A sale and purchase transaction culminates in the « closure. » Here, buyers and sellers (usually on the same day) exchange documents, pay and deliver and transfer the ship. It requires careful coordination between the various parties acting by mutual agreement in order to ensure the success of the sale. Each party has its role to play. As an indication, some important participants may be to date; Seller and buyer (or authorized representative), lawyers, bankers (both financial and for payments), flag state representative, crew (old and new, if replaced), broker, class representative, insurer, with others potentially also needed, usually not all in the same place, or even in the same time zone. The final phase of sales and purchase is called the final phase. It includes pre-delivery issues, including inspection of the underwater parts by the classification company, the provision of documents and the physical delivery of the vessel for payment of the balance of the contract price. These underwater inspections can be carried out at the buyer`s request, in which case, if the surveyor of the classification company does not request it, the fee due is charged into the buyer`s account. The negotiation phase and the contract phase are the first two stages of the sale of a ship. They are usually carried out by brokers, who are ordered by both the buyer and the seller. Initially, the buyer`s broker will exchange telex with the seller`s brokers to make an invitation to make an offer.
The main concerns of both parties at this stage are the pricing, details of the vessel and the purpose of the transaction. Under the Sale of Goods Act 1979 s.51, the purchaser has the right to sue for non-delivery of the vessel and damages. To delay delivery, the buyer can argue the difference in the value of the vessel if the purchase price of the other vessel is immediately different. In addition, the buyer may terminate the contract and seek damages if the vessel is not delivered after a certain period of time. Parties should also be informed of any financing relevant to the sale before concluding the MoA. If the vessel is mortgaged or subject to other charges, a potential buyer will be curious about how to obtain a clean title. A seller should also determine in advance whether the buyer intends to obtain financing. From a practical point of view, there are several elements that require special attention when external capital or equity is applicable.
For example, cancellation of mortgages, registration of new mortgages, authorized business structures, specific lender requirements, etc. While it is outside the scope of this section to examine in detail the financing of vessels, the parties should ensure that the applicable financing inevitably influences certain elements of the sales and purchase activity. Of course, this is a simplified breakdown of the process and it is generally advisable to keep a lawyer. If you need help with the sale of a boat, an agreement or questions about the law of the sea or transactions, please contact lawyer John Frazier. The sale and purchase of ships is one of the most complex procedures in the shipping industry – much more complicated compared to a new shipbuilding contract, for example. The S-P contract includes different types of expertise and strong negotiating capabilities. In addition, due to the legal effect of marine rights on the used vessel, the purchaser should check the history and all court letters in order to reduce any future losses of the purchased vessel.