Topics to be covered:
THE SHIP
The knowledge of ship design and construction required of a Sale & Purchase broker is that which is necessary to communicate effectively with a potential buyer.
The fundamental differences between dry bulk cargo ships, general-purpose ships, liners) and tankers, including Ore/Oil and Ore/Bulk/Oil carriers.
The purpose also basic design and construction features of decks, holds, hatches, derricks, winches cranes and other cargo handling gear.
The terminology of measuring ships. Other dimensions used in ships including freeboard, draft, moulded depth, length overall, length between perpendiculars, beam extreme breadth.
The importance of displacement (especially light displacement) tonnage in ship sales for demolition. What information is contained in General Arrangement Plans.
The basic characteristics of a ship’s propulsion machinery also other machinery and equipment that may feature in ship sale negotiations.
The trends in ship development especially those which are affected by legislation and/or international convention (e.g. double skinned tankers). Be aware of perceptions of future developments which may affect a purchaser’s thinking.
GEOGRAPHY
The location of the main areas of current shipbuilding; be aware of the size, capabilities and specialisation of the major yards. The location of the major buyers of tonnage for demolition. Cargoes, trade routes and meteorological phenomena to the extent that these may influence the types and sizes of ships to be employed.
REGISTRATION AND CLASSIFICATION
The need for a ship to be registered. The differences between registration in the owner’s own country (flag state) and registration in another country (offshore registration). The differences between flags of convenience and “open registers” operated by traditional maritime nations. The advantages and disadvantages of each form of registration. The advantages both real and hoped-for arising out of the introduction of tonnage tax. How the S & P broker may become involved in changing a ship’s registration.
The need for a ship to be classified and what classification entails. The role and function of classification societies and the names of the principal societies. The membership of the International Association of Classification Societies (IACS) entails.
How an S & P broker may become involved in changing a ship’s classification.
THE PARTIES INVOLVED
How an S & P broker must be able to differentiate among the different types of shipowners – the Buyers and the Sellers - including individual entrepreneurial owners; limited companies large and small; divisions in conglomerates; investment groups which may purchase for immediate bareboat charter to an operator; shipping pools. The role and function of other major players in the S & P market including other brokers; ship breakers; charterers; bankers and other financiers.
The role and function of those who may become involved at the time of completion of a sale including lawyers; notaries; consuls; registrars; classification society representatives.
The structure of a typical S & P broker’s office and the importance of record-keeping.
MARKETS
The differences and interrelationships between the markets for newbuildings, second hand tonnage and demolition. How the information each requires differs in emphasis.
What factors influence the state (firmness or weakness) of the S & P Market generally and what factors influence each of these markets particularly.
What factors influence the chartering market and how these direct impinge on the second hand market and indirectly on the demolition market and how current views on the future of world economy affect the newbuilding market.
The influence on markets of external factors including natural catastrophes; political crises; environmental disasters; aid programmes.
How the markets for tramps, liners and tankers and how different countries may react to different factors.
The skill required to prepare and to interpret market reports including both statistical and written reports.
CONTRACTS AND DOCUMENTATION
The basic anatomy of an agreement to sell a ship and the essential differences depending upon whether it is for a newbuilding, a second hand ship or a ship destined for scrap.
The existence of all the standard Memorandums of Agreement in current use. The most widely used namely Norwegian Saleform.
Norwegian Saleforms in current use.
The practicalities of the inspection and dry-docking clauses and when these are customarily carried out
How to compile additional clauses when these are desirable to supplement or replace those in the printed form.
The role and function of all other documentation which buyers and sellers normally must produce at the time of completing the sale and the legal transfer of the ship. The issuing authorities for these documents. Representatives of other parties whose presence or electronic contact may be required at time of handover.
NEGOTIATION
The basics of firm offer and counter offer in the negotiating process and the manner in which it is customary for the two parties each having their respective brokers.
How to draft an opening offer encompassing all the principal’s requirements including the wording of any clauses not covered by the printed form and which may have to be specifically compiled. How the negotiating process leads to a conclusion necessitating a recapitulation together with a completion agenda. The various “subjects” particularly “subject inspection” which have to be lifted before the sale is finally complete. The manner in which a ship’s particulars are usually compiled when placing a ship on the market for sale.
The etiquette and ethics customary among S & P brokers including the commitment to clients when certain information has been requested and given.
FINANCE AND INSURANCE
The different ways a Buyer may raise the funds to finance the purchase.
The sources of such funds and the type of information such financiers will require.
The role and function of a mortgage when used as security for a loan to finance the purchase.
The procedures of leasing and bareboat chartering as methods of acquiring tonnage.
The effect of interest rates, foreign currency and currency fluctuation on the raising of finance and servicing the loan.
The manner in which the Seller’s and Buyer’s insurable risk changes as the negotiations progress and the importance of ensuring cover is obtained at the correct time. The providers of insurance including the role of a P & I Club.
VALUATIONS
The duties of a valuer in ship sale and purchase The reasons for and types of bodies requiring valuations.
The legal liabilities upon and protection needed by valuers. How a valuation is presented with particular attention to appropriate caveats.
The information upon which a valuation is based and the method of assessing a value.
LEGAL ASPECTS OF SALE AND PURCHASE
The legal position of the broker in S & P and the relationship with the principal.
The principle of the broker acting under the specific authority of the principal and the liability likely to arise if this authority is not acted upon meticulously.
What is involved in breach of warranty of authority both with and without negligence.
Understand what is implied with the words “free of all encumbrances and maritime liens”.
The importance of a valid Notice of Readiness and of the ship arriving within her cancelling date.
The principal areas of dispute including alleged misrepresentation in the description of the vessel, condition of the vessel on delivery, quantity of bunkers on delivery, alleged absence of items of equipment on delivery.
The Buyer is not obliged to give any reason for declining a ship on inspection.
The brokers right to a commission and the manner of ensuring this right is protected
The effect of international conventions and legislation on existing and new ships.