A Buyer’s Guide to Yacht Sales Contracts

Yacht sales contracts outline the responsibilities of the buyer and seller when ownership of a vessel is transferred for a financial consideration. They don’t necessarily have to be complex documents but can sometimes be difficult to understand. However, after reading this short primer, you will have no problems understanding standard clauses in boat sales contracts. In this guide, we will answer common questions such as “What are the key components of a yacht sales contract?”, talk about the protection contracts offer to buyers, and highlight many interesting features of standard sales contracts in the yachting industry.

KEY COMPONENTS OF A YACHT SALES CONTRACT

What are the key components of a yacht sales contract, and how should they be written? Typical yacht sales contracts issued by brokers, shipbuilders and agents across the globe normally include the following key components:

• Purchase Price

• Deposit

• Payment Schedule (if Applicable)

• Condition of Vessel

• Date, Time and Location of Sea Trials (if Applicable)

• Warranties

• Inspection Clause (if Applicable)

• Protection for Buyer and Seller / Penalty Clauses

In almost all cases, delivery terms will also form part of a yacht sales contract when buying a new or used vessel. Clarity and brevity are the marks of a well-written contract.

PROTECTIONS FOR BUYERS

What protections are offered to buyers in a yacht sales contract? Well, provisions for buyer protection are made in several of the clauses in standard yacht sales contracts. These include the deposit, condition and warranty clauses and may include sea trial and inspection clauses. For more expensive vessels, both new and previously owned, sea trials are normally recommended.

WARRANTIES IN YACHT SALES CONTRACTS

All new boat owners are keen to learn about the type of warranties the industry offers, and questions like “How are warranties defined and applied within yacht sales contracts?” are heard in brokers’ offices daily.

The type of warranties included in a yacht sales contract will depend on whether the vessel is new or used but may include cover for defects in materials and workmanship, mechanical faults, batteries and accessories. However comprehensive a boat warranty, it is unlikely to be longer than a year in duration, so you still need to inspect a new or used yacht very carefully before making a purchase.

INSPECTION CLAUSES

Inspection clauses state the rights of the buyer to inspect the vessel before purchase, with details of the date and times that access will be provided. While less common in contracts for smaller vessels, contracts covering the sale of larger, oceangoing yachts and superyachts generally include inspection clauses.

PAYMENT SCHEDULE STRUCTURE

In many cases, a deposit is paid upfront, and the balance is due when all details of a sale have been finalised. However, if the seller has agreed to a series of partial payments, the contract covering the sale should specify the amount of each payment and the date on which it is due.

BREACH OF CONTRACT

We are often asked what happens if either party breaches the terms of the yacht sales contract, and we always give the same answer: it depends on whether details of what occurs after a breach of contract have been included in the contract. Various penalty clauses may be included in a yacht sales contract, and these clauses are referred to when a breach occurs.

NEGOTIATING DELIVERY TERMS

A yacht sales contract should specify when, where and how delivery of the vessel is to be completed. It is one of the most important clauses in any boat sales contract, as once a yacht has been delivered, the title is considered to have passed from the seller to the buyer. Most importantly, it means that the new owner is now responsible for the vessel. For more information about delivery clauses, try searching for answers to questions such as “How are delivery terms negotiated in yacht sales contracts?” Alternatively, you are welcome to contact us by phone or email if you are interested in learning more about having a yacht delivered in Southeast Asia. 

CONCLUSION

There is no doubting the importance of a yacht sales contract when acquiring a new vessel, whether you are buying a new or previously owned boat. A well-written contract with unambiguous terms and conditions can make the process of buying a yacht significantly easier and less stressful.

If you would like to acquire a yacht in Asia and would appreciate the help of experienced brokers, contact Simpson Marine at [email protected] or WhatsApp us. An experienced representative will gladly discuss your thoughts and provide any advice and information to assist.