At the end of 2011, BIMCO approved, in consultation with the shipping industry, a new version of the memorandum of agreement for ship sale and purchase, SALEFORM 2012.
The revision process, undertaken by BIMCO and the Norwegian Shipbrokers' Association, sought to identify the key clauses most commonly amended, remove ambiguity from the previous version and reflect current commercial practice.
The principal differences between SALEFORM 2012 and its predecessor, SALEFORM 1993 are summarised below:
- Deposit arrangements have been modernised. Parties may choose their own percentage of the Purchase Price as the Deposit (or a default figure of 10% of the Purchase Price applies if not specified). A Deposit Holder is introduced (which may not necessarily be a bank, but with the default position being the appointment of the Seller's Bank if another entity is not specified) and the trigger for lodging the Deposit is more clearly fixed.
- The trigger for payment of Purchase Price is now tied into the issuing of the Notice of Readiness, with the Purchase Price being paid 3 Banking Days after the Notice of Readiness is tendered.
- Notice of Readiness provisions have been updated to include a requirement that notice is given at specified intervals of (i) the date on which the Notice of Readiness is intended to be given and (ii) the intended date and place of delivery to assist Buyers to make delivery arrangements.
- A new provision requires Buyers to declare their option to complete a divers inspection 9 days prior to delivery, which must take place in the presence of a Classification Society surveyor. A further revision ensures Sellers cannot tender Notice of Readiness before the divers inspection is completed. The allocation of costs in connection with the divers inspection is more clearly delineated.
- Cancelling Date - the time period for Buyers to accept or reject a new Cancelling Date (if the original Cancelling Date has been missed) has been shortened to three Banking Days.
- Any repairs necessary as a result of the divers inspection which do not affect class are now permitted to be deferred until the next scheduled drydocking. The Purchase Price will be reduced accordingly and the method of calculating such reduction is explained.
- The costs connected with survey of the tailshaft system have been clarified, and the perceived ambiguity in SALEFORM 1993 relating to costs of drydocking the Vessel has been addressed.
- Sellers must now more clearly identify spares and excluded items in clause 7. Further, hired items and those belonging to third parties on board at inspection which have not been excluded from the sale are to be replaced at Sellers' expense prior to delivery unless specifically excluded.
- The calculation method for bunkers and lubricating oils now offers two alternatives, being Seller's actual net price or current market price at port of delivery.
- Changes to clause 8 regarding documentation have been made largely to reflect market practice. In addition, the grace period to allow such documentation to be put in place following Notice of Readiness has been removed in clause 14.
- The scope of the Seller's warranty regarding encumbrances in clause 9 has been expanded.
- The Condition on Delivery clause now provides that the Vessel is to be delivered free of cargo and stowaways.
- Buyers' representatives on board will now be required to sign Sellers' P&I Club's standard letter of indemnity.
- The Arbitration provisions have been expanded in clause 16, particularly where the Agreement is to be governed by English law.
- New clauses to deal with Notices and Entire Agreement have also been added.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.