inc., in accordance with the Arbitration Rules of the Meat Importers
Council of America, Inc., and judgement upon the award rendered by the
Arbitrator(s) may be entered in any Court having jurisdiction thereof."
1.5Contract Checklist.In entering into a contract, Buyer or Seller ought to consider whether
to make specific reference to the following matters.Essential terms, such as quantity and price,
must be covered or there is no contract.Non-essential terms do not necessarily need to be stated for a contract
to be binding, but they should at least be considered.The following Contract Checklist lists
terms which should be considered for inclusion.
a.Every contract must have
proper consideration, i.e.,
both parties must oblige themselves to perform some type of act.In other words, a set of promises must be
b.The contract should specifically
list the merchandise that is to be
purchased, including the quantity.Additionally, especially in the case of meat,
both parties should clarify the quality
level at which the product will be deemed to be conforming to the contract, and
any other factors which may be deemed important, such as country of origin, age
of product, and so forth.
if any, does the Buyer want as to the quality
of the product from the Seller?What manner of inspection is the Buyer allowed to perform before taking
delivery?The contract should set
forth the documentary evidence of assurances which the Seller is required
to provide the Buyer, such as a certificate of E. coli testing, or other health or veterinary certifications,
and/or provide for any inspection that the Buyer may conduct on the
product before the sale is final.
d.In many cases, the order is
placed without reference to a specific
load or shipment of meat, (ie TBN) and at
some later time the Seller nominates the meat for the Buyer’s account. If the
Buyer wishes to be assured of receiving a specific load or shipment of meat in
advance, it should be agreed upon and set forth in the contract.
e.The contract should specify
the price for the merchandise.If the price is flexible, it should make a
reference to a given commodity market or other point of reference.To avoid dispute, the contract should also specify
the time within which the Buyer is to
pay, with reference to a specific event, such as delivery.
f.A contract should specify
the point at which title, as well as
risk of loss, will pass.
g.Both parties should consider shipping, freight, or other costs.In order to properly consider such items, the
contracting parties may refer to an established trade term of sale (i.e.,
FOB Buyer’s plant) or Incoterm with which they are
h.Does the Buyer wish to
purchase additional insurance, or
have such additional insurance be included as part of the contract of sale, i.e.,
rejection insurance, product liability insurance?If so, this should be specified in the
i.What will constitute a breach of the agreement?Will there be provisions for the cure of such
breach or for a discount in case of partial performance?Related concepts are cancellation and termination,
both of which should be provided for by the parties.
time be of the essence?The time of delivery(or
shipment) should be clearly set forth in the contract.
parties involved in the sale of meat are often comfortable dealing on the basis
of accepted trade practices or an established course of dealings between them,
it is always best to endeavor to reduce contract terms to writing.In the event of a dispute, arbitration, or
even litigation, it will make your claims under the contract much easier to
prove.It is recommended that parties
include a clause incorporating MICA
guidelines as well as an arbitration
clause, as set forth above in sections 1.3 and 1.4, respectively.
l.Product Specification.A carefully drawn contract will include an
enumeration of the particulars of size, quality, anatomical identification,
packaging, chemical lean, weight range, cutting lines, trim, animal diet,
labeling, etc., that detail the Buyer’s requirements or the Seller’s guarantee
of the contents of the consignment.
detail referred to in manufacturing beef packs includes:
·Packaging -- bulk packed in poly lined standard export grade cartons
each 60 lb. even weight.
·Chemical Lean (e.g., 90 CL).
·Primary category of livestock -- bull, cow, steer, veal.
·Anatomical region of the carcass from which the meat is derived
(i.e., CF, CFH, CHUX, trim, etc.)
detail referred to in chilled or frozen cuts packs might include:
·Product description (e.g., INCSO - inside, cap off).
·Size (e.g., weight range 10 -- 16 lb. or 10 lb. up).
[Note:Some MICA members have traditionally referred
to the AUS-MEAT “Handbook of Australian
Meat” and the USA “National Meat
Buyers Guide” by the North American Meat Processors Association, as
standard references for manufacturing beef packs and cuts specifications.]
2.1 It is common in the trade for purchase and sale
contracts to specify quantity in terms of one or more "loads".In this case, the following definitions and
2.2Manufacturing beef (60 lb. even weight cartons).A "load" of grinding meat in 60 pound
net weight cartons shall consist of 40,000 pounds plus or minus 5 percent, a
range of 633 to 700 boxes.
2.3 Beef Cuts (catch weight cartons).A "load" of cuts or catch weight cartons shall consist of a
minimum of 30,000 pounds and a maximum of 38,000 pounds.
guidelines do not apply to bone-in
goat and sheepmeat.
2.5In the event of a discrepancy in these amounts, it will be the
responsibility of the Seller to notify the Buyer prior to shipment.
("Cost, Insurance & Freight")
3.1 A term of sale used in ocean shipments signifying that the price
includes (i) the cost of goods, (ii) the freight to
stated destination including terminal handling charge at origin, if any,(iii) insurance, and (iv) all charges at
3.2 As used herein “insurance” means all insurance including - all
risks marine, and (in Australia
and New Zealand)
rejection for entry by the Veterinary authorities of the importing
country.It is a custom of the trade
that the level of insurance be equal to 110% of the C&F value. (See Rejection Insurance § 10.2.) Particularly given the
fact that some companies elect to self insure, Buyer should beware of who is
actually providing the insurance.
3.3 Buyer (or Seller, for Buyer’s account) may wish to purchase additional
insurance to cover various risks not normally part of CIF contract.(See Insurance, § X.)
The Terminal Handling Charge at destination is currently not the responsibility
of the C.I.F. Seller.
Title to the goods in a C.I.F. contract normally passes with exchange of
documents, which may or may not include exchange of moneys at that time (e.g.,
C.I.F. sight draft, C.I.F. net 7 days, etc.)
(or “X-Quay” or “X-Wharf”)
4.1 Ex-Dock - Usually means warehouse dock and usually
means that the Seller makes the product available for pickup by the Buyer on
the dock indicated.The Seller generally
bears all the risk and costs of delivering the product onto the dock and
placing the product at the Buyer’s disposal.Loading charges to move the product from the dock onto the conveyance
are the Buyer’s responsibility.
4.2 Transfer of title in a warehouse is evidenced
by creation of a new document of title and the product is put in the name of
the Buyer.Once the transfer occurs, the
Seller has no further control over the product.
4.3West Coast - Product
inspected at a dock facility (not in a warehouse) will be made available to the
customer on the inspection dock, where it must be picked up.Charges after inspection, if any, accrue to
the Buyer’s account.Title transfers
upon pickup by Buyer’s designated truck and Bill of Lading signed.
V.F.O.B. ("Free on
5.1"Free on board" some location (for example, FOB shipping point; FOB
destination) means that the invoice price includes delivery at Seller's expense
to that location.The Seller must, at
his own expense and risk, deliver the product loaded on a suitable conveyance
designated by the Buyer at the place named in the contract.The Seller assumes all responsibilities and
costs up to the point of delivery, including insurance, transportation, etc.
Title to goods usually passes from Seller to Buyer at the F.O.B. location.
5.2 Ocean Transportation
(FOB origin) - Seller is responsible for all costs to Free on Board the vessel
in country of origin - including a) terminal handling charges at origin, if any
b) wharfage or harbor dues, c) export taxes, and d) export or import
quota.Title passes to Buyer upon negotiation
of a full set of F.O.B. documents.
5.3 Land Transportation - (F.O.B. North America) - The Seller must at his
own expense and risk, deliver the product loaded on a suitable conveyance
designated at the place named in the contract.Title transfers to Buyer upon loading of the conveyance and signing of
the conveyance Bill of Lading.
in Storage (T.I.S.)
6.1 Under the T.I.S. term product is transferred to the Buyer while in
warehouse, without being physically moved.The Seller is required to advise the warehouse promptly of the sale in
writing.The warehouse then amends its
records and documents of title to show that title to the property has changed
from the Seller to the Buyer.
6.2 Buyer's taking possession of goods in a warehouse is accomplished
through the act of creating another document evidencing the transfer of title
from Seller to Buyer.The goods
are put in the name of the Buyer, and Seller has no further control over the
if the warehouse charges storage on a daily basis, the Buyer is responsible for
storage starting at the time when title changes or from an agreed date if any.If storage is
charged on a monthly or other periodic basis, and a portion of future storage
has been prepaid (or booked) at the time title shifts, the Buyer is not
responsible for any part of the pre-paid storage.
6.4Generally, The T.I.S. Buyer also receives any remaining free
time of the Seller.
7.1 This term authorizes the Buyer to exercise certain authority over the
goods, without receiving transfer of title to the goods.Such authority typically includes the right
to receive details of the goods from the warehouseman, to test for fat, to
inspect and to load out the goods subject to a payment/credit agreement with
7.2 A "Release in Storage", as with other
transactions designated "release", is distinguished from a
"transfer" in that title to the goods passes to the Buyer upon
transfer, whereas with Release in Storage, title of the goods remains with the
Seller, until the Seller receives payment, or other arrangements have been made
between the Buyer and Seller pursuant to the terms of sale, such as a sale on
with Credit Hold
8.1 The term "credit hold" signifies that title remains with
the Seller until a written instruction from the Seller to the warehouse
stipulates a title transfer.The
specific transfer involved in the transaction (i.e.,
"ex-dock," "transfer in storage," "FOB,"
"X-warehouse") remains unchanged, except that the meat will remain in
the Seller's name until the credit hold is released by Seller normally by
8.2 In Release with Credit Hold, any storage charges begin accruing to
the account of the Buyer once the Seller
"transfers" (i.e., releases) the merchandise in storage to the
Buyer, but the Seller reserves the right to cancel the credit hold release if
the Buyer fails to pay the Seller within the contracted time.
8.3 In Ex-Dock transactions, a common practice is
to release with a credit hold Ex-Dock.In that case, title of the meat does not transfer until it is loaded on
the Buyer's truck.The Seller can still
withdraw its release of the meat up until the point where it is loaded on the
Buyer's truck and the Bill of Lading signed.(See "Ex-Dock.")
Handling Charge (T.H.C.)
Handling Charge (T.H.C.) is a charge for cargo services provided by an ocean shipping and/or receiving terminal.In "C.I.F." or "F.O.B.”
country of origin transactions, the T.H.C. and all other expenses up to F.O.B.
in the country of origin are the responsibility of the Seller.T.H.C. costs in the country of destination
are normally the responsibility of the Buyer, unless a different arrangement is
made. This also applies with respect to Ex-Dock transactions.
[Note:Some years ago MICA sought, unsuccessfully,
to establish with the Federal Maritime Commission that US T.H.C. is part of the
freight.Under current practice, T.H.C.
must be viewed as a separate charge.]
kinds of insurance might be involved with respect to meat.Examples include marine insurance, which
protects against loss caused by all perils except those which are specifically
excluded in the terms of the policy (“all risk marine” insurance), and
rejection insurance.In CIF sales, the
cost of such insurance is included in the price.(See section 3.2.)However, Buyers in both CIF and FOB sales may
wish to purchase additional insurance.
10.2Rejection Insurance is a special kind
of insurance in the meat industry.It
protects the importer/Buyer in the event the product is rejected by the
USDA.Typically, the exporter purchases
rejection insurance for the benefit of the importer/Buyer in the amount of 110%
of the C&F value.With respect to
shipments from Australia and
rejection insurance is traditionally included in the CIF price.For other countries there is no clear
rule.Rejection insurance is typically
not included in the FOB price. (Note -buyer
beware that some exporters self insure)
10.3“Rejection.”There is no standard form ofrejection insurance policy in the
industry, therefore, the details of one policy may differ from another.Frequently the insurance carrier strictly
construes the term “rejection” so as to relate only to product that is refused
entry and stamped rejected by the USDA.In most cases, if the product has been stamped “Accepted and Passed” and
has entered into commerce, any subsequent problem, such as a positive laboratory
test for defects or a government recall, would not constitute “rejection” under
the policy, unless the contract provides that such contingencies will be
Liability Insurance.If it is
established that a commercial product (e.g., meat) is a cause of harm to
consumers or others because of a defect, it is possible that the seller,
importer, producer and/or other person in the distribution chain could be held
responsible.Product liability insurance
protects against this peril
10.5Public Liability Insurance.This type of insurance coverage protects
against third party claims arising from the conduct, property and agents of the
insured.Such policies are generally
associated with businesses, associations, etc., which seek protection from
legal liability arising from ordinary business activities.
11.1 In general.Labeling
(marking) requirements with respect to imported meat are administered by both
the US Customs Service and the USDA.While there may be conflicting country of origin marking requirements
imposed by the USDA and Customs, Customs nevertheless asserts legal
jurisdiction over all imported merchandise.The importer must be careful that the exporter satisfies both agencies’
requirements.A discussion of labeling
and country of origin marking is contained elsewhere in this Handbook.(See Importing Meat, Labeling & Ciphers
and US Port of Entry Procedures.)
XII.Age of Product
12.1There is no uniform consensus within the industry concerning the permissible
age of meat.If there is no established
course of trade between the parties, it would always be advisable to consider
specifying how old the product can be and still be considered good delivery in
the contract between Buyer and Seller.
XIII.Time of Shipment
13.1 The Buyer shall be bound in the term of the Bill of Lading issued
in respect of the meat providing that those terms and conditions are not in
conflict with the terms and conditions of the Specifications and Trading Rules
for the Importation of Meat into North America
of the Meat Importers Council of America.
13.2 Shipment Date.The
shipment date shall be the “shipped on board date” as stamped on the original
Bill of Lading.
13.3 Domestic Delivery Period/Delivery Tolerance. Where the contract provides for arrival or
domestic delivery in a specified month, the last day of the month is the last
day of good tender under the contract.Where the contract provides for a part of a month, e.g.,
“mid-August,” the 10th day to the 20th day of the month
is the last day of good tender under the contract.In the case of a longer contract, e.g.,
August - September arrival/delivery, the later month ending would apply.In all cases, a 7-day notification would be
14.1 Demurrage refers to the charges levied
against the account of cargo when it has been left at a pier or terminal beyond
a specified time.Demurrage charges on
such cargo are borne by the party holding title to the goods at the time the
charges are incurred.
14.2If demurrage charges are incurred because
documents of title are delivered late with respect to ocean shipments, the
costs are borne by the Seller/shipper.
14.3If demurrage charges are incurred because documents of title are
delivered late with respect to ocean shipments, the costs are borne by the
Seller shipper.(Although the Steamship line will hold the buyer (consignee)
accountable for the charges, the costs should be borne by the Seller (shipper))
XV.Rejection by USDA
15.1 Nomination.Where the
load, or partial load, has been nominated, the Seller is not obligated to
deliver a replacement load (or part).(See Nomination, § XVII.)
15.2 Half-Load Rejected.Once
a load is nominated by the Seller, delivery of a half-load (or portion) stands.
XVI.Full Set of Documents
16.1 Delivery of a full set of documents constitutes delivery of
16.2 CIF Mandatory Documents.Unless otherwise specified in the contract, a
“full set of documents” in CIF transactions means the documents which are
mandatory to accomplish importation, that is, the commercial invoice, bill of
lading, and foreign health certificate, must be delivered to the Buyer by the
16.3 Ancillary Documents.In addition,
a “full set of documents” may include any other ancillary documents required by
the Buyer as part of the contract, such as an E. coli certificate, freezing certificate, TRQ certificate, country
or origin certificate, fat testing certificate, and so forth.
16.4 FOB Country of Origin.Unless specified in the contract, a “full
set of documents” in FOB country of origin transactions means the same
mandatory documents set forth in section 16.2 with respect to CIF sales except
that the Seller shall deliver a bill of lading marked “collect” to the Buyer,
and may include the ancillary documents set forth in section 16.3.
17.1 Nomination, generally.After
a contract of sale has been entered into between merchants, but before delivery
of the product, the Seller is required to “nominate” or designate the specific,
identifiable load of product that is being delivered to Buyer in fulfillment of
the contract.Nomination is accomplished
by providing Buyer with notification of a vessel, voyage number, brand, and
shipping mark, or a location,
lot number, brand, and shipping mark.The seller cannot revoke a nomination once made in writing, unless
mutually agreed upon between all parties.
17.2Timely nomination.Seller must nominate the load in a timely manner.Normal industry practice is that: a) for CIF
purchases, Seller should nominate the load prior to departure of vessel; and b)
for FOB, Ex-dock, or T.I.S. sales, Seller must nominate the load seven days
prior to anticipated delivery or tender.
transactions between traders, the Seller cannot revoke a nomination
once made, unless mutually agreed upon between the parties.
17.4 Nomination/Tender of Short Load.The tender, or nomination, of a “load”
outside the MICA “load” tolerances is not good reason for the Buyer to call
Seller in default, as the Seller has the option to re-tender or renominate the correct contract quantity.(See Load, § II.)
17.5 However, if on subsequent tenders or nominations the Seller is
unable to deliver the minimum quantity within the delivery or shipment period
called for, then the Buyer can exercise their right to call the Seller in
default. If a nomination is made by the Seller in good faith that the MICA “load” tolerances have been adhered to
according to the documentation provided, and a carton shortage is later
discovered at out-turn, then the delivery is still deemed to be a good
delivery.However, Seller must make
proper adjustments to the Buyer for the shortage.(See Shortages, § XVII)
18.1Shortages (carton count).Unless otherwise specified,
quality and quantity are final at destination for all FOB origin, CIF or
shortages recorded at import inspection, the FSIS tally recorded on the Form 9540-1 shall
be the count recognized by the Buyer and Seller and the packing establishment
(or the cold store where product is loaded) in the country of origin shall be
held liable for the shortage.
shortages realized at load out from the USA warehouse, the warehouse shall
be liable for the shortage if the outbound tally is short with respect to the
c.For carton shortages
claimed by the final customer and verified by a third party and where the
customers count is less than the Trucking Bill of Lading, the trucking company
shall be deemed liable for the shortage.
19.1 In the event a load has been tendered out of contract terms, the
parties may renegotiate the price.If a
renegotiated price cannot be agreed upon, the Buyer shall be provided with a
replacement load in accordance with section 19.2.
19.2 A replacement shipment will be physically delivered to the Buyer
at the point of rejection within two weeks of the Buyer's or Seller's demand
therefor.The replacement shipment shall
be equivalent to meat it replaces and, if the Buyer requires, shall be
accompanied by a certified analysis showing that the meat is within
specification.In this case, the Buyer
cannot object if the requirement of an analysis makes it impossible to meet the
two week delivery requirement, and delivery time shall be at least extended for
purposes of certification.(See also
Section of the Guidelines For The Settlement of Fat Claims (replacement load
20.1 Force Majeure refers to a superior or
irresistible force, usually associated with insurance aspects of contracts.As a condition in contract, it relieves
either party from obligations where major unforeseen events, which are outside
the control of the parties and could not have been avoided by the exercise of
due care, prevent compliance with provisions of agreement.Thus, if such a force occurs, performance
under the contract is excused for the period of time that the cause is in
effect.If the period of delay or
prevention does not affect the entire quantity under the transaction then the
quantity may be proportionately reduced commensurate with the period that
performance is delayed or prevented.Examples of force majeure include fires,
floods, strikes, acts of government, war, or other acts beyond the control of
the parties.It is unlike an Act of God
(or “vis major”) which holds that the act must be
from “natural” causes and independent of the control of human action
21.1 USDA regulations prohibit parties from making unsubstantiated
“claims” or representations on cartons of meat.Ciphers are “codes” which the USDA allows to be placed on cartons of
meat to provide a means by which the parties to a transaction can identify
their cartons subject to contract among themselves, without making any
representation to the public as to the quality, contents, and so forth, of the
meat contained therein.A discussion and
list of “ciphers” is contained elsewhere in this Handbook.(See Handbook Section on ciphers for further details.)
XXII.Certification System (Quota)
systems may be operated by, and at the request of, exporting countries that
wish to control and monitor access to the U.S. Tariff Rate Quotas (“TRQ”).Under such system, U.S. Customs will allow
in-quota treatment only for product covered by a certificate issued by the
competent authority in the exporting country.
22.2 Export Certificate.The export
certificate, to be valid, must meet the USDA requirements of 15 CFR 2012.3(b),
in that the certificate must: 1) Be issued by or under the supervision of the government
of the participating country; 2) Specify the name of the exporter, the product
description and quantity, and the calendar year for which the export
certificate is in effect; 3) Be distinct and uniquely identifiable; and4) Be used in the calendar year for which it
is in effect.
22.3 With respect to the requirement that the certificate be distinct
and uniquely identifiable, above, the
certificate must have a distinct and unique identifying number composed of
three elements set forth in the following order: 1) The last digit of the year
for which the export certificate is in effect; 2) The 2‑digit ISO country
of origin code from Annex B of the HTSUS which identifies the participating
country; and 3) Any 6‑digit number issued by the participating country
with respect to the export certificate.19 CFR 132.15(b).
22.4 Retention and submission of certificate to Customs.The export certificate must be retained by
the importer for a period of at least 5 years from the date of entry, or
withdrawal from warehouse, for consumption.It is not required (or permitted) to be filed with the entry, but the
importer shall submit a copy of the export certificate to Customs upon request.
Offer / Firm Bid
23.1A Firm Offer / Firm Bid is a
Quotation or offer to sell or buy goods at a stated price and under stated
terms, which is valid (or legally sufficient and binding) for a certain period
of time, during which time it cannot be revoked by the Seller / Buyer.
23.2It is generally trade
practice in the imported meat industry that firm offers / firm bids made over
the phone are only valid for the duration of the phone call unless otherwise
stated.E.g. the party giving the offer
/ bid firm might guarantee that it valid for a specified period of time (ie 1/2hr, one hour etc). Firm offers can be revoked during
the phone conversation but NOT after one party confirms acceptance of the
23.3Firm offers/ Firm bids with a validity greater
than a day or from one business day to the next (ie
overnight) are usually made in writing.