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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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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- VISA Power Limited - India
- Singapore Mercantile Exchange
- Dalmia Cement Bharat India
- Bukit Baiduri Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Indian Oil Corporation Limited
- Ministry of Finance - Indonesia
- Central Electricity Authority - India
- New Zealand Coal & Carbon
- Gujarat Electricity Regulatory Commission - India
- PNOC Exploration Corporation - Philippines
- Aditya Birla Group - India
- Tata Chemicals Ltd - India
- Merrill Lynch Commodities Europe
- Parry Sugars Refinery, India
- Semirara Mining and Power Corporation, Philippines
- McConnell Dowell - Australia
- Binh Thuan Hamico - Vietnam
- Neyveli Lignite Corporation Ltd, - India
- Mercator Lines Limited - India
- AsiaOL BioFuels Corp., Philippines
- London Commodity Brokers - England
- GAC Shipping (India) Pvt Ltd
- Oldendorff Carriers - Singapore
- Indian Energy Exchange, India
- SMG Consultants - Indonesia
- Chamber of Mines of South Africa
- Mjunction Services Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Kobexindo Tractors - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- Antam Resourcindo - Indonesia
- Bhatia International Limited - India
- The University of Queensland
- Jorong Barutama Greston.PT - Indonesia
- Baramulti Group, Indonesia
- Economic Council, Georgia
- Parliament of New Zealand
- Australian Commodity Traders Exchange
- Uttam Galva Steels Limited - India
- ICICI Bank Limited - India
- Timah Investasi Mineral - Indoneisa
- GMR Energy Limited - India
- Thiess Contractors Indonesia
- Australian Coal Association
- Aboitiz Power Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Billiton Holdings Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Eastern Energy - Thailand
- Formosa Plastics Group - Taiwan
- Planning Commission, India
- Pendopo Energi Batubara - Indonesia
- Electricity Authority, New Zealand
- SN Aboitiz Power Inc, Philippines
- Goldman Sachs - Singapore
- Simpson Spence & Young - Indonesia
- Bayan Resources Tbk. - Indonesia
- Therma Luzon, Inc, Philippines
- Trasteel International SA, Italy
- Barasentosa Lestari - Indonesia
- Ind-Barath Power Infra Limited - India
- Deloitte Consulting - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Essar Steel Hazira Ltd - India
- Indogreen Group - Indonesia
- Indika Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Orica Mining Services - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- CIMB Investment Bank - Malaysia
- Commonwealth Bank - Australia
- Carbofer General Trading SA - India
- Africa Commodities Group - South Africa
- Miang Besar Coal Terminal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Orica Australia Pty. Ltd.
- TNB Fuel Sdn Bhd - Malaysia
- Bhushan Steel Limited - India
- Lanco Infratech Ltd - India
- San Jose City I Power Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- IEA Clean Coal Centre - UK
- Directorate Of Revenue Intelligence - India
- CNBM International Corporation - China
- Makarim & Taira - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Mineral Development Corp Ltd - India
- Vedanta Resources Plc - India
- Jindal Steel & Power Ltd - India
- Thai Mozambique Logistica
- Kalimantan Lumbung Energi - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Kapuas Tunggal Persada - Indonesia
- Borneo Indobara - Indonesia
- Videocon Industries ltd - India
- Wilmar Investment Holdings
- Standard Chartered Bank - UAE
- Edison Trading Spa - Italy
- Straits Asia Resources Limited - Singapore
- Price Waterhouse Coopers - Russia
- Bahari Cakrawala Sebuku - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- MS Steel International - UAE
- Indonesian Coal Mining Association
- Sinarmas Energy and Mining - Indonesia
- Gujarat Sidhee Cement - India
- Attock Cement Pakistan Limited
- Jaiprakash Power Ventures ltd
- Sree Jayajothi Cements Limited - India
- Siam City Cement PLC, Thailand
- Heidelberg Cement - Germany
- Sakthi Sugars Limited - India
- Bangladesh Power Developement Board
- PowerSource Philippines DevCo
- Coal and Oil Company - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Romanian Commodities Exchange
- PTC India Limited - India
- Rashtriya Ispat Nigam Limited - India
- Sarangani Energy Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Tamil Nadu electricity Board
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Agrawal Coal Company - India
- Global Business Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Meralco Power Generation, Philippines
- Eastern Coal Council - USA
- ASAPP Information Group - India
- Mintek Dendrill Indonesia
- Metalloyd Limited - United Kingdom
- Medco Energi Mining Internasional
- Coalindo Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Minerals Council of Australia
- Posco Energy - South Korea
- Larsen & Toubro Limited - India
- GN Power Mariveles Coal Plant, Philippines
- The State Trading Corporation of India Ltd
- SMC Global Power, Philippines
- Iligan Light & Power Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Power Finance Corporation Ltd., India
- Malabar Cements Ltd - India
- Mercuria Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Rio Tinto Coal - Australia
- Vizag Seaport Private Limited - India
- Ministry of Transport, Egypt
- Ambuja Cements Ltd - India
- Global Coal Blending Company Limited - Australia
- GVK Power & Infra Limited - India
- Banpu Public Company Limited - Thailand
- Cigading International Bulk Terminal - Indonesia
- Sindya Power Generating Company Private Ltd
- Bharathi Cement Corporation - India
- Maharashtra Electricity Regulatory Commission - India
- Bukit Makmur.PT - Indonesia
- Anglo American - United Kingdom
- Renaissance Capital - South Africa
- Sical Logistics Limited - India
- Sojitz Corporation - Japan
- Asmin Koalindo Tuhup - Indonesia
- Maheswari Brothers Coal Limited - India
- Marubeni Corporation - India
- Global Green Power PLC Corporation, Philippines
- Energy Development Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- India Bulls Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Manunggal Multi Energi - Indonesia
- Georgia Ports Authority, United States
- White Energy Company Limited
- Kideco Jaya Agung - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Samtan Co., Ltd - South Korea
- Latin American Coal - Colombia
- Central Java Power - Indonesia
- Intertek Mineral Services - Indonesia
- Siam City Cement - Thailand
- Grasim Industreis Ltd - India
- Kartika Selabumi Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Semirara Mining Corp, Philippines
- Madhucon Powers Ltd - India
- International Coal Ventures Pvt Ltd - India
- Xindia Steels Limited - India
- Cement Manufacturers Association - India
- Petron Corporation, Philippines
- Kumho Petrochemical, South Korea
- Port Waratah Coal Services - Australia
- Holcim Trading Pte Ltd - Singapore
- Interocean Group of Companies - India
- South Luzon Thermal Energy Corporation
- Coastal Gujarat Power Limited - India
- Kaltim Prima Coal - Indonesia
- European Bulk Services B.V. - Netherlands
- Petrochimia International Co. Ltd.- Taiwan
- Independent Power Producers Association of India
- Star Paper Mills Limited - India
- Savvy Resources Ltd - HongKong
- The Treasury - Australian Government
- Ministry of Mines - Canada
- Ceylon Electricity Board - Sri Lanka
- Electricity Generating Authority of Thailand
- Energy Link Ltd, New Zealand
- Wood Mackenzie - Singapore
- Riau Bara Harum - Indonesia
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