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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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Sunday, 26 January 14
FREIGHT RATES FALL FURTHER ON LACK OF CARGOES - SOLYM CARRIERS
COALspot.com: The freight market has continued to soften further this week with BDI down by 12.31 pct. BDI was closed at 1,246 points week ended 24 ...
Friday, 24 January 14
US COAL PRODUCTION UP 3.9% ON WEEK IN WEEK ENDED SATURDAY - EIA
COALspot.com – United States the world’s second largest coal producer, produced approximately 19.1 million short tons (mmst) of coal in ...
Friday, 24 January 14
DRY BULK MARKET STRUGGLING TO FIND FIRM FOOTING IN START OF 2014 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has been faltering since the start of 2014, struggling to hold its ground as low seasonal demand has hindered further growth in ...
Thursday, 23 January 14
PANAMAX : THIS WEEK THE ACTIVITY CAME DOWN DRAMATICALLY - FEARNRESEARCH
Handy
With the Chinese New Year approaching the activity and rate levels are sliding in both hemispheres. Rates in the Atlantic have knocked off so ...
Thursday, 23 January 14
30 DAYS LEFT TO REGISTER FOR PACIFIC BASIN COAL CONFERENCE
COALspot.com: (Press Release) : IHS Inc. (NYSE: IHS), the leading global source of information and analysis, will host the Pacific Basin Coal Confer ...
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- The Treasury - Australian Government
- Karaikal Port Pvt Ltd - India
- Central Electricity Authority - India
- New Zealand Coal & Carbon
- Petron Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- SMG Consultants - Indonesia
- IHS Mccloskey Coal Group - USA
- GAC Shipping (India) Pvt Ltd
- Indonesian Coal Mining Association
- LBH Netherlands Bv - Netherlands
- Krishnapatnam Port Company Ltd. - India
- Formosa Plastics Group - Taiwan
- Vijayanagar Sugar Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Baramulti Group, Indonesia
- Mintek Dendrill Indonesia
- Global Green Power PLC Corporation, Philippines
- Standard Chartered Bank - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Independent Power Producers Association of India
- Parry Sugars Refinery, India
- Globalindo Alam Lestari - Indonesia
- Australian Commodity Traders Exchange
- IEA Clean Coal Centre - UK
- Meenaskhi Energy Private Limited - India
- Tata Chemicals Ltd - India
- Samtan Co., Ltd - South Korea
- Alfred C Toepfer International GmbH - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Trasteel International SA, Italy
- Bhushan Steel Limited - India
- Attock Cement Pakistan Limited
- Essar Steel Hazira Ltd - India
- International Coal Ventures Pvt Ltd - India
- Xindia Steels Limited - India
- Kumho Petrochemical, South Korea
- Wilmar Investment Holdings
- TeaM Sual Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- CIMB Investment Bank - Malaysia
- Therma Luzon, Inc, Philippines
- Madhucon Powers Ltd - India
- Mercuria Energy - Indonesia
- Vedanta Resources Plc - India
- Mjunction Services Limited - India
- Semirara Mining and Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Heidelberg Cement - Germany
- Malabar Cements Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Salva Resources Pvt Ltd - India
- Energy Development Corp, Philippines
- Savvy Resources Ltd - HongKong
- Georgia Ports Authority, United States
- Vizag Seaport Private Limited - India
- Interocean Group of Companies - India
- Deloitte Consulting - India
- Kideco Jaya Agung - Indonesia
- Port Waratah Coal Services - Australia
- CNBM International Corporation - China
- Meralco Power Generation, Philippines
- Orica Australia Pty. Ltd.
- Chamber of Mines of South Africa
- Gujarat Electricity Regulatory Commission - India
- Aboitiz Power Corporation - Philippines
- Latin American Coal - Colombia
- Coalindo Energy - Indonesia
- Antam Resourcindo - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- PowerSource Philippines DevCo
- Energy Link Ltd, New Zealand
- South Luzon Thermal Energy Corporation
- Eastern Energy - Thailand
- Ambuja Cements Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mercator Lines Limited - India
- Bangladesh Power Developement Board
- Kapuas Tunggal Persada - Indonesia
- Uttam Galva Steels Limited - India
- Marubeni Corporation - India
- Carbofer General Trading SA - India
- Sakthi Sugars Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Thiess Contractors Indonesia
- Dalmia Cement Bharat India
- Australian Coal Association
- Coal and Oil Company - UAE
- Barasentosa Lestari - Indonesia
- Ministry of Mines - Canada
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Finance - Indonesia
- Commonwealth Bank - Australia
- Africa Commodities Group - South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Borneo Indobara - Indonesia
- Aditya Birla Group - India
- SN Aboitiz Power Inc, Philippines
- SMC Global Power, Philippines
- Gujarat Sidhee Cement - India
- Global Coal Blending Company Limited - Australia
- Binh Thuan Hamico - Vietnam
- Goldman Sachs - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Romanian Commodities Exchange
- Simpson Spence & Young - Indonesia
- Straits Asia Resources Limited - Singapore
- Sree Jayajothi Cements Limited - India
- ASAPP Information Group - India
- Altura Mining Limited, Indonesia
- Central Java Power - Indonesia
- MS Steel International - UAE
- Star Paper Mills Limited - India
- Cigading International Bulk Terminal - Indonesia
- Sindya Power Generating Company Private Ltd
- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- Indika Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Medco Energi Mining Internasional
- Siam City Cement PLC, Thailand
- Jorong Barutama Greston.PT - Indonesia
- Bhatia International Limited - India
- Ministry of Transport, Egypt
- Minerals Council of Australia
- Indo Tambangraya Megah - Indonesia
- Sojitz Corporation - Japan
- Edison Trading Spa - Italy
- Indian Energy Exchange, India
- Rashtriya Ispat Nigam Limited - India
- Jaiprakash Power Ventures ltd
- Global Business Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Posco Energy - South Korea
- Economic Council, Georgia
- Electricity Authority, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Maheswari Brothers Coal Limited - India
- Kaltim Prima Coal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Power Finance Corporation Ltd., India
- Parliament of New Zealand
- Indogreen Group - Indonesia
- Sarangani Energy Corporation, Philippines
- Rio Tinto Coal - Australia
- Price Waterhouse Coopers - Russia
- Tamil Nadu electricity Board
- OPG Power Generation Pvt Ltd - India
- Singapore Mercantile Exchange
- GMR Energy Limited - India
- Bharathi Cement Corporation - India
- Toyota Tsusho Corporation, Japan
- Karbindo Abesyapradhi - Indoneisa
- Metalloyd Limited - United Kingdom
- Wood Mackenzie - Singapore
- VISA Power Limited - India
- European Bulk Services B.V. - Netherlands
- Bukit Makmur.PT - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Eastern Coal Council - USA
- Bhoruka Overseas - Indonesia
- Ind-Barath Power Infra Limited - India
- The State Trading Corporation of India Ltd
- Timah Investasi Mineral - Indoneisa
- Anglo American - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- Sinarmas Energy and Mining - Indonesia
- PTC India Limited - India
- The University of Queensland
- AsiaOL BioFuels Corp., Philippines
- Thai Mozambique Logistica
- Intertek Mineral Services - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Oldendorff Carriers - Singapore
- Manunggal Multi Energi - Indonesia
- Electricity Generating Authority of Thailand
- GVK Power & Infra Limited - India
- Sical Logistics Limited - India
- Grasim Industreis Ltd - India
- Cement Manufacturers Association - India
- Planning Commission, India
- Bukit Baiduri Energy - Indonesia
- Riau Bara Harum - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- India Bulls Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Kartika Selabumi Mining - Indonesia
- Indian Oil Corporation Limited
- Videocon Industries ltd - India
- Renaissance Capital - South Africa
- London Commodity Brokers - England
- Merrill Lynch Commodities Europe
- White Energy Company Limited
- ICICI Bank Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Lanco Infratech Ltd - India
- Pendopo Energi Batubara - Indonesia
- Siam City Cement - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Directorate Of Revenue Intelligence - India
- McConnell Dowell - Australia
- PNOC Exploration Corporation - Philippines
- Larsen & Toubro Limited - India
- Agrawal Coal Company - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Coastal Gujarat Power Limited - India
- San Jose City I Power Corp, Philippines
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