How to secure your boat sale: a tip for brokers

A well-drafted contract will assist the sales process and help to secure your boat sale.

You may ask how is this possible? Usually the words ‘Boat Sales Contract’ are often considered as making the sale process more complicated. The starting point with securing a boat sale is to ensure that your contract meets the brokerages practical and legal requirements while being as fair as possible for both parties.

Fairness

In my opinion this can be a deal breaker for any broker trying to secure your boat sale. You’ve been working hard to capture your client and this process may have taken months with many phone calls; and finally the test sail is complete. Your clients are attending the office to start the legal process of signing the contract. They are sophisticated and familiar with contracts so it’s agreed that they do not need to take the contract to a lawyer.

This is where the sale can fail. If the contract is weighted too much in favour of the broker, that is, to over protect the broker at the cost of leaving the client completely exposed then it is likely the sale will not go through. Examples of this are numerous but can be as simple as not delivering the vessel or not transferring ownership in a timely manner, despite all payments being made.

The bottom line is that the broker wants to secure payment and the new owner wants to secure the safe purchase of the boat. In fact one of our recent contracts was put to the test. We were told, the client read the contract and stated this was a very fair contract and signed immediately. Our client told us that not only did the contract assist in sealing the deal but also it made the broker appear professional, instilling further confidence in the client that they were dealing with a reputable broker.

Practical Requirements

The practical requirements of a contract cover a wide range of considerations starting with the appearance of the document. The layout of the document should be simple and well spaced using a clear font. The numbering should be easy to follow and reference to the meanings of words and other clause used sparingly so as to minimise the toing and throwing between pages that can become confusing.

From our perspective the second page, after the cover sheet, should include all the relevant information so the parties can see at a glance the nuts and bolts.  Followed by the body that describes payment and the workings of the contract being in whatever format is required for example; in two columns, double sided or simply single sided in a single column.

Finally, any details such as payment plans, inventories or plans are added as annexures to the back of the contract and referenced to from the body of the contract. The benefit of this is that the body never changes and any variable information is contained in the front pages and annexures.

Ensuring these practical requirements are followed will ultimately assist you to secure your boat sale.

Legal Requirements

In essence, what is often misunderstood is that a contract is a conversation and the basic rule of this conversation is that, provided its legal the parties can agree to any thing. However, the contract’s terms cannot contract out of any statutory requirements. There are too many rules of this nature to describe. This is where our firm ensures not only are our contracts reflecting the agreements and parties expectation but are legal and enforceable.

In a worst-case scenario, we found while reviewing our client’s contract that they were openly stating in an annexure, using 30 Font that, ‘no warranties would be honoured or were available’. This statement and effect could have catastrophic for the business and led to criminal sanctions being brought against the broker. Fortunately we were able to advise him and changes were made before it was too late. It cannot stressed enough the importance of getting the legalese right for the contract is required generally only when things go wrong and it is in this moment that the contract should be as watertight as possible and assist in solving the problem.

A recent example 

Recently, our firm drafted a sales contract for a large boat brokerage situated on Sydney Harbour. The broker had contacted us seven days before the Sydney International Boat Show, in a panic, hoping we could assist. Three contracts were emailed to our office, one was an example of what was possibly required the other two contracts the broker presently relied upon. Not only were these documents badly drafted and deficient, but also both couldn’t be used in conjunction with each other to fix the brokers problems.

Fixing the problem wasn’t difficult, while our office is based in Newcastle; we assist clients all over the world, in some cases our work requires travel or simply phone or on-line communications will give us the required information to get started. Our initial approach is focused on what the client expects and what they can legally expect. Its important for our client to understand not only why a well-drafted usable contract is required but also how this occurs and what is involved in achieving the required outcome. Vaarzon-Morel Solicitors undertakes this process by way of a total review process.  Firstly, reviewing the structure of the business, how business is conducted and even considering the geography of the business that may affect delivery and servicing of warranties in the future.

Vaarzon-Morel Solicitors’ principal solicitor has a wealth of marine knowledge in the industry, having sailed all his life and with 35 marine commercial years under his belt. This means that not only is time saved in preparing and drafting any documents but that the contracts really speak to the needs of the broker. It’s this straightforward approach that results in a truly professional clean looking document.