Selling or buying ships involves huge costs and therefore must be executed by following the best practices that are internationally recognised. At present, the standard contract form used for the purchase or sale of ships internationally is the Norwegian sales form, the Japan shipping exchange form, and the Singapore ship sale form.
If we look at the main steps that any of the shipbroker companies in Norway follow in their day-to-day transaction, then we can divide them into four steps.
1). Negotiations:
Any leading shipbroker company in Norway offering broking services starts the process by negotiating with the concerned parties. If you want to sell a ship or want to buy a ship, then you should hire a shipbroker firm. There are many shipbroker companies in Norway and in other major countries in Europe, America, and Asia. In the first stage, the shipbroker firm will look for any suitable ships that are in the market for sale. Once such a ship is identified, then its technical details are shared with the client. Once the client approves the detail, then go-ahead is given to the brokers to conclude the deal.
2). Memorandum of agreement:
The next stage is to reduce the details of the agreement between the parties into writing. After the negotiation is concluded, then the brokerage firms after taking the approval of their clients follow any one of the three main internationally recognised standard form of sale of ships. At present, most companies prefer the Norwegian sales form (NSF) for buying or selling ships. Once the memorandum of agreement is signed, then the buyer has to deposit 10% of the cost of the ship or any other amount agreed between the parties in an escrow account within three banking days after the agreed date. In this stage, the buyer gets the right to inspect the ship and its legal documents. If during the inspection process, the buyer finds something amiss, then the agreement can be scrapped.
3). Closing:
At the agreed date of delivery, the seller has to bring the vessel at a place of delivery as agreed upon by the relevant clause of the contract. After this, the seller has to furnish a written notice of the readiness of the ship to the buyer. After that, relevant documents are exchanged between the parties. After getting the physical delivery of the ship, the buyer makes the payment through the escrow agent or through his own bank account on the same date. It is important that the vessel must be delivered in the same condition as it was found when inspected by the buyer. After that, a legal document confirming the date and time of the delivery is signed and exchanged between the buyer and the seller. If the buyer fails to pay the purchase price to the seller, then the seller has the right repudiate the memorandum of agreement and keep the deposit. On the other hand, if the seller fails to deliver the vessel on the agreed date, then the buyer has the option of cancelling the MoA and get back the deposit. At this point, the seller must confirm that the ship is free of any legal encumbrance. And in case it is discovered later that there are any claims against the ship prior to the delivery, then it has to be met by the seller.
4). After-sale:
After the ship is delivered to the new owner, then the seller should cancel the insurance policy taken against the ship as well as inform the relevant classification society about the change ownership of the vessel. The new owner of the ship can register the ship under the existing flag or do it under a new flag under its name. If the new owner changes the vessel’s flag, then he has to get a certification of deletion and a continuous synopsis record from the previous flag state authority. Additionally, the new owner has to take an insurance policy of the ship hand to notify the classification society about the date and time at which the new ship was purchased.
Conclusion:
If you are buying or selling a ship, then you have to clear a lot of legal hurdles. If you are not comfortable in dealing with the legal requirements, then it is important that you should hire a reputable shipbroker firm that will represent you in the buying or selling process. To know more about it, you should visit http://norshipsale.com
