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Warning – Saleform 93 – new English judgement

In a new judgement High Court in London held that when a vessel is sold pursuant to the terms of Saleform 93, there is an implied term of the contract that the vessel shall be in satisfactory condition.

This requirement follows from the English Sale of Goods Act 1979, but the parties can agree that the implied term of satisfactory condition shall not apply. The judge held that Saleform 93 did not contain clear wording to exclude the term.

The general perception of sales made pursuant to Saleform 93 (and previous versions of Saleform) was that they were “as is” sales, and the buyer would not have any claim against the seller if it later turned out that the vessel had defects, i.e. that the vessel was not in a satisfactory condition.

In Saleform 2012 there is an entire agreement clause. It follows from the judgement that if this clause had been incorporated in the contract, the buyer would have no claim for defects on the vessel except for breach of other clauses of the contract, such as seller’s responsibility for average damage affecting class.

We would recommend that if our members are selling vessels, they should use Saleform 2012, or at least incorporate the terms in the sale contracts similar to the entire agreement clause in Saleform 2012. A warranty that the vessel is in satisfactory condition may cause the seller to incur significant loss.

If you have any questions regarding the above, please do not hesitate to contact us.