Generally there is a certain amount of haggling in the matter of price and conditions, but when agreement has been reached it is the Seller’s brokers’ duty to draw up a Memorandum of Agreement. This usually consists of clauses as follows:
- A preamble giving the names of the buyers and the sellers, the name of the ship and a brief description of her.
- Price and times for payment. Payment is normally made by a 10% deposit on signing Memorandum of Agreement in joint names of buyers and sellers or their Agents and the balance together with the release of this deposit is paid on delivery, which is usually within 3 days after readiness for delivery.
- Conditions of sale, also time and place for delivery.
- Dry-docking Clause.
- Additional payment for bunkers and stores.
- Exclusion of hired items such as radio, satellite communication equipment and radar, if not the ship’s property, and particularly in passenger ships it is usual to exclude badged articles.
- All plans and classification certificates to be handed to buyers.
- Ship to be at seller’s risk until time of delivery.
- A caveat emptor clause, absolving Sellers from all faults or deficiencies of any description after delivery subject, of course, to the Conditions of the Contract being fulfilled.
- Clauses dealing with default on either side. If the Buyers default the Sellers can cancel the Contract, retain the deposit and obtain compensation for any further loss, all expenses, plus Interest thereon. If the Sellers should default Buyers may cancel the Contract and the deposit will be returned with interest. In addition Sellers would be required to make due compensation for any loss caused to the Buyers.
- Automatic cancellation of the contract and return of the deposit to the buyer in the event of the loss of the ship before delivery.
- An undertaking to change the ship’s name and funnel marking before trading under new ownership.
- Arbitration clause.
- A clause providing for commission to be paid to the brokers concerned.
- In addition, this agreement contains, of course, all other terms of the firm offer finally accepted.
In general international use there is a printed form called the Norwegian Shipbrokers’ Association Memorandum of Agreement “Saleform 1993”.