How a second-hand vessel changes hands — negotiation, inspections, the Memorandum of Agreement, the deposit and the closing documents — and where deals usually go wrong.
Buying or selling a ship is one of the largest transactions a shipping company makes. The process is well established, but every deal is different, and small details in the contract decide who carries the risk. This guide walks through a typical second-hand sale and purchase (S&P) transaction.
1. Market approach and negotiation
The seller's broker circulates the vessel's particulars to the market; buyers' brokers screen candidates against their client's requirements — size, age, yard, specification and survey status. Offers and counter-offers are exchanged until the main terms are agreed. A deal is usually "subject to" conditions such as inspection, approval by the buyer's board or financing.
2. Inspections
- Class records inspection: the buyer reviews the vessel's survey history, outstanding recommendations and conditions of class, and upcoming survey dates.
- Physical inspection: a superintendent or surveyor inspects the ship afloat — machinery, hull, holds, deck equipment and the condition of accommodation and documentation on board.
- Background checks: port state control detention history, casualty records and ownership history are commonly checked through public databases such as Equasis.
3. The Memorandum of Agreement
Once subjects are lifted the parties sign a Memorandum of Agreement (MOA). For years the market standard has been the Norwegian Saleform 2012 (NSF 2012); in early 2026 BIMCO and the Norwegian Shipbrokers' Association adopted its successor, SALEFORM 2025. The MOA sets out the price, the deposit, the time and place of delivery, the cancelling date, the treatment of bunkers and spares, the documents to be exchanged, the condition in which the ship must be delivered, the consequences of default by either side, and the law and arbitration clause.
The deposit
Under NSF 2012 the buyer lodges a deposit — 10% of the price unless the parties agree otherwise — with a deposit holder, usually a bank, within three banking days of the MOA being signed and the account being opened; it is released only on the joint written instructions of both parties. SALEFORM 2025 moves the deposit to an escrow agent under an escrow agreement. Under either form the deposit is security for the buyer's performance: if the buyer fails to complete, the seller may be entitled to keep it.
4. Notices and delivery
As the ship approaches the delivery port the seller gives the notices of expected delivery agreed in the MOA, followed by a notice of readiness when the vessel is at the agreed place and physically ready. The buyer must then pay within the agreed time. Delivery must take place before the cancelling date; if it does not, the buyer usually has the option to cancel.
5. Closing
At closing the balance of the price is released against the delivery documents — typically the bill of sale, evidence of the seller's title and of freedom from encumbrances, a class certificate, the deletion certificate from the current registry and the protocol of delivery and acceptance. The buyer takes over the ship, registers it under the new flag and, in most cases, renames it.
Where deals go wrong
- Recommendations or conditions of class discovered late.
- Delivery-condition disputes — the ship must be delivered substantially as inspected, fair wear and tear excepted.
- Missed cancelling dates and unclear notice provisions.
- Bunker and spare-part quantities that were not defined in the MOA.
An experienced S&P broker coordinates all of these steps, keeps the timetable realistic and protects your position in the drafting of the MOA. Talk to our S&P desk.