Important types of sale and purchase contracts: Norwegian Saleform, MOAs and negotiation tips for buying a ship.

davide ramponi
1. Jan. 2025
3 Min. Lesezeit

Aktualisiert: 12. März

My name is Davide Ramponi, I am 20 years old and I am currently doing an apprenticeship as a shipping agent in Hamburg. In my blog, I take you with me on my journey into the exciting world of shipping and share my knowledge, experiences and progress on my way to becoming an expert in the field of sale and purchase.

Detailed illustration of Sale and Purchase Contracts in shipping featuring a shipbroker at a desk reviewing contracts and legal documents. The desk is adorned with ship models, legal books, and a laptop, symbolizing the process of drafting and negotiating agreements like the Norwegian Saleform and MOAs. The background subtly includes a maritime port with cargo ships, emphasizing the shipping context and the importance of precise contracts for smooth transactions.

In the area of ship sale and purchase, contracts play a central role. They form the basis for smooth transactions and minimise the risk for all parties involved. In this article, I will explain the most important types of contracts, their structure and significance, as well as tips for successful negotiations.

The Norwegian Saleform (NSF) and its importance

The Norwegian Saleform (NSF) is one of the most commonly used contract standards in the sale and purchase sector. This contract, which was first introduced in 1956 and has since been updated several times, is known for its clarity and comprehensive coverage of the relevant aspects of a ship purchase.

Why is the NSF so important?
The NSF provides a standardised basis that is accepted by most industry players. It covers essential areas such as the purchase price, inspection rights, payment terms and handover arrangements. The current version, NSF 2012, reflects modern requirements and is often used as a benchmark for other contracts.

Other types of contracts: BIMCO and standardised MOAs

In addition to the Norwegian Saleform, there are other important types of contract:

BIMCO contracts

The Baltic and International Maritime Council (BIMCO) provides standardised contract templates that are specifically tailored to the needs of the shipping industry. These contracts are particularly popular for chartering and insurance, but can also be adapted for sale and purchase.

Standardised MOAs (Memorandum of Agreement):
An MOA is the fundamental agreement between the buyer and seller. Standardised MOAs, often based on the NSF, provide a solid foundation and minimise legal uncertainty.

Structure of a typical MOA

An MOA follows a clear and standardised structure that ensures all the essential aspects of a ship purchase are covered:

1. Identification of the parties:

The MOA begins by naming the parties involved – the buyer and the seller.
Clear identification is important to avoid misunderstandings or disputes.

2. Description of the vessel:

This is where details such as the vessel's name, IMO number, year of construction, size and condition are recorded.
An accurate description is crucial to ensure that the vessel meets expectations.

3. Purchase price and payment terms:

The MOA sets out the agreed purchase price, as well as the timeframe and terms of payment (e.g. down payments, final payments).

4. Inspection and delivery arrangements:

Details of the technical inspection, handover procedure and deadline for the transfer of ownership are set out here.

Tips for negotiations and common points of contention

Negotiations on the MOA can be challenging because both parties have different interests. Here are some tips:

Clarity of terms

Make sure that all clauses are clearly and unambiguously formulated to avoid misunderstandings later on.

Flexibility on contentious issues: Issues such as payment terms or liability for defects can be tricky. Flexibility and a willingness to compromise are crucial here.
Technical inspections: Disputes often arise about the condition of the ship. Precise and transparent inspection reports can help to minimise such conflicts.

Legal risks and how to minimise them

Ship purchase contracts carry legal risks that can be minimised through careful planning and professional support:

Consult lawyers: An experienced maritime lawyer can ensure that the contract meets all legal requirements and protects the interests of the buyer or seller.
Written documentation: oral agreements are risky. All agreements should be recorded in writing and become part of the contract.
Precise wording: unclear or vague wording can lead to disputes later on. Clear language and standards are crucial here.

Conclusion:

Contracts are at the heart of the sale and purchase process. From the Norwegian Saleform to other standardised MOAs, they provide a solid foundation to ensure smooth and legally compliant transactions. It is particularly exciting for me to learn how important these legal instruments are for success in the shipping industry.

Do you have questions about a specific contract or would you like to learn more about the practical application of the Norwegian Saleform? Write to me with your thoughts and experiences in the comments – I look forward to the exchange!