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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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Monday, 10 March 14
THE FREIGHT MARKET WAS QUITE FIRM THIS PAST WEEK
COALspot.com: The freight market was quite firm this past week with BDI sharply increased by 22.65 pct week on week and closed at 1543 points, while ...
Saturday, 08 March 14
LETTERS OF INDEMNITY - SKULD
KNOWLEDGE TO ELEVATE
In today's trading market, owners are frequently requested to accept a letter of indemnity (LOI) in exchange for complying ...
Friday, 07 March 14
DRY BULK MARKET TO BENEFIT FROM CHINA'S GDP GROWTH TARGET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
With the dry bulk market freight rates finally making waves, China's aim of 7.5% GDP growth for 2014 mean once again positive news for the shipping ...
Friday, 07 March 14
RBCT, WORLD'S LARGEST COAL EXPORTING TERMINAL SHIPPED 1.78% LESS COAL MONTH ON MONTH
COALspot.com: South Africa's Richards Bay Coal Terminal (RBCT) the single largest export coal terminal in the world, shipped 4.487 million tons of ...
Friday, 07 March 14
INDONESIA SHIPPED 7% LESS COAL IN JANUARY 2014 COMPARED TO ITS DECEMBER EXPORTS
COALspot.com: Indonesia, the world 4th largest coal producer and the Global largest multi grade coal exporter shipped around $1.8* billion ...
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- Cigading International Bulk Terminal - Indonesia
- Independent Power Producers Association of India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Manunggal Multi Energi - Indonesia
- Sojitz Corporation - Japan
- Barasentosa Lestari - Indonesia
- OPG Power Generation Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Mercuria Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bharathi Cement Corporation - India
- Directorate Of Revenue Intelligence - India
- Interocean Group of Companies - India
- Bhatia International Limited - India
- Lanco Infratech Ltd - India
- Chettinad Cement Corporation Ltd - India
- Cement Manufacturers Association - India
- London Commodity Brokers - England
- Metalloyd Limited - United Kingdom
- Leighton Contractors Pty Ltd - Australia
- Bangladesh Power Developement Board
- Wilmar Investment Holdings
- Coalindo Energy - Indonesia
- Intertek Mineral Services - Indonesia
- IHS Mccloskey Coal Group - USA
- Ministry of Transport, Egypt
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Vizag Seaport Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Agrawal Coal Company - India
- Bhoruka Overseas - Indonesia
- Global Green Power PLC Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- South Luzon Thermal Energy Corporation
- Australian Commodity Traders Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Uttam Galva Steels Limited - India
- Indo Tambangraya Megah - Indonesia
- IEA Clean Coal Centre - UK
- Billiton Holdings Pty Ltd - Australia
- Mjunction Services Limited - India
- GMR Energy Limited - India
- GVK Power & Infra Limited - India
- Planning Commission, India
- Star Paper Mills Limited - India
- Videocon Industries ltd - India
- Samtan Co., Ltd - South Korea
- Orica Mining Services - Indonesia
- Posco Energy - South Korea
- Heidelberg Cement - Germany
- TeaM Sual Corporation - Philippines
- New Zealand Coal & Carbon
- Sical Logistics Limited - India
- Ministry of Finance - Indonesia
- Dalmia Cement Bharat India
- Ministry of Mines - Canada
- Jorong Barutama Greston.PT - Indonesia
- Georgia Ports Authority, United States
- Simpson Spence & Young - Indonesia
- ASAPP Information Group - India
- Karaikal Port Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Aditya Birla Group - India
- Central Java Power - Indonesia
- Riau Bara Harum - Indonesia
- Ceylon Electricity Board - Sri Lanka
- CNBM International Corporation - China
- Oldendorff Carriers - Singapore
- Rio Tinto Coal - Australia
- Central Electricity Authority - India
- Miang Besar Coal Terminal - Indonesia
- Savvy Resources Ltd - HongKong
- Merrill Lynch Commodities Europe
- GAC Shipping (India) Pvt Ltd
- Altura Mining Limited, Indonesia
- Banpu Public Company Limited - Thailand
- Siam City Cement - Thailand
- Bayan Resources Tbk. - Indonesia
- McConnell Dowell - Australia
- Kideco Jaya Agung - Indonesia
- Formosa Plastics Group - Taiwan
- Eastern Coal Council - USA
- Indogreen Group - Indonesia
- Malabar Cements Ltd - India
- VISA Power Limited - India
- Wood Mackenzie - Singapore
- Electricity Authority, New Zealand
- Renaissance Capital - South Africa
- San Jose City I Power Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- Latin American Coal - Colombia
- Thiess Contractors Indonesia
- International Coal Ventures Pvt Ltd - India
- Borneo Indobara - Indonesia
- Energy Link Ltd, New Zealand
- Gujarat Sidhee Cement - India
- PowerSource Philippines DevCo
- Salva Resources Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Singapore Mercantile Exchange
- Sakthi Sugars Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- ICICI Bank Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Ind-Barath Power Infra Limited - India
- Aboitiz Power Corporation - Philippines
- Standard Chartered Bank - UAE
- Directorate General of MIneral and Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petron Corporation, Philippines
- Madhucon Powers Ltd - India
- Bukit Baiduri Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Holcim Trading Pte Ltd - Singapore
- Maheswari Brothers Coal Limited - India
- Carbofer General Trading SA - India
- Neyveli Lignite Corporation Ltd, - India
- Energy Development Corp, Philippines
- Minerals Council of Australia
- Asmin Koalindo Tuhup - Indonesia
- Global Coal Blending Company Limited - Australia
- SMC Global Power, Philippines
- Bhushan Steel Limited - India
- Vedanta Resources Plc - India
- Attock Cement Pakistan Limited
- Semirara Mining Corp, Philippines
- Port Waratah Coal Services - Australia
- Romanian Commodities Exchange
- MS Steel International - UAE
- PNOC Exploration Corporation - Philippines
- Eastern Energy - Thailand
- SMG Consultants - Indonesia
- Straits Asia Resources Limited - Singapore
- Indian Oil Corporation Limited
- Parry Sugars Refinery, India
- Marubeni Corporation - India
- Semirara Mining and Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Indian Energy Exchange, India
- Africa Commodities Group - South Africa
- Binh Thuan Hamico - Vietnam
- Meralco Power Generation, Philippines
- Larsen & Toubro Limited - India
- Kumho Petrochemical, South Korea
- PTC India Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Chamber of Mines of South Africa
- Deloitte Consulting - India
- Kartika Selabumi Mining - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Gujarat Electricity Regulatory Commission - India
- Vijayanagar Sugar Pvt Ltd - India
- Indonesian Coal Mining Association
- Iligan Light & Power Inc, Philippines
- Siam City Cement PLC, Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Trasteel International SA, Italy
- Electricity Generating Authority of Thailand
- The University of Queensland
- Therma Luzon, Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Baramulti Group, Indonesia
- Timah Investasi Mineral - Indoneisa
- Edison Trading Spa - Italy
- Globalindo Alam Lestari - Indonesia
- Australian Coal Association
- Global Business Power Corporation, Philippines
- Economic Council, Georgia
- Kapuas Tunggal Persada - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Anglo American - United Kingdom
- Coastal Gujarat Power Limited - India
- CIMB Investment Bank - Malaysia
- Tamil Nadu electricity Board
- Goldman Sachs - Singapore
- Coal and Oil Company - UAE
- Bukit Makmur.PT - Indonesia
- Grasim Industreis Ltd - India
- European Bulk Services B.V. - Netherlands
- Karbindo Abesyapradhi - Indoneisa
- Mintek Dendrill Indonesia
- Jaiprakash Power Ventures ltd
- Jindal Steel & Power Ltd - India
- Meenaskhi Energy Private Limited - India
- Tata Chemicals Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- PetroVietnam Power Coal Import and Supply Company
- Xindia Steels Limited - India
- Kaltim Prima Coal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Ambuja Cements Ltd - India
- Essar Steel Hazira Ltd - India
- Indika Energy - Indonesia
- Medco Energi Mining Internasional
- Alfred C Toepfer International GmbH - Germany
- India Bulls Power Limited - India
- Makarim & Taira - Indonesia
- White Energy Company Limited
- Antam Resourcindo - Indonesia
- Thai Mozambique Logistica
- Sindya Power Generating Company Private Ltd
- Mercator Lines Limited - India
- Sarangani Energy Corporation, Philippines
- The Treasury - Australian Government
- Pendopo Energi Batubara - Indonesia
- Commonwealth Bank - Australia
- Parliament of New Zealand
- Toyota Tsusho Corporation, Japan
- The State Trading Corporation of India Ltd
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