The Benefits of Slowing Down in Vessel Purchases

We understand the excitement associated with purchasing a new vessel, particularly with the Northern Hemisphere summer fast approaching. While the temptation to sign on the dotted line as quickly as possible is strong when you find the yacht of dreams, sometimes taking a few moments to obtain advice as to how to structure the transaction can save you headaches down the line.

Many vessel brokers and manufacturers have their own standard form contracts. The terms of these can be very favourable to them, putting unnecessary risk and procedural uncertainties on you as the buyer. With this in mind, we recommend you always engage an experienced maritime lawyer before signing any contract you have been provided. It is not uncommon to have fundamental processes like being able to reject a vessel after seatrials or having the purchase price held by a reputable third party until closing completely absent from contracts; clauses which provide you as buyer additional layers of security and protection.

Beyond this, it is common for vessels to be owned by a company that you have set up in an offshore jurisdiction. This provides a degree of protection to you as an individual from risk associated with the purchase and operation of the vessel, and can have additional benefits associated with importation and duties. If you decide that this is the way you want to hold your vessel, it can be a lot simpler and more cost effective to have the company set up and incorporated before you take delivery of the vessel rather than taking delivery yourself and then on-selling the vessel to your company.

These are only two of the reasons for not rushing into a vessel sale and purchase agreement; giving yourself time to review the agreement and ensure that the terms offer you an adequate level of protection is hugely important, as is making sure the right ownership arrangements are in place before you take delivery of the vessel.

Dawson & Associates are hugely experienced in the sale and purchase of a wide range of vessels, at varying price points, and provide expert advice in offshore company formation and different ownership arrangements.

If you are thinking about buying or selling a vessel, or have been given a contract by a broker or manufacturer and want advice on whether it offers you suitable protection, contact either Peter Dawson by email peter@maritimelaw.co.nz; phone +64 27 229 9624 or Troy Stade by email troy@maritimelaw.co.nz; phone +64 27 368 6730.