answer: Mrs.Wang tells Mr. Brown 20% of the dried mushrooms offered by him were moldy and some of them were even worm-eaten. Wang's surveyor says it's because some of the mushrooms were not dried enough before packing, so Wang wants Brown to compensate for the loss, while Brown refuses since Wang bought the goods F. O. B. Houston and on shipping quality, not on landed quality. Brown insists that Wang approach the insurance company, but Wang failed to cover contamination in the coverage, which is a lesson to her.
documents: #Person1#: Mr. Brown, I'd like to talk with you about something that is getting to be a problem. I'd like, if possible, to see it settled at this meeting.
  #Person2#: What is it, Mrs. Wang?
  #Person1#: It's about the quality of 300 cartons of dried mushrooms. They reached us two weeks ago, and were immediately examined after they arrived. To our astonishment, about 20 % of them were moldy and in many cartons there were even small brownish bugs crawling in and out of the half eaten mushrooms. We can't accept them in this state. They are unfit for human consumption. And the Medical Officer of Health has issued a Stop Notice on them.
  #Person2#: Is that so? So far we haven't had any complaint of this kind. Our mushrooms have enjoyed a good reputation for their superior quality for years. We are really at a loss to understand why your lot was found moldy and wormeaten. Have you any evidence?
  #Person1#: Certainly. Here's a survey report by a well-known lab in London, whose testimony is absolutely reliable.
  #Person2#: Though everything may be as you say, there are many factors involved. What's more, your surveyors have not mentioned any cause for the damage.
  #Person1#: The mushrooms were packed in small one pound plastic bags, sixty of these bags to a carton. It is stated on the surveyor? s report that external conditions of goods at the time of survey are all sound and intact. So it is obvious the cause of the damage is that the mushrooms were not completely dried before packing.
  #Person2#: As you know, before shipment, the Commodity InspectionBureau inspected the goods in question. They concluded that the goods were well dehydrated from fresh and choice material and up to standard for export.
  #Person1#: I think the Inspection Bureau at your end, when effecting inspection, only selected a few package at random these happened to be up to the standard. The part that was not dried properly, most probably, escaped their attention. As the amount in question is only 20 % of the whole shipment, I think it is only reasonable that you should compensate us for the loss.
  #Person2#: The inspection certificate, which is based on a random selection of 20 % of the consignment as we've agreed on beforehand, is considered final and binding upon both parties. We do not accept any claims for compensation for loss incurred in transit, because you bought the goods F. O. B. Houston and on shipping quality, not on landed quality. Your claim, in our opinion, should be referred to the insurance company, as the mishap occurred after shipment.
  #Person1#: We've already got in touch with the underwriter. But they have refused to accept any liability. They attributed the accident to the effects of dampness during the long sea voyage.
  #Person2#: That's a matter over which we could exercise no control, then. I'm afraid I have to insist that you approach the insurance company for settlement, that is, if you have covered this risk in your coverage.
  #Person1#: To my regret, we failed to cover contamination. This is an unfortunate oversight on our part and a lesson to us.
  #Person2#: Otherwise the insurance company would no doubt have entertained your case.
  #Person1#: Well, live and learn. It seems we'll have to waive the claim.