The new version of the MYBA Memorandum of Agreement

Lawyer on Board

In this issue, we continue our analysis of the main changes to the 2021 MOA – Second Part

by Federico Santini* – photo by Guillaume Plisson

We reported in the previous issue on the introduction of the seller’s warranty in respect of the yacht’s VAT status. A second significant change concerns Clause 16 (INVENTORY), which relates to the inventory, i.e. the list of equipment, goods and spare parts included in the sale and which must therefore be delivered on board at the time of delivery of the yacht. In the previous version of the contract, the parties had 7 days from the signing of the MOA to agree the inventory, whereas in the new version the inventory must be agreed and signed by the parties together with the MOA, to which it becomes an annex. This change is certainly appropriate in order to avoid subsequent disputes, which are quite common in practice, concerning the absence on board of goods which the buyer has inspected on the occasion of the first visit on board.

CLAUSE 25 DEALS WITH THE DEPOSIT TO BE MADE
BY THE BUYER INTO THE DEPOSITARY’S BANK ACCOUNT AFTER THE SIGNING OF THE MOA.

Another amendment concerns Clause 17 (SEA TRIAL/CONDITION SURVEY), which has been incorporated with the provision that neither the sea trial nor the condition survey may commence until the interested party has confirmed to the seller and the buyer the receipt of the deposit. This amendment is also appropriate – and has often been included in the Special Conditions or in a separate addendum – particularly in cases where the date of completion of the sea trial and dry survey referred to in clause (9) is very close to the date of signing the MOA, so that the seller is indemnified for any damage to the yacht at sea or on shore that may be caused by the buyer’s actions, or for any expenses incurred by the buyer. Closely related are the amendments to Clause 25 (DEPOSIT), which governs the deposit to be paid by the Purchaser into the Participant’s bank account upon execution of the MOA.

Firstly, the reference to 10% of the sale price has been removed so that the parties will negotiate the amount of the deposit as any other commercial term. Second, the stakeholder’s obligation to inform the buyer and seller of the receipt of the deposit is introduced. Thirdly, the time limit of four working days within which the deposit must be paid by the buyer has been maintained, but the condition of prior compliance by the buyer and seller to provide the stakeholder with the anti-money laundering documentation referred to in Clause 40 – a new clause which will be discussed later – which is necessary for the stakeholder to legally receive the funds, has been added. Important changes have then been made to Clause 27 (CONDITION SURVEY), which sets out the terms and conditions of the survey and the notification of any defects found during the survey, for the purposes of any subsequent claim for rectification or reduction of the purchase price, or for the purposes of any rejection of the yacht.

photo by Guillaume Plisson for Imperial

Clause 27 governs the manner in which the dry check is to be carried out and the manner and time limits in which any defects discovered during the dry check are to be reported.

Firstly, the new wording clarifies the definition of the relevant “defect”, providing that it must be a defect (i) not disclosed in writing to the purchaser prior to the date of the MOA (and therefore accepted by the purchaser) and (ii) which, in the professional opinion of the surveyor, renders the yacht unseaworthy and/or affects the operational integrity of the yacht or its systems or machinery. Secondly, the new clause requires that any defects found must be certified in writing by the surveyor in a special statement (“Surveyor’s Statement”) to be attached to the buyer’s notice requesting their rectification or a reduction in the purchase price or, where appropriate, the rejection of the yacht. Thirdly, the right of the buyer, provided that the deposit has already been paid, to appoint an expert to take and analyse oil samples from the yacht’s main engines and generators in the presence of the yacht’s captain and/or chief engineer is expressly added. This is a practice already in place and is now expressly required as part of the Condition Survey. We will complete the analysis of the main changes introduced in the MOA in the next issue.