What is Ship Sale and Purchase? S&P Market, Shipbrokers, MOA and SALEFORM Explained

Ship Sale and Purchase

Ship Sale and Purchase, often shortened to S&P, is the specialist maritime market in which ships are bought, sold, valued, inspected, delivered, financed, registered, and transferred between shipowners. A ship sale is usually a major capital transaction involving millions of dollars, detailed technical information, documentary precision, shipbroker negotiation, legal review, classification records, financing arrangements, registry formalities, and careful coordination between buyer, seller, banks, lawyers, brokers, managers, and flag authorities.

Unlike many ordinary asset sales, a ship sale is both a commercial and maritime transaction. The ship may be trading, under charter, mortgaged, classed, insured, crewed, and located in a different country from the buyer and seller. Delivery may occur in one port, documentary closing may take place elsewhere, and payment may pass through escrow or banking channels in another jurisdiction. For this reason, the Ship Sale and Purchase market requires experience, speed, accuracy, and a strong understanding of maritime practice.

There are three principal sectors within the sale and purchase market:

1- Demolition (Scrapping)

2- New Buildings

3- Second Hand

The secondhand ship market is usually the most active sector. It is uncommon for a ship to remain with the same owner from delivery at the shipyard until recycling at the end of its trading life. During a ship’s commercial life, market cycles, financing needs, environmental rules, fleet strategy, cargo patterns, and chartering opportunities change. A shipowner may therefore be a buyer in one market cycle and a seller in another.

A ship may trade for 20 to 25 years, sometimes longer, depending on ship type, condition, maintenance, freight market, regulatory requirements, and operating cost. During that time, the ship may change ownership several times. A bulk carrier, tanker, container ship, gas ship, offshore ship, or specialized ship may become more valuable or less valuable depending on freight earnings, fuel efficiency, cargo demand, class status, and future employment prospects.

Shipowners may decide to sell for many reasons. A ship may no longer fit the owner’s preferred trade. The ship may be too old for certain charterers. New regulations may require costly retrofits. The owner may want to release cash, reduce debt, modernize the fleet, shift into another ship type, or avoid future dry-docking expenses. In other cases, a shipowner sells because the secondhand price is attractive and the market offers an opportunity to realize profit.

1- Demolition (Scrapping)

Demolition, also called scrapping or ship recycling, is the end-of-life sector of the Ship Sale and Purchase market. When a ship becomes too old, too expensive to maintain, too inefficient to trade, or commercially obsolete, the owner may sell it for demolition. In that case, the buyer is usually a cash buyer or recycling yard, and the price is often linked to the ship’s lightweight tonnage and the scrap value of steel and non-ferrous materials.

Age is not always the only reason for demolition. Market conditions may push even relatively modern ships toward lay-up or scrapping if they cannot earn enough freight to cover operating costs, debt service, insurance, crew, dry-docking, and maintenance. During severe shipping recessions, the demolition market can become active because owners prefer to remove uneconomic ships from service rather than continue trading at a loss.

The oil crises and tanker market collapse of the late 1970s and 1980s provide a classic example. Before the downturn, crude oil carrier demand appeared almost unlimited. Shipyards were full, and many VLCCs and ULCCs were ordered. When oil demand fell and the tanker market weakened, some large tankers moved from shipyard delivery to lay-up almost immediately. Many owners had no profitable employment and could not justify long-term storage costs. Demolition became the practical solution.

Sometimes an owner may sell a ship for demolition even when a trading buyer might offer a higher price. This may appear surprising, but there can be commercial reasons:

Under certain tax or fiscal regimes, achieving a high sale price for an older ship may create unfavorable tax consequences.
Selling the ship for continued trading may create a new competitor, especially if the buyer has a lower capital cost, cheaper financing, different crewing cost, or a more flexible flag arrangement.

A seller may prefer to remove an old ship permanently from the market rather than allow another operator to use it in direct competition. This is especially relevant where ships are suited to a narrow cargo, region, or trade lane.

In demolition sales, technical information differs from ordinary secondhand sales. Buyers are interested in light displacement tonnage, steel weight, location, class status, bunkers, spare propeller, tail shaft, non-ferrous metals, hazardous materials inventory, and delivery location. Environmental and recycling standards are also increasingly important, especially where responsible recycling and compliance with international and regional rules are required.

2- New Buildings

Newbuilding transactions involve the construction and purchase of new ships from shipyards. At the optimistic end of the market, shipowners order new ships because they expect future freight demand, fleet renewal, environmental efficiency, fuel savings, or strategic advantage. Newbuilding contracts are complex because the buyer is not purchasing an existing ship but a future asset that must be designed, built, supervised, tested, delivered, and financed.

A new ship is not the same as an office building or warehouse. A ship must satisfy commercial requirements, hydrodynamic performance, structural strength, cargo capacity, stability, fuel efficiency, environmental rules, class requirements, flag requirements, shipyard capability, equipment selection, and future trading flexibility. The design must work at sea under real weather and operational conditions.

Newbuilding contracts may be signed at different stages. Sometimes the parties agree on a broad specification and allow the detailed design to develop later. Sometimes buyers instruct naval architects to create a particular design and then invite shipyards to quote. In other cases, the buyer accepts a standard yard design, possibly with modifications. Standard designs can reduce cost and risk because earlier ships of the same type may have already revealed and corrected design weaknesses.

Shipyards may test hull forms with models in towing tanks or use computational fluid dynamics and advanced simulation. These tests may lead to changes in length, beam, bulbous bow, stern form, propeller design, engine selection, or cargo arrangement. A small change in hull form may affect speed, fuel consumption, cargo intake, draft, and operating cost throughout the ship’s life.

Newbuilding buyers must also consider delivery timing. A ship ordered during a strong market may be delivered after the market has weakened. Conversely, a ship ordered during a downturn may be delivered into a stronger market. Newbuilding investment therefore involves market forecasting, financing discipline, technical judgment, and appetite for long-term risk.

Economies of scale have been important in shipping, but ship size cannot increase without limit. Larger ships may reduce unit transport cost, but they also require stronger structures, deeper ports, longer berths, larger cargo parcels, higher financing, and more specialized employment. At some point, extra size may reduce flexibility and increase risk. A ship must be large enough to be efficient but not so large that it becomes difficult to employ.

3- Second Hand

The secondhand market is the busiest and most practical sector of Ship Sale and Purchase. Sale and Purchase (S&P) Shipbrokers are especially active in the Second Hand Tonnage market because ships are constantly being offered, inspected, negotiated, sold, refinanced, and delivered. Buyers and sellers often appoint separate S&P shipbrokers, just as owners and charterers may appoint separate brokers in chartering.

A Sale and Purchase (S&P) Shipbroker gathers and circulates ship particulars to potential buyers and other brokers. The particulars normally include the ship’s name, type, DWT, draft, year built, builder, flag, class, dimensions, cargo capacity, machinery, speed and consumption, special survey status, class notation, holds and hatches, gear, pumps, tanks, bunker capacity, trading certificates, and inspection availability.

A strong S&P broker’s office depends on accurate market information and a reliable ship database. Modern databases allow brokers to search by size, age, ship type, class, flag, cargo gear, draft, trading region, survey position, fuel consumption, or delivery location. For example, a buyer may ask for all geared bulk carriers between 35,000 and 55,000 DWT, built within a certain age range, with cranes at each hatch and suitable for grain or steel trades. A good database allows the broker to identify candidates quickly.

The value of a database depends on the quality of information entered. Ship particulars may be obtained from owners, managers, previous sale records, classification databases, brokers, inspection reports, and recognized market sources. However, brokers usually add a disclaimer such as “These particulars are believed correct but no guarantee is given of their accuracy.” Buyers must verify the information through inspection, class records, certificates, and professional advice.

Important secondhand ship particulars include:

deadweight (DWT) and draft
year and place of build
builder and yard reputation
length overall, beam, depth, and dimensions
cargo capacity and cubic measurements
cargo gear, cranes, grabs, pumps, tanks, or specialized equipment
number of holds, hatches, tanks, or cargo spaces
deck arrangements and hatch dimensions
main engine, auxiliary engines, horsepower, and maker
speed and fuel consumption
bunker capacity
class, flag, and survey status
special survey and dry-docking dates
trading certificates
recent employment and inspection location

For demolition sales, the relevant information is different. Buyers may focus on light displacement tonnage, steel weight, bronze or iron propeller, spare tail shaft, bunkers, location, and delivery conditions.

If a ship interests a buyer, the buyer may request the capacity plan, general arrangement plan, class status, recent inspection reports, machinery information, and certificate list. It is normally not the broker’s role to guarantee the ship’s condition unless the broker knows a specific problem. The buyer’s superintendent, technical consultant, or surveyor should inspect the ship and review the records.

When buying a ship, class records are crucial. They reveal the ship’s construction history, survey history, damages, repairs, recommendations, conditions of class, memoranda, and upcoming survey obligations. A ship may look attractive in photographs, but class records may reveal costly future requirements. Buyers should examine class records carefully before accepting the ship.

Inspections may take place before or after initial negotiations. It is uncommon for a ship to be dry-docked at the earliest stage unless the sale terms require it. A firm offer for a trading ship usually states the price, commission, deposit, delivery range, cancelling date, inspection terms, class condition, bunkers, lubricating oils, and whether the ship is to be delivered free of average damage or free of damage affecting class.

Another important term is payment for bunkers, lubricating oils, unused stores, spare parts, and other items on board. These may be included in the sale price or paid separately at agreed prices. The parties must also ensure that the ship’s trading certificates remain valid at delivery and that all government permissions, registry approvals, and mortgage releases are properly handled.

What is Ship Sale and Purchase (S&P) Market?

The Ship Sale and Purchase (S&P) market is the international market where ships are bought and sold. It includes secondhand ships, newbuildings, resale contracts, demolition sales, distressed sales, fleet sales, single-ship transactions, and strategic acquisitions. The market is important because it allows shipowners to adjust fleet composition, investors to enter shipping, operators to expand capacity, and older ships to leave the trading fleet.

The S&P market is influenced by freight rates, asset values, interest rates, shipyard prices, demolition prices, environmental regulations, fuel prices, financing availability, geopolitical risk, sanctions, cargo demand, fleet supply, and investor sentiment. A strong freight market usually increases ship values because buyers expect higher earnings. A weak freight market may reduce values and increase distressed selling.

Types of Ships Traded: The market includes bulk carriers, tankers, container ships, LNG carriers, LPG carriers, offshore ships, passenger ships, general cargo ships, chemical tankers, car carriers, and specialized ships. Demand varies by sector.
Market Participants: Participants include shipowners, buyers, sellers, S&P shipbrokers, banks, leasing houses, private equity investors, ship managers, lawyers, insurers, classification societies, flag States, escrow agents, and technical consultants.
Pricing and Valuation: Ship values depend on age, ship type, size, condition, earnings potential, class status, fuel efficiency, yard quality, charter coverage, market sentiment, and comparable sales.
Market Trends and Cycles: The S&P market is cyclical. Asset prices may rise quickly during strong freight markets and fall sharply during downturns.
Contractual Process: Ship sales are normally concluded under a Memorandum of Agreement (MOA), such as SALEFORM 2012, SHIPSALE 22, or other recognized forms.
Regulatory Compliance and Due Diligence: Buyers must review class, flag, certificates, ownership, mortgages, liens, sanctions exposure, environmental compliance, and trading history.
Financing and Investment: Many buyers use bank loans, leasing structures, private equity, seller credit, or internal cash. Financing must be aligned with delivery and mortgage registration.
Technology and Sustainability Trends: Digital market intelligence, ship tracking, emissions rules, fuel efficiency, carbon intensity, alternative fuels, and energy-saving equipment increasingly affect ship value.
Global Market Dynamics: The S&P market is global. A buyer in Greece may purchase a ship from a Japanese owner for delivery in Singapore, finance it through a European bank, register it under a different flag, and place it under a new manager.
Role of Classification Societies and Flag States: Classification societies confirm technical standards, while flag States maintain registry and regulatory control. Class and flag reputation can affect marketability.
Secondary Market and Scrapping: Older ships may be sold for further trading or recycling. New environmental rules and high scrap prices can accelerate demolition decisions.
Digital Platforms and Market Data: Databases, valuation tools, AIS tracking, analytics, and digital document rooms now support S&P transactions, although negotiation remains relationship-driven.
Environmental Considerations and Regulations: Ships with poor efficiency or expensive retrofit needs may suffer value discounts. Ships with modern engines, energy-saving devices, or attractive emissions profiles may command stronger interest.
Insurance and Risk Management: Buyers must arrange insurance from delivery. Sellers must maintain insurance until delivery and ensure risk transfers according to the MOA.
Market Liquidity and Speculation: Liquidity differs by ship type and market cycle. Standard bulk carriers and tankers may be easier to sell than highly specialized ships.
Shipping Alliances and Mergers: Consolidation can create fleet sales, surplus ship disposals, and demand for particular ship types.
After-Sales Services and Management: After delivery, the buyer must arrange crew, insurance, management, flag registration, class continuity, chartering, bunkers, and operational readiness.

The S&P market reflects the wider health of shipping. When freight rates, credit, and confidence are strong, buyers become more aggressive. When markets weaken, buyers become cautious and sellers may reduce prices. Successful participation requires market knowledge, technical due diligence, legal accuracy, and disciplined timing.

How do you Buy and Sell a Ship?

Buying and selling a ship follows a structured process, but every transaction has its own complications. A ship may be under charter, under mortgage, under repair, under arrest risk, or approaching special survey. The buyer and seller must agree not only on price but also on inspection, deposit, delivery, class condition, bunkers, documents, closing place, payment method, taxes, flag change, and default remedies.

For Ship Sellers:

Market Assessment and Decision to Sell:
- Evaluate freight market, asset values, likely buyer interest, upcoming survey costs, debt position, and fleet strategy.
- Consider whether selling now produces better value than continued trading.
Appointing a Shipbroker:
- Most sellers appoint a specialist S&P Shipbroker.
- The broker advises on value, prepares particulars, contacts buyers, protects confidentiality, and negotiates terms.
Ship Valuation:
- Value is assessed by age, type, condition, class status, yard, earnings, comparable sales, and market direction.
Preparing the Ship for Sale:
- The seller gathers certificates, class records, plans, maintenance history, inspection access, and trading information.
- Obvious technical or documentary weaknesses should be addressed before inspection where practical.
Marketing the Ship:
- The broker circulates the ship privately or widely depending on the seller’s instructions.
- Some sales are confidential, while others are openly marketed.
Negotiation and Agreement:
- Once a buyer is interested, the parties negotiate price, deposit, inspection, delivery, cancelling date, documents, and conditions.
- The agreement is usually documented in a Memorandum of Agreement (MOA).

For Ship Buyers:

Market Research and Identifying a Ship:
- The buyer decides the ship type, age, size, cargo capability, trading region, budget, and financing plan.
- Potential ships are identified through brokers, market reports, direct contacts, and databases.
Inspection and Due Diligence:
- The buyer arranges physical inspection, class review, certificate review, and technical due diligence.
- Legal due diligence may include ownership, mortgages, liens, sanctions, corporate authority, and registry status.
Negotiation and Making an Offer:
- The buyer makes an offer through the broker or directly to the seller.
- The offer normally covers price, deposit, subjects, inspection, delivery place, cancelling date, and commission.
Signing the Memorandum of Agreement (MOA):
- When terms are agreed, the parties sign the MOA.
- The MOA sets out price, deposit, delivery, documents, inspection rights, default provisions, and closing mechanics.
Financing and Payment:
- The buyer arranges loan drawdown, equity funding, mortgage registration, insurance, and escrow payment.
- The deposit is usually paid shortly after signing, while the balance is paid at delivery.
Transfer of Ownership:
- Ownership transfers when the delivery documents are exchanged and payment is released according to the MOA.
- The bill of sale, protocol of delivery and acceptance, registry documents, and corporate authorities are central documents.
Taking Delivery of the Ship:
- The buyer takes physical and legal delivery at the agreed place and time.
- Insurance, management, crew, flag, class, and operational arrangements must be ready at delivery.

Legal and Regulatory Compliance:

The transaction must comply with maritime law, registry rules, sanctions laws, anti-corruption requirements, financing conditions, tax rules, and corporate authority requirements.
Legal advice is normally required, especially where financing, mortgage discharge, flag change, or international closing is involved.

Post-Transaction:

The buyer must arrange ship management, crew, insurance, flag registration, class continuation, bunkers, stores, and chartering employment.
The seller must deliver all documents required under the MOA, discharge mortgages, settle outstanding matters, and ensure clean transfer of title.

The process can be straightforward when both parties are organized, but it can become difficult if documents are missing, finance is delayed, class issues arise, delivery notices are defective, or the ship’s trading schedule changes.

What is the role of a Shipbroker in Ship Sale and Purchase (S&P)?

A Shipbroker in Ship Sale and Purchase is a specialist intermediary who connects buyers and sellers of ships. The S&P Shipbroker provides market intelligence, identifies opportunities, circulates ship particulars, advises on value, negotiates terms, coordinates inspections, assists with documentary progress, and helps move the transaction from initial interest to delivery.

1. Market Expertise and Intelligence:

Analyzing Market Trends: S&P Shipbrokers follow ship values, freight markets, demolition prices, newbuilding prices, interest rates, fleet supply, and comparable sales.
Advising Clients: Shipbrokers help sellers decide when to sell and help buyers decide whether a ship is fairly priced.

2. Valuation and Pricing:

Assessing Ship Value: Shipbrokers estimate value by comparing similar ships sold recently and considering age, specification, class status, and earnings outlook.
Pricing Strategies: Shipbrokers help sellers avoid underpricing and help buyers avoid overpaying in a strong market.

3. Marketing and Promotion:

Listing and Advertising: Shipbrokers circulate ships for sale through private channels, direct buyer lists, and market networks.
Networking: Shipbrokers rely on relationships with owners, managers, banks, funds, operators, and other brokers.

4. Negotiation and Mediation:

Facilitating Negotiations: Shipbrokers negotiate price, inspection, subjects, deposit, delivery, bunkers, documents, and commission.
Mediating Conflicts: Shipbrokers help keep negotiations alive when disagreements arise.

5. Contract Facilitation:

Drafting Agreements: Shipbrokers may assist in preparing the commercial recap and coordinating the MOA, although lawyers usually review legal wording.
Ensuring Legal Compliance: Shipbrokers are not a substitute for lawyers, but experienced brokers can identify commercial and procedural issues early.

6. Due Diligence and Inspection Coordination:

Organizing Inspections: Shipbrokers coordinate inspection windows, attendance lists, port access, and communication with owners and managers.
Verifying Documentation: Shipbrokers may help circulate class status, certificates, plans, and records, but buyers must verify them professionally.

7. Post-Sale Support:

Facilitating Delivery: Shipbrokers assist with delivery notices, closing coordination, bunkers, and practical communication.
Ongoing Consultation: Buyers may continue asking brokers for market advice, future employment possibilities, or resale strategy.

8. Financial Transactions:

Handling Deposits: Deposits are often held by an escrow agent, law firm, bank, or trusted stakeholder, depending on the MOA.
Advising on Payment Terms: Shipbrokers help align commercial expectations, but legal and banking professionals handle formal payment arrangements.

A good S&P Shipbroker is not merely a messenger. The broker’s judgment can influence price, timing, buyer confidence, seller strategy, and the successful completion of the sale.

How to buy a Ship?

Buying a ship is a structured process that requires commercial, technical, financial, and legal preparation. A buyer should not begin only with the question “which ship is cheapest?” The better question is whether the ship fits the buyer’s trading plan, financing structure, management ability, regulatory exposure, and expected return.

Initial Decision and Agreement: The seller decides to sell and the buyer begins negotiations, normally through S&P Shipbrokers. Price, deposit, inspection, delivery, inclusions, exclusions, and subjects are discussed.
Binding Contract: Once terms are agreed, the parties sign a binding MOA, often based on SALEFORM, SHIPSALE 22, NIPPONSALE, or another form.
Escrow Account: The buyer’s deposit is usually placed in escrow. The escrow arrangement protects both parties and defines when the deposit is released or returned.
Closing Formalities: Between signing and delivery, the parties prepare documents, discharge mortgages, arrange financing, confirm class, coordinate registry matters, and prepare payment.
Document Exchange: Sellers provide documents such as bill of sale, corporate authorities, certificate of ownership, class confirmation, deletion certificate, and no-encumbrance evidence.
Buyer's Documents: Buyers may provide corporate authorities, good standing certificates, financing documents, deposit release instructions, insurance evidence, and registry documents.
Financing Arrangements: Sellers may need to repay their existing lender. Buyers may need loan drawdown and new mortgage registration. These steps must be coordinated carefully.
Protocol of Delivery and Acceptance: The Protocol of Delivery and Acceptance records the exact date and time when the ship is delivered and accepted.
Registry and Mortgage: After closing, the ship may be deleted from the old registry and registered under the buyer’s chosen flag, with any new mortgage recorded for the buyer’s lender.
Practical Considerations: Insurance, crew, technical management, class, flag, paint marks, stores, bunkers, communications, and charter employment must be arranged.

Buyers should also prepare for post-delivery costs. A ship may need immediate bunkers, stores, crew change, minor repairs, class attendance, flag inspection, safety equipment renewal, or repainting. These costs should be included in the acquisition budget.

Ship Sale and Purchase (S&P) Procedure

Ship Sale and Purchase (S&P) Shipbrokers specialize in the acquisition and disposal of ships in the secondhand market, newbuilding resale market, and sometimes demolition market. They provide market intelligence, arrange negotiations, help identify buyers and sellers, and support the practical steps leading to title transfer and ship delivery.

Process of Making an Offer Before Inspection

A prospective Ship Buyer may submit an offer before inspection. This is common when the ship is attractive, market competition is strong, or the buyer wants to secure a position before other buyers move. The offer may be subject to inspection, board approval, financing, management approval, or other conditions.

Prospective Ship Buyers are often required to provide company information, beneficial ownership details, proof of funds, financing position, or a history of ship ownership. Sellers want to know that the buyer is serious and capable of completing the transaction.

A Memorandum of Agreement (MOA), such as Norwegian Sale Form 1993, SALEFORM 2012, SHIPSALE 22, or another accepted form, is normally used. The buyer’s lawyers should review the MOA before signing, especially where the buyer requires financing, class conditions, sanctions wording, or specific delivery documents.

Common sale conditions may include:

buyer’s inspection
class record review
underwater inspection
dry dock inspection
sea trial where agreed
board approval
financing approval
management approval
review of certificates and trading history

This stage is also important for calculating bunkers, lubricating oils, unused stores, and spare parts on board. These items may be paid separately from the ship’s purchase price unless the MOA states that they are included.

After agreement on price and terms, the buyer often deposits 10% of the purchase price into escrow by wire transfer. The escrow holder may be the seller’s law firm, buyer’s law firm, broker, bank, or another agreed stakeholder. The deposit remains subject to the MOA terms.

Before inspection, the buyer must provide names of attendees, passport details if required, and inspection requirements. The owner and manager coordinate attendance with the ship’s trading schedule, port agent, terminal, security rules, and Master.

After inspection, the buyer should decide promptly whether to proceed, reject, or renegotiate. If proceeding, the buyer may conduct further survey or accept the ship according to MOA terms. After survey, the buyer may accept the ship as is, renegotiate because of findings, or reject if the MOA allows rejection. Deposit consequences depend on the agreed wording.

Finalizing the sale involves:

The Buyer providing or agreeing a Protocol of Closing setting out the closing process.
Preparing a Protocol of Delivery and Acceptance to be signed by both parties.
Completing required Powers of Attorney.
The Seller issuing a formal Notice of Readiness for ship delivery where required by the MOA.
Coordinating payment, release of mortgage, delivery documents, registry deletion, and new registration.

Documentation Required for Closing

Ship Seller’s Required Documents:

Notarized, attested, and apostilled legal Bill of Sale where required.
Current Certificate of Registration from the flag State.
Class confirmation within the agreed period before delivery.
Certificate or transcript verifying no registered encumbrances.
Deletion certificate or undertaking from the Seller’s registry.
Invoice for remaining bunkers and lubricating oils, if payable separately.
Corporate authorities approving the sale.
Power of Attorney where documents are signed by an attorney-in-fact.
Certificate of good standing or equivalent corporate evidence.
Any additional certificates requested by Buyers and agreed in the MOA.

Ship Buyer's Required Documents:

Release letter for the escrow deposit.
Proof of balance payment to the Seller's account.
Original Power of Attorney documents where required.
Corporate minutes or resolutions confirming the purchase.
Good standing certificate or equivalent corporate evidence.
Registry acceptance documents for the new flag.
Evidence of insurance from delivery.
Any other documents required under the MOA.

After documents are exchanged, funds are released, and the Protocol of Delivery and Acceptance is signed, ownership transfers to the Buyers according to the agreed terms.

BIMCO SHIPSALE 22

BIMCO SHIPSALE 22 is a standard contract for the sale and purchase of ships introduced by BIMCO (Baltic and International Maritime Council). It was launched in April 2022 as a modern standalone Memorandum of Agreement for ship sale and purchase transactions. SHIPSALE 22 was designed to provide a clearer and more contemporary alternative to older sale forms used in the market.

SHIPSALE 22 updates and modernizes the structure traditionally associated with SALEFORM 2012, which was the well-known Norwegian Shipbrokers’ Association form widely used in international ship trading. SHIPSALE 22 uses BIMCO’s familiar box layout in Part I for main commercial terms and Part II for the detailed contractual terms. This structure helps parties identify key terms more easily.

SHIPSALE 22 reflects modern practice in several areas, including electronic signatures, virtual documentary closing, sanctions clauses, anti-corruption clauses, confidentiality, guarantors, and more structured delivery documentation. These features reflect changes in ship sale practice, especially the increased use of remote closings and electronic communication.

Where can I find a Standard Contract for the Sale and Purchase (S&P) of Ships?

We kindly suggest that you visit the web page of BIMCO (Baltic and International Maritime Council) to learn more about Ship Sale and Purchase (S&P) and to obtain original Sale and Purchase (S&P) Contracts, Charter Party Forms and Documents. www.bimco.org

On April 25, 2022, BIMCO introduced SHIPSALE 22 as a new standalone MOA for ship sales and purchases. Unlike earlier Norwegian SALEFORM versions, SHIPSALE 22 was created as a BIMCO form. The purpose was not necessarily to respond to one single legal change, but to provide a modern BIMCO contract structure for sale and purchase transactions.

The Norwegian SALEFORM has long been the dominant contract basis for secondhand ship trading. Other forms, such as NIPPONSALE and Singapore Ship Sale Form 2011, have also been used in certain markets. SHIPSALE 22 entered a market where SALEFORM was already familiar, so adoption depends on broker preference, lawyer familiarity, client confidence, and negotiation habits.

SHIPSALE 22 was developed after consultation with industry specialists. It attempts to simplify the document, organize the sequence of a ship sale more logically, and include clauses often added manually to older forms. Its recognition of virtual closing and electronic signatures reflects modern international transaction practice.

Key Differences between SHIPSALE 22 and SALEFORM 2012

SHIPSALE 22 and SALEFORM 2012 both serve the same basic purpose: documenting the sale and purchase of a ship. However, SHIPSALE 22 introduces a more modern structure and several updated provisions.

Format:

SHIPSALE 22 is divided into Part I for main commercial terms in a box format and Part II for detailed contractual terms.
SALEFORM 2012 does not use the same BIMCO box-style two-part structure.

Key Features of SHIPSALE 22:

Guarantors (Part I, Boxes 5 and 6): Allows details of Sellers’ and Buyers’ Guarantors to be included.
Bunkers, Oils, and Greases (Part I, Box 18): Treats these items separately for clarity on quantities and payment.
Documentary Closing (Part I, Box 19): Includes options for physical or electronic documentary closing.
Validity of Classification Certificates (Box 20): Gives space for parties to specify certificate validity requirements.
Definitions (Part II): Updates defined terms and introduces clearer treatment of excluded items.
Subjects (Part II, Clause 3): Allows subjects such as board approval, with consequences if they are not lifted.
Deposit (Part II, Clause 5): Addresses delays in deposit payment caused by disruptive banking events.
Inspection (Part II, Clause 6): Provides clearer inspection wording and options for sale without inspection.
Underwater Inspection (Part II, Clause 8): Updates inspection mechanics compared with older practice.
Drydock Inspection (Part II, Clause 9(d)): Provides more structured timing for repositioning where drydock inspection is involved.
Condition of Ship at Delivery (Part II, Clause 10): Expands seller warranties concerning employment and security.
Delivery Notices (Part II, Clause 11): Simplifies notice structure.
Payments (Part II, Clause 14(d)): Includes payment provisions such as gross-up wording.
Post-delivery Obligations (Part II, Clause 17): Consolidates post-delivery obligations into one clause.
Termination Rights (Part II, Clause 18(b)): Limits certain compensation claims to direct losses and expenses.
Sanctions and Anticorruption (Part II, Clauses 21 and 22): Adds modern compliance clauses not found in the same way in SALEFORM 2012.
Confidentiality (Part II, Clause 23): Adds express confidentiality wording.
Electronic Signature (Part II, Clause 27): Deals with electronic signing of documents.
Annex A – Delivery Documents: Provides a more organized list of delivery documents required from both parties.

SHIPSALE 22 addresses several issues that parties often amended manually in SALEFORM 2012. However, SALEFORM 2012 remains familiar and widely understood. In practice, both forms may continue to be used, depending on the market, ship type, parties, lawyers, and brokers involved.

What is Norwegian Sale Form (NSF)?

The Norwegian Sale Form (NSF) is a standard contract form used for the sale and purchase of secondhand ships. It has been one of the most recognized ship sale forms in the international maritime market. The Norwegian Sale Form sets out the main terms governing price, deposit, inspection, delivery, documents, bunkers, default, arbitration, and transfer of title.

The Norwegian Sale Form has been updated over time to reflect market practice, legal development, and commercial experience. SALEFORM 2012 is one of the most widely known modern versions. Parties commonly use it as a base form and then add riders or amendments to suit the transaction.

The strength of the Norwegian Sale Form is familiarity. Brokers, lawyers, buyers, sellers, banks, and managers know its structure. Familiar wording reduces uncertainty and allows parties to focus on commercial amendments rather than negotiating every clause from the beginning.

Key features of the Norwegian Sale Form (NSF) include:

Price and Deposit: The form sets out the purchase price and deposit mechanism.
Inspection and Delivery: The form regulates buyer inspection rights, delivery place, delivery timing, notices, and acceptance.
Condition of the Ship: The form deals with the condition in which the ship must be delivered, including class and certificate requirements.
Default and Dispute Resolution: The form provides remedies for buyer or seller default and normally includes arbitration wording.
Customization: Parties may add clauses dealing with sanctions, financing, confidentiality, trading commitments, documentary requirements, or special conditions.

The Norwegian Sale Form is not merely a template. It reflects many years of international ship sale practice. Its value lies in providing a recognizable framework for complex transactions.

Norwegian Sale Form (NSF) Versions:

The Norwegian Sale Form has developed through several versions, each designed to reflect changing maritime practice. Important versions include:

NSF 1987: An earlier version that was used widely in the market.
NSF 1993: A major update that became extremely familiar to brokers and lawyers.
NSF 2000: A later version that introduced further refinements.
NSF 2012 (SALEFORM 2012): A modern and widely used version with updated wording and structure.

Each version builds on earlier market experience. Parties may still prefer older forms because they know them well, even after newer forms become available. In ship sale practice, familiarity can be as important as drafting modernization.

Process of Buying and Selling Ships with Norwegian Sale Form (NSF)

The Memorandum of Agreement (MOA) is the main contract in many ship sale transactions. One of the most familiar forms is SALEFORM 2012, also known as Norwegian Sale Form 2012. It provides a structured route from negotiation to inspection, deposit, closing, delivery, and transfer of ownership.

Steps Prior to Finalizing the Memorandum of Agreement (MOA)

Shipbroker Engagement and Initial Negotiations:

Before the MOA is finalized, the buyer or seller normally contacts an S&P Shipbroker. The broker discusses market value, price expectations, inspection possibility, delivery range, deposit amount, commission, and commercial subjects. Brokers are usually not parties to the MOA, but their role in negotiation is central.

Initial negotiations should be handled carefully. If the parties do not intend to be bound until the MOA is signed, the communications should clearly state that negotiations are subject to execution of the MOA or subject to contract. Otherwise, there may be arguments about whether a binding agreement was already formed.

Inspections and Due Diligence

Before signing or before lifting subjects, the buyer may conduct an inspection and review class records, certificates, plans, and technical documents. Due diligence should also cover ownership, registered mortgages, liens, sanctions exposure, corporate authority, flag status, and financing requirements.

Memorandum of Agreement (MOA) - The Framework for Sale

The MOA sets out the framework for the sale. It identifies the parties, ship, price, deposit, inspection rights, delivery location, cancelling date, documentary obligations, default remedies, arbitration, and other terms. The MOA should be precise because small wording differences can create major disputes.

Key Components of the Memorandum of Agreement (MOA)

Parties Involved: The buyer may be a special purpose vehicle, while the seller is usually the registered owner.
Ship Description, Price, and Deposit: The ship must be identified clearly, and the price and deposit must be stated accurately.
Inspection: The MOA should state whether the sale is subject to inspection, already inspected, or without inspection.
Closing the Sale: Closing involves document exchange, payment, delivery, mortgage release, registry action, and signing of the Protocol of Delivery and Acceptance.

Document Exchange and Ship Delivery

Documentation: Documents may include Bill of Sale, corporate authorities, class confirmation, certificate of ownership, deletion certificate, no-encumbrance certificate, and registry documents.
Physical Delivery: Delivery occurs at the agreed place and time, usually confirmed by the Protocol of Delivery and Acceptance.
Payment: Payment and delivery must be synchronized so that the seller receives funds and the buyer receives title without unnecessary risk.

Conclusion

Buying and selling a ship requires legal accuracy, technical awareness, commercial discipline, and careful timing. Standard forms such as SALEFORM 2012 and SHIPSALE 22 provide structure, but the parties must still manage due diligence, inspection, financing, documents, registry formalities, and practical delivery. A smooth closing depends on preparation long before the delivery date.

Commercial Importance of Ship Sale and Purchase

Ship Sale and Purchase is commercially important because it reallocates shipping assets to the owners who can use them most effectively. A ship that is redundant for one owner may be ideal for another. A ship that is too old for a first-class charterer may still have value in another trade. A newbuilding resale may allow a buyer to obtain earlier delivery than ordering directly from a shipyard.

The S&P market also provides a price signal for the entire shipping industry. Ship values affect financing, loan-to-value ratios, company balance sheets, investor confidence, fleet renewal, demolition decisions, and newbuilding appetite. A strong secondhand market often encourages owners to sell older tonnage and order new ships. A weak market may discourage investment and push owners toward consolidation or recycling.

For shipbrokers, S&P transactions require patience and confidentiality. A sale may take weeks or months to conclude. Many discussions fail before reaching a firm offer. Buyers may inspect and reject. Sellers may withdraw if the market improves. Banks may delay financing. Registry documents may be incomplete. The broker must manage expectations and keep the transaction moving.

Practical Checklist for Ship Sale and Purchase

A practical checklist helps reduce mistakes in S&P transactions.

For Buyers:

define ship type, age, size, budget, and trading purpose
check current market values and comparable sales
inspect the ship physically where possible
review class records and survey status
check certificates and trading documents
verify ownership and registered encumbrances
arrange financing before delivery
prepare insurance and management
review MOA carefully with legal advisers
coordinate flag registration and mortgage registration

For Sellers:

prepare accurate ship particulars
collect certificate list and class status
resolve obvious documentary defects
decide marketing strategy with S&P Shipbroker
confirm minimum acceptable price
review tax and financing consequences
coordinate existing mortgage release
prepare Bill of Sale and corporate authorities
arrange delivery notices and closing documents
ensure crew and managers understand delivery plan

For Both Parties:

agree the MOA form and governing law
define inspection rights clearly
state deposit amount and escrow arrangements
agree delivery range and cancelling date
state bunkers and lubricating oils payment method
identify all delivery documents
coordinate closing time zones and banking cut-off times
check sanctions and compliance requirements
prepare Protocol of Delivery and Acceptance
avoid last-minute changes where possible

Conclusion: Ship Sale and Purchase

Ship Sale and Purchase is a core part of maritime business. It connects shipowners, investors, operators, banks, shipbrokers, lawyers, classification societies, managers, and registries in transactions that can reshape fleets and influence market direction. Whether the transaction involves demolition, newbuilding, secondhand tonnage, or resale, the process requires commercial judgment and careful execution.

The secondhand market remains the most active part of S&P because ships regularly move between owners during their trading lives. Buyers seek ships that match their commercial strategy, while sellers use the market to renew fleets, release capital, manage risk, or exit trades. S&P Shipbrokers play a central role by providing market intelligence, valuation guidance, buyer and seller access, negotiation support, and practical coordination.

Standard forms such as Norwegian Sale Form, SALEFORM 2012, and BIMCO SHIPSALE 22 provide the contractual framework, but the success of a transaction depends on more than the form. Accurate particulars, professional inspection, class review, clean documents, financing, escrow, registry coordination, mortgage release, and clear delivery procedures are all essential. In ship sale and purchase, preparation is the difference between a smooth closing and a costly dispute.