Dry-Docking Clause in Ship Sale and Purchase

Dry-Docking Clause in Ship Sale & Purchase 

Ship Sale & Purchase at Second Hand Market there is the matter of Dry-Docking Clause might read:

“The Sellers shall place the vessel in dry-dock at port of delivery and if rudder, propeller, bottom or other underwater part or parts be found broken, damaged or defective so as to affect the vessel’s clean certificate of class, same shall be made good at the Sellers’ expense to Classification Society’s satisfaction to retain vessel’s class without qualification. While the vessel is in dry-dock and if required by the Buyers the tail-end shaft shall be drawn. Should same be condemned or found defective so as to affect the vessel’s clean certificate of class it shall be renewed or made good at the Seller’s expense to the Classification Society’s satisfaction to retain vessel’s class without qualification.

The cost of drawing and replacing tail-end shaft shall be borne by the Buyers unless Classification Society requires tail-end shaft to be renewed or made good. The expense of putting in and taking out of dry-dock and the dry-dock dues shall be paid by the Buyers unless rudder propeller bottom other underwater part(s) or tail-end shaft be found broken damaged or defective as aforesaid in which event the Sellers shall pay these expenses. Sellers shall pay all costs of transporting the vessel to the dry-dock and from the dry-dock to the place of delivery”.

The best way to explain this Dry-Docking Clause is if we can imagine the actual dry-docking of a ship for inspection prior to delivery.

First it is the responsibility of the Sellers to bring the vessel to the dry-dock ready for docking and subsequently from the dry-dock to the berth or place of delivery. The expenses involved in doing this, including Tugs and Pilot if required, are for Sellers’ account and there can be no argument on this. These expenses should not be confused with those involved in the actual putting in and taking out of dry-dock and the dry-dock dues.

Once the ship is in the dry-dock an inspection of the underwater parts will be carried out by the Classification Society’s Surveyors who are in effect neutral referees and cannot be influenced by either Sellers’ or Buyers’ Technical Representatives; except to the extent that if a repair is called for the method of carrying it out may be discussed.

There are often two ways of doing a repair , the expensive way with a full repair or renewal or the less expensive way, which might be a welding job or a patching job. The latter way may be just as strong and acceptable to the Classification Society so that naturally Sellers’ Superintendent will usually put such a method to a Surveyor with a view to saving his Owners a little money.

Now if the Classification Surveyor requires any work to be done on the underwater parts the cost of putting the ship in and taking out of dry-dock and the dry-dock dues will be paid by the Sellers.

On the other hand if there are no such repairs affecting the ship’s class these expenses are for the Buyer’s account. As a separate matter Buyers have the option of having the Tail-end shaft drawn, this is of course the shaft that finally connects up the Main Engine with the Propeller. If they elect to have it drawn for examination it is done at the Buyer’s expense unless it is condemned or found defective so as to affect the ship’s clean Certificate of Class.

If condemned or defective Sellers would not only have to pay the cost of drawing and replacing the shaft plus the repairs thereto, but also the dry-docking costs even though no other repairs were required on the other underwater parts.

Shipping people perhaps understand the importance of this Dry-Docking Clause, particularly to a Buyer, if you appreciate that he has, as a rule, bought the ship without seeing what she is like below the waterline and consequently must have adequate safeguards against the unexpected.

Dry-Docking Clause in Ship Sale and Purchase

A dry-docking clause in a ship sale and purchase agreement is a provision that outlines the conditions and responsibilities of both parties (seller and buyer) concerning the dry-docking of the vessel.

In general terms, it states that the seller guarantees the vessel will pass an inspection or survey in dry-dock. Depending on the negotiation, the seller may also be responsible for any necessary repairs or maintenance identified during the dry-docking to ensure the ship is seaworthy and compliant with all relevant regulations.

Here is an example of a dry-docking clause:

“The Seller warrants that the Vessel, at the time of delivery, will have all valid certificates required for trading and will be in a seaworthy condition, in every respect ready for the voyage. If the Vessel is due for dry-docking within six months of the expected delivery date, the Seller is obligated to dry-dock the Vessel at its own cost and expense prior to delivery.

Any deficiencies, damages, or repairs identified during the dry-docking inspection will be the Seller’s responsibility and must be rectified at Seller’s cost to the satisfaction of the Buyer’s representatives and the relevant classification society.

Should any required certifications not be up-to-date or if the vessel is found not to be in seaworthy condition, the Buyer shall have the right to either (i) reject the Vessel, (ii) agree on a new delivery date to allow the Seller to rectify the deficiencies, or (iii) negotiate a reduction in the purchase price.”

Please note that the exact conditions and stipulations in the dry-docking clause will vary depending on the specific agreement between the buyer and the seller. It is always recommended to seek legal counsel when dealing with such complex transactions to ensure all parties’ interests are adequately protected.