CHAPTER XII SALE AND PURCHASE STEAMER'S Particulars Form-Sale Contract-Bill of Sale-Negotiations for Tonnage-Auction of Shipping Tonnage-New TonnageManaging Owner. THE sale and purchase of shipping property is more or less a specialized line of business, and there are in Great Britain firms who confine themselves to this class of work. In the majority of shipowning and shipbroking offices, however, matters of the sale and purchase of tonnage do frequently occur, and it is necessary, therefore, that a working knowledge of the procedure should be acquired by all engaged in shipowning and shipbroking. Some technical knowledge is essential to the sale and purchase broker; he must know something of the goods (ships) in which he deals. A buyer, before deciding to purchase a particular vessel, usually calls in a marine superintendent, engineer, or other expert, to inspect the vessel and advise as to her condition and capabilities, but, in the preliminary negotiations, various points crop up necessitating, on the part of the broker, a good general knowledge of the construction and main features of shipping property, in order to enable him to understand clearly the requirements of the prospective buyer, and discuss with him the suitability of any vessels proposed. The sale or purchase of a steamer or other vessel is seldom negotiated direct between a buyer and a seller, and the services of intermediaries are almost essential. An owner, whether a buyer or a seller, is not in touch with buyers or sellers of tonnage all over the world, whereas shipbrokers who make a speciality of sale and purchase business, have the machinery always at hand to track down in the minimum of time a prospective buyer or seller. An owner wishing to dispose of any of his vessels may let his desire be known openly in the market, but, more frequently, the information that an owner would sell is obtained by brokers in the course of conversation with the owner, or as a result of inquiries made to the owner on behalf of prospective purchasers of similar tonnage. A broker who has a purchaser for a particular type of vessel may approach one or more owners of such types to ascertain if they would consider sale, and, if the owner is prepared to do so, negotiations between the buyer and the seller may commence through the medium of the broker. An owner, definitely desirous of reducing his holding of tonnage, may make the fact known to one or more brokers of his acquaintance, or may confine himself to one particular broker, through whom all negotiations would pass. The broker selected is, presumably, one who is likely to bring off a satisfactory sale, either because of his wide connections, or his particular knowledge of the class of shipping property to be sold. The broker is furnished with full details of the steamer (typical steamer's particular form is given on p. 159), and, thereupon, proceeds to circularize the steamer, under her name (if authorized by owner) or under a folio number, in the quarters most likely to show response. The owner may object to the general circularization of his steamer, and permit the broker to put her before definite buyers only. In due course, the steamer will come before a possible buyer, who becomes so far interested in her as to request permission to inspect, or to make an offer "subject to inspection." The preliminary examination may be a more or less superficial one, or it may include the opening up of the machinery, etc.; sometimes, before a full examination is agreed, an offer " subject to inspection is made. Several offers and counter offers may pass between the parties, and, if terms and price are agreed, a sale contract " note, or agreement of sale, is drawn up, and signed by the buyer and the seller, and a deposit of 10 per cent of the purchase price is made by the buyer, which deposit is returnable in the event of the seller, on damage being found after bottom inspection in dry dock, exercising his option to cancel in place of repairing the damage. Steamer's Particulars Form. The particulars of a steamer submitted to a prospective buyer must be full, as a purchaser naturally requires to know all about the vessel proposed, before he can decide whether it would suit his requirements. Besides the various measurements of length, breadth, and depth, the sizes of the holds and the hatches, the gross and net tonnage, the deadweight, draught, and cubic capacity, the buyer will want to know the type, age, and condition of the boilers and machinery, the speed and consumption of coal or other fuel. The renewing of the boiler is a big consideration, and, where this is found necessary, the value of a ship to a purchaser is materially affected. The date when the vessel was put through survey is important, as, if she is due or about due for a survey, the buyer may have to face heavy expense in putting her through her survey. Sometimes a vessel is sold on the condition that the seller put her through survey. In connection with the issuing of "particulars of steamers," special note should be made of the qualifying statement always embodied in the "particulars" forms, or in letters covering particulars, to the effect that "the particulars are believed to be correct, but are not guaranteed." The need for this reservation is obvious, as, in the case of continual and occasionally careless handling of the particulars of steamers, errors in description may creep in, which might have serious results without this protecting clause. Sale Contract. . Sale contracts vary in detail, but in their essential features are all similar. A sale contract specifies that the vessel has been sold and purchased, with all stores for the sum of The buyer has generally inspected the hull and engines, but not the ship's bottom, before signing the sale contract, and the sale contract has usually a clause permitting the buyers to drydock the vessel so that the bottom may be inspected. If damage to the bottom is discovered after drydocking, the seller is given the option of making good the damage, or cancelling the contract. The cost of drydocking is for the buyer's expense, but if bottom damage be found on drydocking, and the seller elects to cancel the contract, then the cost of the drydocking is to be borne by him. The vessel and stores are to be taken over as they lie, without any allowance on account of weight, quality, errors of description in advertisements, circulars, etc., and to be at the buyer's risk and expense from the date of completion of sale. The sale is completed by the balance of the purchase money being paid by the buyer to the seller, and a bill of sale handed to the buyer in exchange by the seller. The seller guarantees that all debts against the vessel up to the date of taking over by the purchaser will be paid prior to the delivery of the vessel. If the buyer fails to pay the whole of the purchase money when and in the manner agreed, the seller may resell the vessel, the deposit made by the buyer is forfeited, and, in addition, the buyer is liable for the loss and expense of resale, with interest. On the other hand, if the seller does not produce within a specified time a legal bill of sale, or fails to deliver the vessel when and as agreed, he shall return buyer's deposit to him, with interest added, and compensation for the default, unless same should have arisen from events over which the seller had no control. The final clause states the amount of brokerage due, which is, as a rule, payable by the seller, and the complete form of the contract is shown on p. 161. The above are typical clauses in sale contracts, but there are considerable variations according to the agreement made between a particular buyer and a particular seller. Some of the clauses mentioned above may be omitted or modified, or additional clauses inserted to meet the particular exigencies of the case. It is customary for all sale contracts to have clauses governing the return of the deposit made on signing of sale contract, the time and method of payment of the balance of the purchase money, and conditions in regard to drydocking. Bill of Sale. It is mentioned in the sale contract exemplified that the balance of the purchase money is to be paid over in return for a bill of sale. This is a special form of document required by law under the Merchant Shipping Acts, when the sale of a ship takes place. This form contains certain particulars of the vessel-official number; name; number; date and port of registry; horse-power of engines (if a steamer); length, breadth, depth, gross and registered tonnage," and as described in more detail in the Certificate of the Surveyor and the Register Book." The document certifies that in consideration of the sum paid, |