Seller Beware! An analysis of the implementation of As Is principle on Norwegian Saleform 93 under English law for sale and purchase of second-hand vessels: A case study of the Union Power decision and a subsequent English court decision, the Hirtenstein
English law most likely is still and will continue to be prominent in the world of shipping. That is why an English court decision, especially one that is related to shipping, may be of significant importance to the world of the shipping industry and possibly having a great impact on the industry. Many times ships encounter multiple transfer of ownership between many parties. The most common ways for people to acquire a ship is by shipbuilding contracts (with shipyard as the seller and customer as buyer) and by purchasing a second-hand vessel. However, the latter would represent a much quicker and cheaper alternative to a shipbuilding project. Admittedly, the process of buying and selling second-hand ships is becoming more popular and becoming a very important activity in shipping industries, one with potentially serious legal consequences. Despite being one of the most popular standard form contracts in sale and purchase transactions of second-hand vessels, NSF 1993 has proved to be a fertile ground for dispute between sellers and buyers. On 13th December 2012, the English Court had made a controversial judgment regarding the relationship between the NSF 93 and the SGA in an English law governed MOA. It has always been the subject of some speculation as to whether the NSF (both 1987 and 1993 versions) is an as is, where is contract that excludes terms as to satisfactory quality and fitness for purpose, which are implied into contracts of sale by the SGA. Nevertheless with the recent decision in Dalmare SpA v Union Maritime Ltd and Valor Shipping Ltd ( Union Power ) has now given a little authority to such speculation. Through the said decision, the English High Court has held that the implied term of satisfactory quality and fitness purpose of SGA are indeed to be implied into a English law-governed MOA using the NSF. In addition, the court went further on the decision and made a provisional view that the words as is, where is apparently also do not exclude the statutory implied terms. It only excludes the right to reject the vessel upon delivery due to breach of statutory implied conditions, but leaving unaffected the right to claim damages for the buyer. Therefore with the inception of this decision, the public should also pay more attention to the legal principle Caveat Venditor (Seller Beware) because apparently sellers can be pursued by the buyer alleging for breaches of statutory implied terms after delivery. However, following to Union Power, a recent English Court decision in 2014 namely Michael Hirtenstein and Il Sole Limited v. Hill Dickinson LLP (the Hirtenstein ), has shed some doubt on the Union Power decision in regards to the application of the implied terms in as is contracts. It gave some contradictory views about the application of the implied terms on as is contracts. It was suggested that applying the implied terms in as is contracts may be contrary to the expectations of ordinary business people and too generous to the buyer.