BIMCO And Norwegian Shipbrokers Association Adjust Sale Of Vessel Contract

WORLDWIDE – Since 1956 there has been an almost universally accepted contract form for the purchase of second hand vessels, freight or otherwise. The standard sales form, now known as SALEFORM 1993, has gone through several transformations since its introduction and is about to be examined again by the Baltic and International Maritime Council (BIMCO) and the Norwegian Shipbrokers’ Association (NSA) who, following consultation with the industry over the summer, have decided to revise it.

Both BIMCO and the NSA have formed Sub-committees composed of international experts with commercial and legal expertise in ship sale and purchase with the aim of completing the revision of SALEFORM 1993 by autumn 2011. BIMCO Chief Documentary Affairs Officer Grant Hunter advised the Handy Shipping Guide that both organisations will be taking a cautious approach to this revision as SALEFORM 1993 is a very well established and internationally used standard contract and many of its provisions have been tried and tested by the Courts.

With a document that is key to transactions that may be worth millions users obviously place great reliance on the existing wording. The committees will focus on areas where items are frequently amended and may require minor changes, a good example being the necessity to include a vessel’s IMO number. More substantive changes could include clarification of when banking days run if countries in different time zones are involved in the transaction and clearer provisions dealing with lodging the deposit and opening a joint account.

The BIMCO sub committee is due to discuss the matter on the 18th January and 3rd February after which they will have a clearer overview of the possible amendments to the form without damaging the flexibility of the document. The sub committee will also examine the “Aktor” judgement (PT Berlian Laju Tanker -v- Nuse Shipping) in respect of how the purchase price is paid in relation to the deposit under SALEFORM.

BIMCO is the largest of the international shipping associations representing 640 million dead weight tonnes, or about 65% of merchant shipping and Deputy Secretary General, Soren Larsen commented:

“SALEFORM 1993 is the universally accepted standard form for the sale and purchase of second hand vessels. The two strong messages we received from our global consultation process was that we should preserve the general concept of SALEFORM but that a modest update was required. We are confident that we can make this well-used form even better”.

He was supported by NSA Director Knut Frode Eriksen who said:

“We are very pleased that this important project is underway in a good co-operation with BIMCO and aim to publish the revised SALEFORM 2011 next year. The strong experience and expertise of the Sub-committees involved should ensure a revision that can be embraced by all parts of the industry.”