| Clause reference | Positive developments | General observations |
|---|---|---|
| Part I, Box 5 (Sellers’ Guarantor) | The Sellers’ Guarantor(s) can now be included in both Box 5 and the signature block. | Our view is that the language regarding guarantees contained in the signature block is insufficient as it only covers performance guarantees and not other financial guarantees and indemnification obligations. A well-advised Buyer or Seller should therefore insist on having the other side’s Guarantor sign up to a separate guarantee to be included in Box 25 (Subjects) that need to be lifted for the effectiveness of the Agreement. |
| Part I, Box 6 (Buyers’ Guarantor) | The Buyers’ Guarantor(s) can now be included in both Box 6 and the signature block. | Same comments as above re Box 5. |
| Part I, Box 8 (Inspection) | There is no presumption that an inspection has already been carried out if nothing is included in the Box. | |
| Part I, Box 10 (Deposit) | The amount of the deposit must be stated (unlike in NSF 2012, where a default 10% deposit applies if no amount is entered) | |
| Part I, Box 18 (Deposit) | This Box distinguishes between (i) Bunkers and (ii) Oils and Greases. This creates the option to exclude Bunkers in particular from the sale, especially in cases where the current Charterer is the Buyer and already owns said Bunkers. | |
| Part I, Box 19 (Documentary closing) | Box 19 provides the option for an electronic closing, which has increasingly become the norm as a result of the Covid-19 pandemic, better technology and a drive to keep costs down. | |
| Part I, Box 20 (Validity of class certificates) | Box 20 provides for the length of the validity of classification certificates, which we tend to see used in the case of older vessels, and is in the Buyers’ interest | |
| Part I, Box 25 (Subjects) | In Box 25, any relevant Subjects to the agreement can be entered. | |
| Part II, Clause 1 (Definitions and Interpretations) | By offering more definitions, SHIPSALE 22 is more precise and concise than NSF 2012. | |
| Part II, Clause 2 (Sale and Purchase) | The main obligations of Buyers and Sellers are summarised briefly and precisely. This clause can be pieced together from NSF 2012 through correct drafting, but requires jumping between clauses which is not user friendly. | |
| Part II, Clause 3 (Subjects) | The new text now makes it clear what happens if the Subjects are not lifted by the specified date, whereas NSF 2012 leaves this open to interpretation. | Paragraph (a) of this clause has not been drafted adequately for it to work as intended. The following sections of SHIPSALE 22 need to be effective at signing in order for Clause 3 to come into effect: Box 2, Box 3, Box 4, Box 25, Signature blocks, certain definitions in Clause 1(a), Clause 1(d), Clause 3 itself and, if electronically signed, Clause 27. In addition, as a matter of best commercial and legal practice, we believe that Clauses 23, 24 and 26 should also be effective at signing and dating and not be conditional on lifting Subjects. |
| Part II, Clause 4 (Purchase Price) | Some useful clarifications have been added to this clause, namely that: • the Included Items are stated; and • the Bunkers, Oils and Greases are not included in the Purchase Price. Whilst NSF 2012 does covers this, it does so across various clauses, so SHIPSALE 22 is simpler. | |
| Part II, Clause 5 (Deposit) | Clause 5 has also received some useful additions: • Clause 5(d) provides additional limbs for the start of the three Banking Day period; • Clause 5(d)(ii) is a new requirement that the Deposit Holding Agreement must be signed by all parties; • Clause 5(d)(iii) expands on NSF 2012 clause 2(ii) by adding that the Deposit Holder must have notified the parties that the Deposit Account is in all respects ready to receive the Deposit; and • Clause 5(d)(iii) includes detailed reasons allowing the Buyers to extend the period in which the deposit must be paid from 3 days to 5 days. | |
| Part II, Clause 6 (Inspection) | Clause 6 now contains all three possible variants for an inspection: • the inspection has already taken place; • the Buyers still have a right to inspection; and • the Buyers waive their inspection right entirely. Clause 6(b)(v) extends the deadline for acceptance after the inspection to 5 days compared to 72 hours under NSF 2012. | |
| Part II, Clause 7 (Buyers’ On-board Representatives) | This clause broadly follows NSF 2012 with no notable amendments or additions. | |
| Part II, Clause 8 (Underwater Inspection) | Clause 8 does not stipulate a 9 nine-day period for exercising the option to perform an underwater inspection ("UWI") before Notice of Readiness is given. Instead, it is suggested that any UWI should be at the place of delivery, in line with the current practice of conducting UWIs close to delivery and then obtaining a Sellers' letter of confirmation that the Vessel has not touched bottom since the UWI. | |
| Part II, Clause 9 (Drydock Inspection) | The only notable change from NSF 2012 is the automatic extension of the Cancelling Date if, as a result of a Drydock Inspection, the Vessel has to be repositioned, (up to 21 days’ extension, compared to 14 in NSF 2012). | |
| Part II, Clause 10 (Condition of Vessel at Delivery) | Clause 10 is an expanded combination of Clauses 9 and 11 of NSF 2012. | |
| Part II, Clause 11 (Delivery Notices) | There is no distinction between "approximate" and "definite" notices. This is likely to be a welcome change and reflects how delivery dates often change due to environmental conditions and the practicalities of getting a Vessel physically and documentarily ready for closing. | Although paragraph (e) of this clause stipulates that “Notice of Readiness shall not be given later than the Cancelling Date” our view is that this could and should have gone further by including some wording to address a clarification. |
| Part II, Clause 12 (Vessel Delay) | This broadly reflects paragraph (c) of Clause 5 of NSF 2012 with no notable amendments or additions. | |
| Part II, Clause 13 (Bunkers, Oils and Greases) | This clause has been updated to reflect the standard commercial practice that the quantities of the Bunkers, Oils and Greases are determined by a joint survey, and also that said survey must be completed prior to Delivery. | |
| Part II, Clause 14 (Payments) | This clause includes an additional gross-up provision which is not expressly included in NSF 2012. | In our view, it would have been useful to include optional drafting for scenarios where an escrow arrangement is used for payment of the balance of the Purchase Price, as such gross-up language is typically included in most well-drafted escrow agreements. |
| Part II, Clause 15 (Delivery Documents) | Clause 15 requires the exchange of copies of the Delivery Documents no later than 5 days after the first delivery notice. This is a new requirement compared to NSF 2012, though a similar timeframe is typically included in addendums to NSF 2012 when one was drafted to address the exchange of - and agreement on – the respective parties' delivery documents. | |
| Part II, Clause 16 (Delivery) | SHIPSALE 22 provides for both electronic and physical closing, which is a useful and practical solution reflecting recent market practice. | Paragraph (d), however, requires 2 "originals" of the protocol of delivery and acceptance be exchanged at Delivery, which is not be possible if closing occurs electronically. To avoid any potential dispute over the time of delivery, our suggestion is that the protocol of delivery and acceptance should always be executed at the documentary closing and not at physical delivery, and duplicate protocols of delivery and acceptance should absolutely not be used. |
| Part II, Clause 17 (Post-Delivery Obligations) | The principal change is stylistic. | |
| Part II, Clause 18 (Sellers’ Termination Rights) | This clause is different from NSF 2012 in that the amount of compensation Sellers can claim from Buyers in excess of the Deposit is limited to "direct losses and expenses". NSF 2012 does not provide for this distinction. | |
| Part II, Clause 19 (Buyers’ Termination Rights) | The same addition described in Clause 18 has been made in Clause 19(b) in respect of Buyers’ Termination Rights. | |
| Part II, Clause 20 (Total Loss) | There are no notable amendments or additions to these provisions. | |
| Part II, Clause 21 (Sanctions) | SHIPSALE 22 contains BIMCO's standard sanctions wording which, if breached, entitles the non-breaching party to cancel the agreement and claim damages. | |
| Part II, Clause 22 (Anti-Corruption) | This is a new clause, which follows BIMCO’s standard anti-corruption wording. | |
| Part II, Clause 23 (Confidentiality) | This is a new clause, not seen in NSF 2012, that reflects the commercial reality that parties often want to keep details of a sale confidential at least until completion. | |
| Part II, Clause 24 (BIMCO Electronic Signature Clause 2021) | This is a new clause which addresses the electronic signing of documents, reflecting recent market practice, especially since COVID-19. | |
| Annex A: Delivery Documents | Still not included is a procedure for the exchange of Delivery Documents in case of an electronic closings, which appears to be an unfortunate omission, in particular in light of the inclusion of the new Box 19 and relevant wording in Clauses 16 and 27. The List of Sellers' (Part 1) and Buyers' (Part 2) Delivery Documents are almost identical in wording to the documents required under Clause 8 of NSF 2012. |
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| Annex B: Excluded Items List | Annex B is left blank for the parties to insert the excluded items on a case-by-case basis. |
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