Sale and Purchase of Ship - Protection of Buyer

Protection of Buyer

There are some clauses under the sales Form protecting the interest of the buyer of ship. For example, the Clause 9 of Sale Form 1993 has provided some limited protection for the buyer. Under the clause 9, the seller has made the warrant that the vessel is free from all charters, encumbrances, mortgages and maritime liens or any other debts whatsoever at the time of delivery. The buyer can claim against the seller for all consequences of claims make against the vessel which have been incurred prior to the time of delivery. If the ship cannot settle down all the mortgages and other claim attached to the ship before the delivery, the buyer can discharge the purchase price to cover this part of claim. Normally, the buyer would also retain part of the payment for around six months to secure there is no any claims and Maritime Liens of the ship.

However, it is difficult for the buyer to terminate the contact even the vessel still have some encumbrances, mortgages or maritime liens at the time of delivery. Under the English law, the "warranty" is a contractual promise which is not the condition of the contract, so the innocent party can only entitle to claim for the damages but not terminate the contact if there is breach of warranty. Thus, it is difficult for the buyer to terminate the contract.