For the first time, BIMCO has produced its own ship sale and purchase agreement.
On 21 April 2022, BIMCO released a new standard contract for sale and purchase of vessels, SHIPSALE 22. It is clearly based on the familiar and widely used Saleform 2012 but there are a number of changes in details, rights and obligations, and time frames that should be carefully reviewed.
The box format found in other BIMCO contracts has been adopted in Part I of SHIPSALE 22. This section summarises the transaction information including key dates, amounts, inspection arrangements and more, enabling parties to find the commercial details at a glance. Part II contains the terms and conditions of the agreement and Part III deals with documents to be provided plus the protocol of delivery and acceptance.
The deposit clause in SALEFORM 2012 was amended from its previous version (SALEFORM 1993) to reflect market practice more closely, namely the increased use of a third party deposit holder in place of a joint account in the name of the buyer and seller held with either party’s bank. SHIPSALE 22 builds on this point further, with specific references to a separate deposit holding agreement between the buyer, seller and deposit holder.
A key addition in SHIPSALE 22 is the dedicated “subjects” clause that allows the parties to agree and document any specific conditions to be fulfilled before the agreement takes effect. If such conditions are not met by the specified date, the agreement is automatically null and void.
It is not uncommon for the performance of one or both parties under a sale/purchase agreement to be guaranteed by another entity, particularly where the party is a single-purpose entity. In SHIPSALE 22, a set of boxes and signature fields have been included to make it simpler to document such performance guarantees. Like Saleform 2012, SHIPSALE 22 (Clause 10) includes a warranty by the sellers that the vessel is delivered free of encumbrances. The wording has, however, been adjusted to explicitly cover any form of trading commitment as well as any form of arrest or restraint.
The deadline for exchange of drafts has been tightened in SHIPSALE 22: Where Saleform 2012 provided that drafts of sellers’ and buyers’ delivery documents should be exchanged no later than nine days before the intended date of readiness for delivery, SHIPSALE 22 stipulates five days after the first delivery notice, which in the standard form is to be sent 20 days before the intended date of readiness. Furthermore, SHIPSALE 22 provides that the buyers must specify any additional documents their intended registry requires within two days of receipt of the sellers’ earliest delivery notice, underscoring the importance of early contact with and pre-clearance of required documents with the intended registry.
One important change from SALEFORM 2012 is in the inspection clause. Previously, parties would have only two alternatives: that the buyer has inspected and accepted the vessel and her class records, or that the buyer will have the right to inspect the vessel and class records.
SHIPSALE 22 now includes a third option for the buyer expressly to waive an inspection of the vessel and Class records and accept them “as-is”. This may be a useful option for some transactions.
One specific point for clarification pertains to the changes to applicable law and dispute resolution. The prior SALEFORM 2012 allowed parties to select one of three clauses and cross out the two unused clauses, with the first option being choice of English law, the Arbitration Act of 1996 and London Maritime Arbitrators Association (LMAA) arbitration in London; the second option being New York law and arbitration in New York under the Society of Maritime Arbitrators (SMA); and the third option being a general choice of law clause with no arbitration provision. For the sake of clarity, the SHIPSALE 22 includes the BIMCO Law and Arbitration Clause 2020.