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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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Sunday, 12 January 14
THE FREIGHT MARKET CONTINUE TO REMAIN WEAK NEXT WEEK - SOLYM CARRIERS
Wish You A very Happy New Year
COALspot.com: The market has dropped quite a lot as expected due to holidays and probably also the effect of ban o ...
Friday, 10 January 14
DECISION ON ORE EXPORT BAN WILL BE MADE TOMORROW: INDUSTRY MINISTER, JG SAYS
Industry Minister M.S. Hidayat dismissed reports on Thursday that the government had made a decision on the matter. “We will only make a decis ...
Friday, 10 January 14
US COAL PRODUCTION UP 5.8% ON WEEK IN WEEK ENDED SATURDAY 4 JANUARY
COALspot.com – United States the world’s second largest coal producer, produced approximately 18.8 million short tons (mmst) of coal in ...
Thursday, 09 January 14
THE INDONESIAN GOVERNMENT EASES ORE EXPORT BAN
COALspot.com: The Indonesian government has finally agreed to ease the ore-export ban just a few days before the Sunday deadline amid protests from ...
Thursday, 09 January 14
CAPESIZE: WEST AUSTRALIA FREIGHT IS NOW DOWN IN THE $8S AND STILL DROPPING - FEARNLEYS
Handy
In the Atlantic we see rates sliding slowly for the start of 2014. Several players cvrd over the holidays and the rate decline was som ...
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- Xindia Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- Wood Mackenzie - Singapore
- Barasentosa Lestari - Indonesia
- Mercuria Energy - Indonesia
- ASAPP Information Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- Ceylon Electricity Board - Sri Lanka
- New Zealand Coal & Carbon
- Bukit Baiduri Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- IEA Clean Coal Centre - UK
- Holcim Trading Pte Ltd - Singapore
- Karaikal Port Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- South Luzon Thermal Energy Corporation
- Maheswari Brothers Coal Limited - India
- VISA Power Limited - India
- Simpson Spence & Young - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mercator Lines Limited - India
- PTC India Limited - India
- Kepco SPC Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Australian Coal Association
- Oldendorff Carriers - Singapore
- CNBM International Corporation - China
- Larsen & Toubro Limited - India
- Kapuas Tunggal Persada - Indonesia
- Sree Jayajothi Cements Limited - India
- Indian Oil Corporation Limited
- Coal and Oil Company - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Electricity Authority, New Zealand
- London Commodity Brokers - England
- Medco Energi Mining Internasional
- Kideco Jaya Agung - Indonesia
- Savvy Resources Ltd - HongKong
- Leighton Contractors Pty Ltd - Australia
- Interocean Group of Companies - India
- Chettinad Cement Corporation Ltd - India
- Eastern Energy - Thailand
- Port Waratah Coal Services - Australia
- Edison Trading Spa - Italy
- Ministry of Transport, Egypt
- TeaM Sual Corporation - Philippines
- Independent Power Producers Association of India
- Asmin Koalindo Tuhup - Indonesia
- Riau Bara Harum - Indonesia
- Posco Energy - South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vedanta Resources Plc - India
- Baramulti Group, Indonesia
- Sindya Power Generating Company Private Ltd
- MS Steel International - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Lanco Infratech Ltd - India
- Metalloyd Limited - United Kingdom
- Binh Thuan Hamico - Vietnam
- Electricity Generating Authority of Thailand
- Indo Tambangraya Megah - Indonesia
- Indika Energy - Indonesia
- Thai Mozambique Logistica
- SMC Global Power, Philippines
- Semirara Mining and Power Corporation, Philippines
- Tata Chemicals Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Parry Sugars Refinery, India
- Energy Link Ltd, New Zealand
- Coalindo Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Iligan Light & Power Inc, Philippines
- Economic Council, Georgia
- Power Finance Corporation Ltd., India
- Bulk Trading Sa - Switzerland
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Finance - Indonesia
- Star Paper Mills Limited - India
- Standard Chartered Bank - UAE
- Africa Commodities Group - South Africa
- GAC Shipping (India) Pvt Ltd
- Makarim & Taira - Indonesia
- Siam City Cement PLC, Thailand
- Neyveli Lignite Corporation Ltd, - India
- Sarangani Energy Corporation, Philippines
- Indonesian Coal Mining Association
- Indian Energy Exchange, India
- PNOC Exploration Corporation - Philippines
- Mjunction Services Limited - India
- Dalmia Cement Bharat India
- Central Java Power - Indonesia
- Antam Resourcindo - Indonesia
- Attock Cement Pakistan Limited
- Kalimantan Lumbung Energi - Indonesia
- ICICI Bank Limited - India
- Petron Corporation, Philippines
- Central Electricity Authority - India
- Gujarat Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Bayan Resources Tbk. - Indonesia
- Parliament of New Zealand
- Trasteel International SA, Italy
- Krishnapatnam Port Company Ltd. - India
- Bangladesh Power Developement Board
- Anglo American - United Kingdom
- Gujarat Sidhee Cement - India
- Orica Australia Pty. Ltd.
- Billiton Holdings Pty Ltd - Australia
- Latin American Coal - Colombia
- Global Business Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Minerals Council of Australia
- Tamil Nadu electricity Board
- Videocon Industries ltd - India
- Miang Besar Coal Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- The Treasury - Australian Government
- Gujarat Mineral Development Corp Ltd - India
- Marubeni Corporation - India
- Ministry of Mines - Canada
- Vijayanagar Sugar Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Singapore Mercantile Exchange
- Thiess Contractors Indonesia
- Meralco Power Generation, Philippines
- Heidelberg Cement - Germany
- Indogreen Group - Indonesia
- Meenaskhi Energy Private Limited - India
- SMG Consultants - Indonesia
- CIMB Investment Bank - Malaysia
- Alfred C Toepfer International GmbH - Germany
- Australian Commodity Traders Exchange
- Formosa Plastics Group - Taiwan
- Kumho Petrochemical, South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jaiprakash Power Ventures ltd
- Cigading International Bulk Terminal - Indonesia
- IHS Mccloskey Coal Group - USA
- Toyota Tsusho Corporation, Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Altura Mining Limited, Indonesia
- The State Trading Corporation of India Ltd
- Coastal Gujarat Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Aditya Birla Group - India
- San Jose City I Power Corp, Philippines
- Therma Luzon, Inc, Philippines
- Vizag Seaport Private Limited - India
- Bhoruka Overseas - Indonesia
- Wilmar Investment Holdings
- Renaissance Capital - South Africa
- Romanian Commodities Exchange
- Salva Resources Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Carbofer General Trading SA - India
- McConnell Dowell - Australia
- Straits Asia Resources Limited - Singapore
- Pendopo Energi Batubara - Indonesia
- European Bulk Services B.V. - Netherlands
- Bahari Cakrawala Sebuku - Indonesia
- Price Waterhouse Coopers - Russia
- Kohat Cement Company Ltd. - Pakistan
- Maharashtra Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- Goldman Sachs - Singapore
- Sakthi Sugars Limited - India
- Georgia Ports Authority, United States
- OPG Power Generation Pvt Ltd - India
- PowerSource Philippines DevCo
- Karbindo Abesyapradhi - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mintek Dendrill Indonesia
- Malabar Cements Ltd - India
- Jindal Steel & Power Ltd - India
- The University of Queensland
- GMR Energy Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Deloitte Consulting - India
- Energy Development Corp, Philippines
- Bhatia International Limited - India
- Essar Steel Hazira Ltd - India
- Bharathi Cement Corporation - India
- Banpu Public Company Limited - Thailand
- Sojitz Corporation - Japan
- Kartika Selabumi Mining - Indonesia
- Kobexindo Tractors - Indoneisa
- Orica Mining Services - Indonesia
- Commonwealth Bank - Australia
- Borneo Indobara - Indonesia
- Cement Manufacturers Association - India
- Siam City Cement - Thailand
- Jorong Barutama Greston.PT - Indonesia
- Intertek Mineral Services - Indonesia
- Madhucon Powers Ltd - India
- Directorate Of Revenue Intelligence - India
- PetroVietnam Power Coal Import and Supply Company
- Uttam Galva Steels Limited - India
- Sinarmas Energy and Mining - Indonesia
- Kaltim Prima Coal - Indonesia
- Bhushan Steel Limited - India
- Semirara Mining Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Eastern Coal Council - USA
- Rashtriya Ispat Nigam Limited - India
- Agrawal Coal Company - India
- Sical Logistics Limited - India
- Aboitiz Power Corporation - Philippines
- India Bulls Power Limited - India
- Manunggal Multi Energi - Indonesia
- GVK Power & Infra Limited - India
- International Coal Ventures Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Global Coal Blending Company Limited - Australia
- Ind-Barath Power Infra Limited - India
- Planning Commission, India
- White Energy Company Limited
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