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E Global Pte Ltd. Read more Read less. KEY BENEFITS OF ATTENDING Analyse potential problems and strategies required that will arise before delivery under NSF and after delivery Master the strategies on how to deal with problems, on the spot and if the deal breaks down Gain insights into the most important cases of the last 40 years - and why they matter now Learn key litigation and arbitration strategies and tactics - working with counterparties, arbitrators and courts Equip with the know-how of when and how to negotiate commercial settlement Understand and learn how to control the costs of litigation.
Detailed inspections and surveys are usually performed after signing the MoA, as considered below. Before signing, each party is also encouraged to perform a preliminary due diligence on the other.
Modern vessel ownership is typically structured using single ship-owning entities registered in regulatorily friendly offshore jurisdictions. Similar to inspections, safeguards should also be employed in the MoA, for example; evidence of good standing, proof of vessel ownership, etc.
And similarly, it is recommended to perform basic checks before committing to the MoA, after which it may be more difficult to avoid the sale if an unsatisfactory position is discovered. Parties should also be aware of any financing relevant to the sale, before concluding the MoA. If the vessel is mortgaged, or otherwise encumbered, a prospective buyer will be eager to ascertain how clean title will be attained. A seller should also establish from the outset if the buyer intends obtaining financing. From a practical perspective there are various elements that require attention if debt, or equity, financing is applicable.
For example; required deletions of registered mortgages, registration of new mortgages, permissible corporate structures, particular requirements of the lender, etc. Whilst it is beyond the scope of this article to consider ship finance in any detail, parties should be mindful that applicable financing will invariably affect some elements of the sale and purchase transaction.
The NSF , in its unamended form, extends just eight pages covering eighteen clauses. The short document is, however, remarkably versatile. It provides a roadmap of what is required by the parties before transfer of the vessel, what may be done if such requirements are not met, and how transfer of the vessel should take place.
Bulk Vessels for Sale | Ship Sales and Purchase - Bulk Carriers for Sale
Here we consider the main terms. The identities of the buyer and seller are not always immediately apparent. Alternatively, a mechanism permitting novation of the MoA is frequently sought by buyers who have not yet established a SPV to own the vessel at the time of signing the MoA. The buyer should also confirm the identity of the named seller, which should be the same entity listed as the officially registered owner of the vessel.
Two essential terms of any contract of sale are the property being sold ie; the vessel and its price. Both should be clearly stated. The NSF affords the buyer three banking days to make such payment to a third party holder, after signing, and confirmation from the deposit holder that the relevant account has been opened. All things being equal, the deposit will ultimately be transferred to the seller on delivery of the vessel.
Inspection of the subject vessel, her records, and acceptance thereof is a requirement particularly susceptible to disputes. The various NSF versions have long taken the default position, and still do, of affording the buyer unfettered discretion to effectively either accept or reject the vessel on the basis of inspection. To accept the vessel, the buyer is required to perform a positive action — the issuance of a written notice of acceptance to the seller.
This should be provided within 72 hours of the inspection, unless stated otherwise. In practice the inspection clause is often keenly negotiated.
So, You Want to Buy a Ship? Sale & Purchase Essentials
Sellers may seek to amend the default position so that the inspection will only nullify the sale if defects are discovered, which cannot be rectified within a reasonable period of time. Buyers will likely seek to maintain total freedom to entirely avoid the sale if desired. Reliance on a purportedly failed inspection is a popular route for buyers seeking to avoid the sale for any number of reasons. Parties should also be mindful of the underwater or drydocking inspections the buyer is entitled to, although non-acceptance in this instance does not by default vitiate the sale, even if defects are found.
In all cases, parties would be well advised to clearly stipulate their respective rights and obligations concerning inspections. It requires careful coordination between various parties who operate in unison to ensure the sale successfully closes. Each party has its role to play. As an indication, some key participants on the day may include; seller and buyer or authorised representatives , lawyers, bankers both as financiers and for payments , flag state representatives, crew old and new if replaced , brokers, class representative, insurers, with others potentially also required, normally not all in the same location, or even the same time zone.
There are essentially three main elements to a conventional sale and purchase closing; i delivery of documents, ii delivery of the vessel, and iii payment.
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Closing often occurs through two simultaneous meetings — one onshore in a meeting room and the other onboard the vessel. Understand the skill required to prepare and to interpret market reports including both statistical and written reports. Thoroughly understand the basic anatomy of an agreement to sell a ship and the essential differences depending upon whether it is for a newbuilding, a second hand ship or a ship destined for scrap. Understand the existence of all the standard Memorandums of Agreement in current use. Understand the intention of each clause in a saleform, be aware of the Clause numbers of the more crucial clauses.
Understand the practicalities of the inspection and dry-docking clauses and when these are customarily carried out. Understand how to compile additional clauses when these are desirable to supplement or replace those in the printed form. Understand the role and function of all other documentation which buyers and sellers normally must produce at the time of completing the sale and the legal transfer of the ship. Including safety and other compliance certificates. Be aware of the issuing authorities for these documents. Be aware of representatives of other parties whose presence or electronic contact may be required at time of handover.
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Thoroughly understand the basics of firm offer and counter offer in the negotiating process and the manner in which it is customary for the two parties each having their respective brokers. Understand how the negotiating process leads to a conclusion necessitating a recapitulation together with a completion agenda. Thoroughly understand the different ways a Buyer may raise the funds to finance the purchase.
Understand the sources of such funds and the type of information such financiers will require.
Thoroughly understand the role and function of a mortgage when used as security for a loan to finance the purchase. Understand the procedures of leasing and bareboat chartering as methods of acquiring tonnage. Be aware of the effect of interest rates, foreign currency and currency fluctuation on the raising of finance and servicing the loan. Thoroughly understand the duties of a valuer in ship sale and purchase. Be aware of the reasons for and types of bodies requiring valuations.