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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.
If you believe an article violates your rights or the rights of others, please contact us.
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Friday, 07 March 14
INDONESIA TO PRODUCE 421 MMT OF COAL IN 2014
Coalspot.com: Indonesia finally agreed to increased 2014 coal output by as much as 6 percent to 421 million metric tons from its previous plan, a se ...
Friday, 07 March 14
US PRODUCED 19.4 MMST OF COAL IN PAST 7 DAYS, SAYS EIA
COALspot.com – United States the world’s second largest coal producer, produced approximately 19.4 million short tons (mmst) of coal in ...
Thursday, 06 March 14
PANAMAX MARKET IS STRUGGLING IN BOTH HEMISPHERES - FEARNRESEARCH
Handy
The Handy/Supra market experienced a rate increase in the Pacific. The activity itself is not too big, but spot tonnage is clearing up and ow ...
Wednesday, 05 March 14
THE BIG BULKERS HAVE IN FACT WITNESSED SIGNIFICANT IMPROVEMENTS IN BOTH BASINS
The BDI continues to gain back some of the lost ground, although in reality there isn't a lot to celebrate abou ...
Wednesday, 05 March 14
LEAVE IT TO CAPES TO CHANGE THE DIRECTION OF THE DRY BULK MARKET - INTERMODAL
Chartering (Wet: Stable- / Dry: Stable+)
Leave it to Capes to change the direction of the Dry Bulk market. The big bulkers managed to drag the BDI ...
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- Central Electricity Authority - India
- Aboitiz Power Corporation - Philippines
- GMR Energy Limited - India
- The Treasury - Australian Government
- Port Waratah Coal Services - Australia
- Mercator Lines Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coal and Oil Company - UAE
- Sojitz Corporation - Japan
- Essar Steel Hazira Ltd - India
- Global Business Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Holcim Trading Pte Ltd - Singapore
- Global Green Power PLC Corporation, Philippines
- Star Paper Mills Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Trasteel International SA, Italy
- Sree Jayajothi Cements Limited - India
- ICICI Bank Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Edison Trading Spa - Italy
- Jaiprakash Power Ventures ltd
- Timah Investasi Mineral - Indoneisa
- Heidelberg Cement - Germany
- Gujarat Electricity Regulatory Commission - India
- SMC Global Power, Philippines
- Sinarmas Energy and Mining - Indonesia
- Grasim Industreis Ltd - India
- PowerSource Philippines DevCo
- Sindya Power Generating Company Private Ltd
- Billiton Holdings Pty Ltd - Australia
- Ind-Barath Power Infra Limited - India
- Pendopo Energi Batubara - Indonesia
- London Commodity Brokers - England
- Power Finance Corporation Ltd., India
- Attock Cement Pakistan Limited
- Barasentosa Lestari - Indonesia
- Central Java Power - Indonesia
- Chettinad Cement Corporation Ltd - India
- Anglo American - United Kingdom
- Oldendorff Carriers - Singapore
- Kaltim Prima Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- Antam Resourcindo - Indonesia
- Bhoruka Overseas - Indonesia
- Thiess Contractors Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Madhucon Powers Ltd - India
- Rio Tinto Coal - Australia
- Bhushan Steel Limited - India
- Banpu Public Company Limited - Thailand
- Electricity Generating Authority of Thailand
- Energy Development Corp, Philippines
- McConnell Dowell - Australia
- Electricity Authority, New Zealand
- Commonwealth Bank - Australia
- Iligan Light & Power Inc, Philippines
- Intertek Mineral Services - Indonesia
- The State Trading Corporation of India Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Parliament of New Zealand
- MS Steel International - UAE
- Planning Commission, India
- Carbofer General Trading SA - India
- Karaikal Port Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- LBH Netherlands Bv - Netherlands
- India Bulls Power Limited - India
- Gujarat Sidhee Cement - India
- Malabar Cements Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- The University of Queensland
- San Jose City I Power Corp, Philippines
- Africa Commodities Group - South Africa
- CIMB Investment Bank - Malaysia
- Energy Link Ltd, New Zealand
- Ambuja Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- Mjunction Services Limited - India
- ASAPP Information Group - India
- Kapuas Tunggal Persada - Indonesia
- New Zealand Coal & Carbon
- Karbindo Abesyapradhi - Indoneisa
- Posco Energy - South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Indika Energy - Indonesia
- Mercuria Energy - Indonesia
- Videocon Industries ltd - India
- PTC India Limited - India
- White Energy Company Limited
- Singapore Mercantile Exchange
- Tamil Nadu electricity Board
- Straits Asia Resources Limited - Singapore
- Indonesian Coal Mining Association
- Wilmar Investment Holdings
- Savvy Resources Ltd - HongKong
- IHS Mccloskey Coal Group - USA
- South Luzon Thermal Energy Corporation
- Riau Bara Harum - Indonesia
- Simpson Spence & Young - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Sarangani Energy Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Kumho Petrochemical, South Korea
- Bulk Trading Sa - Switzerland
- PNOC Exploration Corporation - Philippines
- Xindia Steels Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Uttam Galva Steels Limited - India
- Minerals Council of Australia
- Samtan Co., Ltd - South Korea
- Globalindo Alam Lestari - Indonesia
- Goldman Sachs - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bhatia International Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- IEA Clean Coal Centre - UK
- Ministry of Finance - Indonesia
- Economic Council, Georgia
- Aditya Birla Group - India
- Vizag Seaport Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- Metalloyd Limited - United Kingdom
- Leighton Contractors Pty Ltd - Australia
- Ministry of Transport, Egypt
- Romanian Commodities Exchange
- Kepco SPC Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Orica Mining Services - Indonesia
- GVK Power & Infra Limited - India
- Altura Mining Limited, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Standard Chartered Bank - UAE
- Meenaskhi Energy Private Limited - India
- Eastern Energy - Thailand
- Maheswari Brothers Coal Limited - India
- Coastal Gujarat Power Limited - India
- Mintek Dendrill Indonesia
- Petron Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Latin American Coal - Colombia
- Indian Oil Corporation Limited
- International Coal Ventures Pvt Ltd - India
- Cement Manufacturers Association - India
- Indogreen Group - Indonesia
- Coalindo Energy - Indonesia
- Thai Mozambique Logistica
- Price Waterhouse Coopers - Russia
- Offshore Bulk Terminal Pte Ltd, Singapore
- GAC Shipping (India) Pvt Ltd
- SN Aboitiz Power Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Parry Sugars Refinery, India
- Salva Resources Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Tata Chemicals Ltd - India
- Eastern Coal Council - USA
- Manunggal Multi Energi - Indonesia
- Ministry of Mines - Canada
- Cigading International Bulk Terminal - Indonesia
- Sakthi Sugars Limited - India
- Indo Tambangraya Megah - Indonesia
- Australian Coal Association
- Marubeni Corporation - India
- Sical Logistics Limited - India
- Bangladesh Power Developement Board
- Merrill Lynch Commodities Europe
- Siam City Cement - Thailand
- Miang Besar Coal Terminal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Dalmia Cement Bharat India
- Kalimantan Lumbung Energi - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Lanco Infratech Ltd - India
- Global Coal Blending Company Limited - Australia
- Independent Power Producers Association of India
- Interocean Group of Companies - India
- Chamber of Mines of South Africa
- CNBM International Corporation - China
- Indian Energy Exchange, India
- Deloitte Consulting - India
- Bukit Makmur.PT - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bharathi Cement Corporation - India
- Makarim & Taira - Indonesia
- Agrawal Coal Company - India
- SMG Consultants - Indonesia
- OPG Power Generation Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- European Bulk Services B.V. - Netherlands
- Meralco Power Generation, Philippines
- Kartika Selabumi Mining - Indonesia
- Borneo Indobara - Indonesia
- Orica Australia Pty. Ltd.
- Gujarat Mineral Development Corp Ltd - India
- Medco Energi Mining Internasional
- Alfred C Toepfer International GmbH - Germany
- Ceylon Electricity Board - Sri Lanka
- Petrochimia International Co. Ltd.- Taiwan
- Larsen & Toubro Limited - India
- VISA Power Limited - India
- Semirara Mining Corp, Philippines
- Baramulti Group, Indonesia
- Therma Luzon, Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Directorate Of Revenue Intelligence - India
- Wood Mackenzie - Singapore
- Georgia Ports Authority, United States
- Vedanta Resources Plc - India
- Rashtriya Ispat Nigam Limited - India
- Renaissance Capital - South Africa
- Bayan Resources Tbk. - Indonesia
- Australian Commodity Traders Exchange
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