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Wednesday, 05 February 14
MARKET INSIGHT - TASOS PAPADOPOULOS
 KNOWLEDGE TO ELEVATE
COALspot.com: Let's take a break from market prospects, numbers, order book etc. and shed some light on the conclusions of the Tribunals in two recently decided cases, namely "The Union Power" and "The Griffon", which any prudent Seller/Buyer should be aware of before entering into an MOA for a secondhand tonnage. In "the Griffon" case an MoA based upon NSF 93 had been signed on 1st May 2010 for the purchase of m/v Griffon. A deposit of 10pct (i.e USD 2,156,000) was payable within 3 banking days of signature; that is by 5th May, 2010. The deposit was not paid by that date and Sellers, on 6th May, 2010 cancelled the MOA as per their express contractual right and claimed the deposit. Buyers had accepted that their failure to pay the deposit was in breach of contract but argued that Sellers should only be entitled to claim "compensation for losses" (as per clause 13 ) and not the whole deposit.
The Court of Appeal confirmed that Buyers are liable for the amount of the (unpaid) whole deposit, if the MOA is terminated as a result of Buyers’ breach. This heralds a departure from the previously held view that under clause 13 of NSF 93, where a Buyer fails to pay the deposit under clause 2, Sellers "shall have the right to cancel this Agreement, and they shall be entitled to claim compensation for their losses and for all expenses incurred together with interest" (which might be less than the amount of the deposit). During the arbitration it was argued that the damages recoverable by Sellers should be the difference between contract and market price which were said to be US$275,000; that is, substantially less than the deposit (i.e. USD 2,156,000). The Court however, concluded that Sellers are in fact entitled to claim the whole deposit in such circumstances.
Anyway, it would not make sense for Buyers to be able to put themselves in a better position than the one they would have been had they not paid the deposit. This case is a reminder to Buyers of secondhand tonnage that if they agree to pay a deposit, under standard NSF terms, they will lose the deposit if they fail to perform, even if Sellers suffer no loss. The case of "The Union Power" in turn, has caused us to re-assess the Sellers' obligation under clause 11 of NSF 93 (Condition on Delivery) and a different understanding of the terms "As is where is " and "As she was at the time of inspection". The MOA in this case, included clause 11 that stipulated that the vessel was to be “delivered and taken over as she was at the time of inspection, fair wear and tear excepted”. When the dispute arose, the buyers argued that a term as to satisfactory quality was to be implied into the MOA by way of s.14(2) of the Sale of Goods Act 1979 (SOGA). Sellers argued that the provision of clause 11, that the vessel was to be sold “as she was”, was inconsistent with implying such a term. The Commercial Court decided in favor of the Buyers, concluding that "class does not tell you the quality of the vessel, which is why the independent implied term as to satisfactory quality is required".
As a result, the effects of the expressions "As is" or "As is where is" no longer exclude the right of Buyers to claim for damages for breach of implied “quality” but only to exclude their right to reject the vessel and not take delivery of her as per the terms and provisions of the MOA. In my view, the above decision is contrary to the commercial common sense and market understanding that has been the basis for thousands of deals over the years.
However, it is worth mentioning that the new NSF 2012 includes wording under Clause 18 which excludes the SOGA regime. Ultimately, what matters is whether the parties have used express and clear wording, such as that of NSF2012, to exclude the SOGA regime if they wish to exclude the satisfactory quality rule.
Compiled by:
Intermodal Research & Valuations | research@intermodal.gr
Analysts:
Mr. George Lazaridis | g.lazaridis@intermodal.gr
Ms. Eva Tzima | e.tzima@intermodal.gr
Disclaimer and legal disclosure: For any further queries please do not hesitate to contact our Research & Valuations Department. The information contained in this report has been obtained from various sources, as reported in the market. Intermodal Shipbrokers Co. believes such information to be factual and reliable without making guarantees regarding its accuracy or completeness. Whilst every care has been taken in the production of the above review, no liability can be accepted for any loss or damage incurred in any way whatsoever by any person who may seek to rely on the information and views contained in this material. This report is being produced for the internal use of the intended recipients only and no re-producing is allowed, without the prior written authorization of Intermodal Shipbrokers Co.
Information contained within the website of COALspot.com is intended for informational purposes only and is not intended as professional counsel and should not be used as such.
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Wednesday, 12 March 14
DRY BULK VESSELS STILL THE CREAM OF THE CROP FOR SHIP OWNERS
Dry bulk carriers have remained the most popular vessel type among ship owners as proven by the sheer number of second hand vessel sales and new ...
Tuesday, 11 March 14
HOLD HARMLESS CLAUSES ARE NOT ALWAYS MUTUAL! - ITIC
KNOWLEDGE TO ELEVATE
ITIC provides an insurance related contract review service to all of its members. As the leading professional indemnity i ...
Tuesday, 11 March 14
NEWCASTLE SHIPPED 6.98% LESS COAL WEEK ON WEEK
COALspot.com: In the week ended 10 March 2014, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, total 2 ...
Tuesday, 11 March 14
INDONESIAN SUB-BITUMINOUS COAL SWAPS CONTINUES TO FALL
COALspot.com – Indonesia, the world’s largest exporter of the thermal coal's swaps for delivery April - June 2014 slip again thi ...
Monday, 10 March 14
API 8 CFR SOUTH CHINA COAL SWAPS LOST 4.28 PERCENT MONTH ON MONTH FOR Q2 DELIVERY
COALspot.com: API 8 CFR South China Coal swaps for average Q2 14 deliveries lost 4.28 percent month on month and closed at US$ 73.97 per mt as on Fr ...
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- Indonesian Coal Mining Association
- Medco Energi Mining Internasional
- Sical Logistics Limited - India
- GMR Energy Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- New Zealand Coal & Carbon
- LBH Netherlands Bv - Netherlands
- Iligan Light & Power Inc, Philippines
- Thai Mozambique Logistica
- Krishnapatnam Port Company Ltd. - India
- Posco Energy - South Korea
- Parliament of New Zealand
- Electricity Generating Authority of Thailand
- Jindal Steel & Power Ltd - India
- Energy Link Ltd, New Zealand
- Orica Australia Pty. Ltd.
- San Jose City I Power Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Australian Commodity Traders Exchange
- Neyveli Lignite Corporation Ltd, - India
- Wood Mackenzie - Singapore
- Latin American Coal - Colombia
- Singapore Mercantile Exchange
- Indian Energy Exchange, India
- Timah Investasi Mineral - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Billiton Holdings Pty Ltd - Australia
- Malabar Cements Ltd - India
- Ambuja Cements Ltd - India
- Vizag Seaport Private Limited - India
- Grasim Industreis Ltd - India
- Goldman Sachs - Singapore
- Economic Council, Georgia
- Mjunction Services Limited - India
- PowerSource Philippines DevCo
- SMG Consultants - Indonesia
- Electricity Authority, New Zealand
- Aboitiz Power Corporation - Philippines
- ICICI Bank Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Baramulti Group, Indonesia
- Xindia Steels Limited - India
- Bukit Makmur.PT - Indonesia
- Kideco Jaya Agung - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Essar Steel Hazira Ltd - India
- Mercuria Energy - Indonesia
- Interocean Group of Companies - India
- Toyota Tsusho Corporation, Japan
- Asmin Koalindo Tuhup - Indonesia
- Intertek Mineral Services - Indonesia
- Larsen & Toubro Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Mineral Development Corp Ltd - India
- Maheswari Brothers Coal Limited - India
- Kapuas Tunggal Persada - Indonesia
- The Treasury - Australian Government
- Holcim Trading Pte Ltd - Singapore
- Ministry of Finance - Indonesia
- Karaikal Port Pvt Ltd - India
- Renaissance Capital - South Africa
- Lanco Infratech Ltd - India
- Altura Mining Limited, Indonesia
- Trasteel International SA, Italy
- Bhoruka Overseas - Indonesia
- CIMB Investment Bank - Malaysia
- Samtan Co., Ltd - South Korea
- Jaiprakash Power Ventures ltd
- Mintek Dendrill Indonesia
- Aditya Birla Group - India
- Directorate Of Revenue Intelligence - India
- Semirara Mining and Power Corporation, Philippines
- PTC India Limited - India
- Indian Oil Corporation Limited
- Marubeni Corporation - India
- Petrochimia International Co. Ltd.- Taiwan
- SMC Global Power, Philippines
- Commonwealth Bank - Australia
- Mercator Lines Limited - India
- Energy Development Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Eastern Energy - Thailand
- Vedanta Resources Plc - India
- Ministry of Mines - Canada
- European Bulk Services B.V. - Netherlands
- GN Power Mariveles Coal Plant, Philippines
- Siam City Cement - Thailand
- Barasentosa Lestari - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Orica Mining Services - Indonesia
- Sindya Power Generating Company Private Ltd
- Bulk Trading Sa - Switzerland
- Indogreen Group - Indonesia
- VISA Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Ind-Barath Power Infra Limited - India
- IHS Mccloskey Coal Group - USA
- Chamber of Mines of South Africa
- Kartika Selabumi Mining - Indonesia
- Straits Asia Resources Limited - Singapore
- Heidelberg Cement - Germany
- Rio Tinto Coal - Australia
- Bangladesh Power Developement Board
- Leighton Contractors Pty Ltd - Australia
- Coal and Oil Company - UAE
- Eastern Coal Council - USA
- Ceylon Electricity Board - Sri Lanka
- Kumho Petrochemical, South Korea
- Alfred C Toepfer International GmbH - Germany
- Romanian Commodities Exchange
- Sakthi Sugars Limited - India
- Savvy Resources Ltd - HongKong
- PNOC Exploration Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Tata Chemicals Ltd - India
- Wilmar Investment Holdings
- Formosa Plastics Group - Taiwan
- Pipit Mutiara Jaya. PT, Indonesia
- TeaM Sual Corporation - Philippines
- Parry Sugars Refinery, India
- Merrill Lynch Commodities Europe
- London Commodity Brokers - England
- Bhushan Steel Limited - India
- Gujarat Electricity Regulatory Commission - India
- Anglo American - United Kingdom
- Minerals Council of Australia
- Kaltim Prima Coal - Indonesia
- Georgia Ports Authority, United States
- Petron Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Coalindo Energy - Indonesia
- Edison Trading Spa - Italy
- Global Green Power PLC Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Standard Chartered Bank - UAE
- Madhucon Powers Ltd - India
- Carbofer General Trading SA - India
- Power Finance Corporation Ltd., India
- Riau Bara Harum - Indonesia
- Chettinad Cement Corporation Ltd - India
- Australian Coal Association
- GVK Power & Infra Limited - India
- Sree Jayajothi Cements Limited - India
- Port Waratah Coal Services - Australia
- International Coal Ventures Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Attock Cement Pakistan Limited
- Independent Power Producers Association of India
- Tamil Nadu electricity Board
- Sinarmas Energy and Mining - Indonesia
- Deloitte Consulting - India
- Borneo Indobara - Indonesia
- Bhatia International Limited - India
- Thiess Contractors Indonesia
- Videocon Industries ltd - India
- Binh Thuan Hamico - Vietnam
- Central Java Power - Indonesia
- Central Electricity Authority - India
- Oldendorff Carriers - Singapore
- Salva Resources Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Planning Commission, India
- Kohat Cement Company Ltd. - Pakistan
- Sarangani Energy Corporation, Philippines
- Bharathi Cement Corporation - India
- Meenaskhi Energy Private Limited - India
- Cement Manufacturers Association - India
- Africa Commodities Group - South Africa
- Sojitz Corporation - Japan
- Banpu Public Company Limited - Thailand
- Therma Luzon, Inc, Philippines
- Gujarat Sidhee Cement - India
- Ministry of Transport, Egypt
- Kepco SPC Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Uttam Galva Steels Limited - India
- Antam Resourcindo - Indonesia
- Semirara Mining Corp, Philippines
- ASAPP Information Group - India
- Global Business Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Siam City Cement PLC, Thailand
- Indika Energy - Indonesia
- Dalmia Cement Bharat India
- MS Steel International - UAE
- OPG Power Generation Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- McConnell Dowell - Australia
- Karbindo Abesyapradhi - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- Star Paper Mills Limited - India
- Bukit Baiduri Energy - Indonesia
- The State Trading Corporation of India Ltd
- Agrawal Coal Company - India
- Price Waterhouse Coopers - Russia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Meralco Power Generation, Philippines
- IEA Clean Coal Centre - UK
- South Luzon Thermal Energy Corporation
- White Energy Company Limited
- Global Coal Blending Company Limited - Australia
- CNBM International Corporation - China
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kalimantan Lumbung Energi - Indonesia
- Makarim & Taira - Indonesia
- Pendopo Energi Batubara - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Manunggal Multi Energi - Indonesia
- The University of Queensland
- India Bulls Power Limited - India
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