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S&P Guide Print E-mail

Guide to Sale and Purchase of International Tonnage

(Please note this is merely a guide and not definitive a list. Variations on this process are common with additions and omissions to suit the particular transaction. It is strongly recommended that buyers should seek legal council for their individual situation).


1. On decision to inspect Buyers should provide sellers/sellers agent with formal request to inspect.This should include:
• Full buyers details and background
• Name of inspectors, along with passport details
• Full inspectors itinerary, for inspection

2. Permission or invitation to inspect confirmed by sellers/sellers agent

3. Inspection conducted, preliminary report given to buyers by inspecting party, with full report to follow. As time is of essence an offer should be forthcoming ASAP.

4. Buyers Lawyer (highly recommend marine sale and purchase experienced) to draw up Memorandum of Agreement (M.O.A.) showing price offered and terms associated. The generally accepted instrument for the MOA is a BIMCO approved Norwegian Sales Form '93. Alternatively the broker can draw up a draft M.O.A. for negotiation purposes, with the final document scrutinised by buyers' lawyer before signing.

5. Submit offer to Sellers

6. Offer accepted or renegotiated until agreement is achieved.

7. On acceptance of offer with the MOA signed both ways, a 10% deposit should be placed in a Joint Escrow account or similarly neutral holding account immediately. This account is usually established with the sellers' first class bank.

8. Terms of the contract are enacted as per what has been agreed in the MOA e.g.
• Vessels is dry docked for underwater inspection
• Buyers representative is placed onboard for familiarization/finial inspection before hand over
• Calculation of bunkers and lubes remaining onboard (NOTE, these amounts are agreed to and paid for separately from the sale price of the vessel, unless specific arrangement has been made to incorporate in the sale price of the vessel).

9. Protocol of closing (order of events) is formulated (generally by the sellers) and agreed to by both parties
A protocol of delivery and acceptance is agreed to by both parties prior to closing

10. If any of the parties cannot physically attend the closing a representative needs to be nominated by way of Power of attorney. This power of attorney needs to be completed in preparation for closing.

11. Formal Notice of readiness is given to the Buyers by the Sellers at the specified time prior to delivery, Confirmation of class within 72 hours prior to delivery

12. CLOSING
Sellers to provide all documents specified in the MOA these are generally, but not limited to the following;
• Legal Bill of Sale duly notarized and attested, in a form acceptable to the Buyers
• Current Certificate of Ownership issued by the appropriate Flag state authority
• Confirmation of class within 72 hours prior to delivery
• Certificate issued by a competent authority stating the vessel is free from registered encumbrances
• Certification stating that the vessel has been deleted from the Sellers registry
• Invoice for remaining Bunkers and Lubes onboard at closing, amount as previously agreed.
• Any other certificates as previously requested by the Buyers

Buyers to provide all documents specified in the MOA. These are generally, but not limited to the following;
• Release letter to the Sellers bank for the jointly held deposit
• Evidence of the balance payment paid to Sellers account
• Original power of attorney documents
• Minutes of meeting by Buyers confirming their intention to purchase the vessel.
• Evidence of payment of the Bunkers and Lubes remaining on board as previously agreed on.
• Any other documents as requested by the Sellers.

Buyers and sellers will each sign all appropriate associated documentation at this time and the vessel will be formally handed over to the Buyers. From here the vessel is owned by the Buyers. All risk associated, harbor dues and other cost become the Buyers.


Purchasing a Vessel

Why Use a Shipbroker
Most vessels are traded locally so that the purchasing process can be no more complex than obtaining a legally binding sale and purchase agreement containing the price and conditions the buyer and seller have mutually accepted. This sounds simple and sometimes it is, but more than often, even this process can become complex and protracted. An experienced shipbroker can ease this process anticipating and pre-empting problems before they occur, standing between both parties to achieve the best result for both.

In more complex negotiations on larger tonnage there are laws relating to sale and purchase covering issues of dispute including validity of agreement, entitlement to commission, rejection of the vessel by the buyer, condition of the ship on delivery, validity of notice of readiness, description of the vessel, ramifications and significance and the effects of legislation on existing vessels, new buildings, construction or demolition ships. There is frequently classification or flagging issues that impinge on the sale of a ship and the terminology of international shipping is a language in itself.

Considerations When Purchasing
Owners are seldom totally satisfied with commissioned new builds so it follows that the purchase of a second hand vessel is invariably a compromise. Many ships are offered to us daily from all around the world. Far too many to be posted on our website or maybe we consider that they have no relevance in our market. Don’t hesitate to contact us if you fail to see the appropriate vessel. We have many others in our records.

As the South West pacific region is a small market, many vessels have to be sourced from other areas of the world. Various countries or regions are homes for the best ships of a generic type. ASL has contacts with owners and specialised brokers in these areas. We will be pleased to utilise these channels on your behalf based on genuine inquires. The international shipping business is highly sophisticated with good vessels been traded quickly. For maximum cooperation the credibility of the buyer is extremely important so these credentials need to be established at an early stage. Quick reaction to the availability of a likely candidate is normally required and ASL is in a position to promptly arrange an independent pre purchase survey in order that the acquisition process can be expedited.

Buyers contemplating purchase should have a clear idea of their budget, type of vessel they require and timing of its acquisition. There are also a number of contingency costs to be considered when buying from overseas including delivery, re-flagging, re registration and taxes as applicable. We are in a position to assist on all of these aspects via the expertise within our group.

Selling Your Vessel

Selling your vessel is a major consideration for ship owners. ASL is absolutely clear that its first obligations rest with you as the owner. We will work hard to achieve for you the best possible price in the shortest possible time by utilising one or several of the methods outlined below. You will want to know that your asset is being represented in the best possible light and that it receives maximum exposure so that you can quickly ascertain what the market is telling you.We achieve exposure through the national and international print media, selected associated brokers and our knowledge of the market in general, but by far the most effective sales tool is a clear well devised and easily navigated web site.

Ship broking websites range in quality with some being downright confusing. We believe that by posting as much information on your vessel as possible with a range of recent photographs, and if possible General Arrangement plans, on an easily navigated website, saves buyer’s time, generates interest and enhances the prospect of an early sale.

You Can Help
You can help by supplying us with the most comprehensive list of specifications you can pull together along with current digital photographs showing side, stern and bow profiles with a selection of deck, cabin and engine room shots displaying the best features of your vessel. While not always available, decipherable pictures of GA plans are very useful as are current ships certificates. Buyers will want to know these details eventually. To assist you we have prepared a comprehensive specification checklist for you to download (below) covering the most useful data. Fill in what you can and tell us a little about the vessels characteristics e.g. how does it punch or handle a seaway?

Sole Agencies
While we endeavour to give maximum exposure to all listings we are duty bound to give precedence to sole listings. As you will note we include a number of featured vessels on our home page with scrolling pictures with these vessels featured in our advertising and promotions. Sole agencies are more likely to receive this profiling. We do however assure all owners who give us general listings of our commitment to promote their vessels with professionalism and vigour.

Sales Strategies
ASL will appraise your vessel and advise you on the most appropriate means of promotion and sale. Most vessels are sold by:

  • Private treaty

i.e. the sale transacted on a willing buyer, willing seller basis via a broker through private negotiation and contract.


Other methods include:

  • Open or closed tender
A tender is a programme similar to an auction, with an increased level of marketing for which you as owner fund the additional promotional costs. A tender involves potential purchasers placing confidential bids for a vessel over a predetermined time span. The bids may or may not include conditions, and any bid can be accepted by the vendor, or the vendor can reserve the right to sell prior. This method is particularly effective when there is urgency associated with the disposal of a vessel as it induces a purchasing decision from interested parties while preserving the confidentiality of their offer and the vendor retains the ultimate right to sell.

  • Auction
Auction is the conclusion of a three to five week programme using a vigorous and high-profile marketing campaign usually funded by you as owner, targeting potential buyers who are frequently overseas. The sale of the vessel goes to the highest bidder or is passed in if the reserve price is not met. If the vessel is passed in the interest generated by the campaign generally results in a sale in the months following the auction.
  • Trading
Trading occurs when the vessel is traded or swapped, often for another vessel, but it could be any assets of part or similar value following the establishment and agreement of the value of all assets by both parties.