Sale and purchase of second-hand vessels


Published by a UUÂãÁÄÖ±²¥ Banking & Finance expert
Practice notes

Sale and purchase of second-hand vessels


Published by a UUÂãÁÄÖ±²¥ Banking & Finance expert

Practice notes
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This Practice Note considers a typical transaction involving the sale and purchase of a second hand commercial ship and in particular covers:

  1. •

    the main standard forms used in the market

  2. •

    the delivery process

  3. •

    transfer of title and risk

  4. •

    delivery free from encumbrances

  5. •

    the identity of the parties, and

  6. •

    the key considerations for financiers

For further information on the steps to be taken and the documentation required when acting for the buyer of a vessel to be registered in the UK, see: Shipping finance closure—checklist.

There are certain aspects of the sale and purchase of superyachts that notably differ from similar transactions involving commercial ships. For further detail on these, see Practice Note: Superyacht finance—sale and purchase of superyachts.

Memorandum of agreement

Many second hand ship sales are negotiated through sale and purchase brokers (widely known as 'S&P' brokers) on behalf of their principals. They will negotiate through a series of written exchanges culminating in what is commonly referred to as the 'recap'. Depending on its terms,

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Jurisdiction(s):
United Kingdom
Related legal acts:
Key definition:
Delivery definition
What does Delivery mean?

Delivery is defined in the sale of goods Act 1979, s 61(1) as the 'voluntary transfer of possession from one person to another' which is the point in time when the parties can be seen to have agreed that the legal right to possession of the goods passes from the seller to the buyer. A distinction must be made between the transfer of possession/delivery and the passing of title/ownership.

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