Lloyd's Maritime and Commercial Law Quarterly
NOTICE OF READINESS—THE PERSISTENCE OF UNCERTAINTY
The Aktion
Introduction
More than two years after Hirst, J.’s decision in The Aktion,1 some of those involved in the sale and purchase of secondhand tonnage do not seem to have fully come to terms with the practical or legal implications of the judgment. To the writer’s knowledge, no reported case has since considered or referred to it, yet it established a precedent which could potentially affect every ship’s sale and purchase contract, with unpredictable and expensive consequences for shipowners, potential shipowners, their brokers and advisers. This commentary reconsiders The Aktion in the light of a recent arbitration and speculates on its future interpretation.
Generally, a contract for the sale of a ship will state, among other things, the period within which the vessel must be delivered and the cancelling date on or after which the buyers may in their discretion refuse to take delivery. A 10% deposit, payable by the buyers on signing of the contract, constitutes an advance of the purchase price if the sale proceeds and, if it does not, it may be forfeited if the buyers, without legal justification, refuse to perform their obligations. When the sellers wish to deliver, they are required to give the buyers three banking days’ notice of readiness. Upon its expiry, delivery takes place and the purchase price is exchanged for the vessel and its documentation. One of the important questions asked in The Aktion was whether the sellers’ notice of delivery would be invalid, and therefore of no effect, if the vessel were not physically ready in all respects when the notice was tendered. The answer, that actual readiness at that time was irrelevant, surprised many people and takes on a particularly covert significance when one party is trying to wriggle out of the bargain he has made (regrettably, not an unfamiliar occurrence).
The Aktion
The majority of contracts for the sale and purchase of secondhand vessels use as their basis the standardized Norwegian Saleform, which was prepared by the Norwegian Shipbrokers’ Association, adopted by the Baltic and International Maritime Council (BIMCO) in 1956, and last revised in 1987 (NSF 87). Duplicating its predecessors, cl. 3 of NSF 87 deals with the method and timing of payment of the purchase price. It states that: “the said Purchase Money shall be paid free of bank charges to [the name and details of the Sellers’ bank are inserted] on delivery of the vessel, but not later than three banking days after the vessel is ready for delivery and written or telexed notice thereof has been given to the Buyers by the Sellers.”
1
Aktion Maritime Corp. of Liberia v. S. Kasmas & Bros. Ltd. (The Aktion)
[1987] 1 Lloyd’s Rep. 283. The case was examined by the writer in [1987] 4 LMCLQ 410, and its detailed facts will not be repeated here.
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