Changes to a Standard Sale Contract through a Broker

[Jacquie II]

Hi all,

I am just in the process of buying a used boat, and I have asked the broker to make some changes to the Sale Contract they use.

They are refusing, saying it is the standard BMF document.

Any thoughts / comments from people's experience when they have bought a boat please? Should I be able to seek changes, or have other people found it just isn't possible?

 

[jfm]

Hi all,

I am just in the process of buying a used boat, and I have asked the broker to make some changes to the Sale Contract they use.

They are refusing, saying it is the standard BMF document.

Any thoughts / comments from people's experience when they have bought a boat please? Should I be able to seek changes, or have other people found it just isn't possible?

I've changed the standard contract a few times - in fact I've never used it unaltered (in 4 transactions from £125k to about £2m). Mostly to fix things that really do need fixing. On the buyer side, I found that when the broker resisted, the seller (who was more business like) agreed. Likewise when selling a boat (3 times) I have put my business hat on and agreed to several things in the buyer's favour that are not in the standard BMF contract.

So stick to your guns. You're perfectly right in thinking the standard contract isn't great in all circumstances and it is normal market practice for it to be altered on occasions. I'd guess the broker in this case is frightened of changing the document and is doing his client no favours. So long as your changes are reasonable, walk away if you don't get the answer you want.

 

[volvopaul]

I've changed the standard contract a few times - in fact I've never used it unaltered (in 4 transactions from £125k to about £2m). Mostly to fix things that really do need fixing. On the buyer side, I found that when the broker resisted, the seller (who was more business like) agreed. Likewise when selling a boat (3 times) I have put my business hat on and agreed to several things in the buyer's favour that are not in the standard BMF contract.

So stick to your guns. You're perfectly right in thinking the standard contract isn't great in all circumstances and it is normal market practice for it to be altered on occasions. I'd guess the broker in this case is frightened of changing the document and is doing his client no favours. So long as your changes are reasonable, walk away if you don't get the answer you want.

I might be wrong here but, the contract is between the buyer and seller, the broker is the agent, I'd ask the broker to put forward your requests to the seller, if he doesn't agree then look for another boat. I'm sure the seller wil accommodate your requests unless there way off track from the standard contracts, also in your requests does the seller stand to loose out financially or incur any costs should you not proceed with the sale after sea trial and survey? If so then that's probably why the broker isn't agreeing with you on this one.

 

[Richard10002]

Hi all,

I am just in the process of buying a used boat, and I have asked the broker to make some changes to the Sale Contract they use.

They are refusing, saying it is the standard BMF document.

Any thoughts / comments from people's experience when they have bought a boat please? Should I be able to seek changes, or have other people found it just isn't possible?

What changes are you asking for? And how important are they to you if the actual seller refused, (rather than the broker)?

 

[PEJ]

When I nearly bought a used Princess from Princess I noticed that they used an adapted version of the standard bmf form. It said that any faults found in the survey that cost less than 1% of the cost of the boat To put right would not have to be put right. Clearly that works in their favour but it seemed reasonable to me and it did not put me off proceeding.

I kept that contract on file and I plan to use their version of next time I sell a boat.

 

[volvopaul]

When I nearly bought a used Princess from Princess I noticed that they used an adapted version of the standard bmf form. It said that any faults found in the survey that cost less than 1% of the cost of the boat To put right would not have to be put right. Clearly that works in their favour but it seemed reasonable to me and it did not put me off proceeding.

I kept that contract on file and I plan to use their version of next time I sell a boat.

Hmm , my findings on the Port lump would have cost more than 1% for sure.

 

[Poecheng]

What the OP is looking for is agreement to have an agreement - seeking agreement to the terms of any offer before actually submitting one. Nothing wrong with that but it is not ultimately required.

If the OP knows what he/she wants to offer then send the offer in writing making it clear the terms of the offer and, to do so, what changes have been made to the standard terms. Then the full offer is on the table for them to actually consider - you don't need their permission to make an offer on your terms. They can accept or reject. It is much easier to reject fiddling with the terms than it is to reject a formal cash offer with the terms altered; the formal offer rather focusses the mind.

 

[Spi D]

Agreed. The seller, not the broker, decide what is acceptable.

Although sometimes combined, two agreements are in force: One agreement between seller and broker concerning the broker's services re. the sale, as per definition not of interest to the buyer.
Another agreement is needed for the conditions of the sale, between the seller and buyer.

Any contract or part of it can be challenged, negotiated, amended, altered or changed. Must be in writing and may involve legal review on both sides, but definitely doable.

Another way is to keep the original contract as is and make an appendix, stating that the agreement comprises both the main contract and the appendix, where in any case of difference the appendix shall prevail.
Best practise would be to mention the appendix in the contract, commonly at the end but above signatures. Of course both contract and appendix needs to be signed by both parties.

This preserves the original contract's content and any cross references therein, simply added to or overruled by the appendix.

 

[Jacquie II]

Thanks all. 1st post - so it disappeared into the bowels of YBW for a while yesterday to be moderated. Further conversations have resolved the issue and changes have been made.

Thanks again.

 

[Nautical]

As others have said it is possible to change a standard contract as long as all parties agree, the broker though is not obliged to agree, in most instances if he is a registered broker and is acting / trading as a professional he will be carrying indemnity insurance. His policy with his insurer will most likely be offered on the basis of examination of his standard sale contracts and he pays a premium based on the underwriters perceived risk. If he changes his contracts and something goes pear shaped his insurers may decided not to pay out. You may think so what his loss, however depending on what the claim is for you may find yourself also out of pocket if he can not cover what ever the loss might be. Sometimes it is better to stick with the agreed contract and arrange any requests or demands directly with the vendor .

 

[jfm]

As others have said it is possible to change a standard contract as long as all parties agree, the broker though is not obliged to agree, in most instances if he is a registered broker and is acting / trading as a professional he will be carrying indemnity insurance. His policy with his insurer will most likely be offered on the basis of examination of his standard sale contracts and he pays a premium based on the underwriters perceived risk. If he changes his contracts and something goes pear shaped his insurers may decided not to pay out. You may think so what his loss, however depending on what the claim is for you may find yourself also out of pocket if he can not cover what ever the loss might be. Sometimes it is better to stick with the agreed contract and arrange any requests or demands directly with the vendor .

That's pretty alarming T. Let's imagine a buyer wants to buy the boat, but with a departure from the normal contract. The seller would agree that departure - he would consider the risk/reward acceptable. The broker happens to have bought a pretty restrictive insurance policy and therefore to protect his own ass he gets in the way of seller and buyer agreeing whatever they want to agree. Doesn't sound great to me!

 

[Nautical]

Does sound restrictive, in practice no one is going to argue over small details and there will naturally be some wiggle room in the policy, but if there is a big departure from the underwriters perceived risk, eg, you change something significant that could open up the broker to a liability should something come apart at the seams, then it isn't unthinkable the underwriter will walk away, it is not a risk he was insuring. After all they are insurance co's, never known one yet that didn't examine every detail of a claim looking for an out.

Everyone in the heat of a sale to get it done sounds a reasonable sort, its when things go wrong and people are looking for compo or someone to stick for the costs/losses that things get heated, Seller or buyer are not professional brokers and are relying on the broker to put a fair and reasonable deal together and take care of the legalities and advise accordingly. If he advises , yeah go for it, agree this or that, no worries and that later turns out to be pants advice and it blows up, everyone is going to look to him/insurer to make good.

 

[jrudge]

Whenever we buy PI insurance for business they don't ask to see the contract, but do ask a series of YES /NO questions about the nature of what and how you sell and the activities you undertake. I would imagine that brokers policies would be similar. Do all sales have a contract? Yes / No etc.

 

[Nautical]

Its a pretty detailed questionnaire to get PI insurance for the yacht industry (that should tell you something of the risks) and you have to supply your standard contracts, T&C's , how you operate your escrow accounts, personal background checks, two personal references from the industry, blah , blah... they take a look at all the info, goes out to UW's and you get a $ quote. It is perhaps not so onerous or detailed if your average sale is less than $500k but when your starter boat is $2m and on upwards to $15m there are big numbers involved should things go wrong especially with an 18 month new build project. I carry $m's in PI and its pretty comprehensive cover so I guess they want all the salient info to asses the risk. If a client wanted to radically change my contract I would have to go back to insurers, no way they would pay out if the contract was a hash about job of the original they based the risk on.

 

[jfm]

But seriously Trevor, that's entirely your problem not anyone else's. As a boat buyer or seller I want to be free to agree whatever I and my counterparty want to agree, and if that invalidates the broker's PI then I would tell the broker to go and sort it out without involving me.

Sure the broker can object to things to the very limited extent that he is (sometimes) a party to the contract, but nothing beyond that

 

[MapisM]

there is big numbers involved should things go wrong especially with an 18 month new build project.

As a boat buyer or seller I want to be free to agree whatever I and my counterparty want to agree

Folks, correct me if I'm wrong but I feel that you are talking at cross-purpose.
When Nautical deals with the sale of an 18 months new build he's actually acting as (or at least on behalf of) the seller, rather than as a broker.
And as I understand, jfm doesn't deny at all that the agreement between the seller and the buyer is a must.

But fwiw, if I were buying/selling a boat from a seller/buyer and a "pure" broker (meant as a third party with reference to the transaction, albeit possibly entitled to claim a commission) would raise objections to whatever I agree with the seller/buyer, I know exactly where I would tell the broker to stick his/her objections/contracts...
I'm assuming of course that anything I agreed with my counterparty is not affecting whatever the broker is entitled to get for his job.

 

[Nautical]

But seriously Trevor, that's entirely your problem not anyone else's. As a boat buyer or seller I want to be free to agree whatever I and my counterparty want to agree, and if that invalidates the broker's PI then I would tell the broker to go and sort it out without involving me.

Sure the broker can object to things to the very limited extent that he is (sometimes) a party to the contract, but nothing beyond that

I guess there are differing takes on it, if you are happy to re-negociate a contract or terms of and the seller/buyer agrees then off you go and everyone is happy. But, if you want my PI to cover the contract (or lets say my insurance to be in place in case I make a monumental cockup of the sale, chop about the contract that leads to a mistake later or didn't do due diligence on the VAT status, registration, title etc) then I have to work within a certain frame work the insurance co allows me. Or, I have to go work out a deal with the insurance co on this specific deal (we are talking of the more bigger $ stuff) and that takes time an money. They may of course not agree to changes that leaves them / me exposed or simply say that'll be another $x's please.

In 99% of cases brokers make changes all the time and no one really stops to question or double check and in nearly every single case everyone is happy, but we all know of the one that went hideously wrong, and then the smiles are gone and everyone is in blame game litigation. I wouldn't allow my client be seller or buyer walk themselves into a problem. I would make the argument that a good broker will ensure there is security in place and all the T's are crossed etc and at the minimum any contract changes don't leave broker or client exposed at a later date.

 

[jfm]

Folks, correct me if I'm wrong but I feel that you are talking at cross-purpose.
When Nautical deals with the sale of an 18 months new build he's actually acting as (or at least on behalf of) the seller, rather than as a broker.
And as I understand, jfm doesn't deny at all that the agreement between the seller and the buyer is a must.

But fwiw, if I were buying/selling a boat from a seller/buyer and a "pure" broker (meant as a third party with reference to the transaction, albeit possibly entitled to claim a commission) would raise objections to whatever I agree with the seller/buyer, I know exactly where I would tell the broker to stick his/her objections/contracts...
I'm assuming of course that anything I agreed with my counterparty is not affecting whatever the broker is entitled to get for his job.

Yup, all agreed MapisM

But, if you want my PI to cover the contract ...

OK Trev maybe we are at crossed purposes on that point. I honestly cannot imagine a case where as buyer or seller I would care whether the broker's PI was in place or not. I wouldn't take material credit risk against a broker that I wasn't happy with in any case, and I cannot see any other protections that I need and that depend on the PI cover of someone else (namely the broker).

But if in the general market buyers/sellers do for some reason want the broker's PI insurance to be effective, then of course they would have to refrain from executing a deal that invalidated it

Remember by the way that by doing VAT due diligence and mentioning it, you might (under UK law at least) be creating a duty of care that didn't previously exist. As a broker, you'd generally prefer caveat emptor to prevail. Take care!

 

[Nautical]

Folks, correct me if I'm wrong but I feel that you are talking at cross-purpose.
When Nautical deals with the sale of an 18 months new build he's actually acting as (or at least on behalf of) the seller, rather than as a broker.
And as I understand, jfm doesn't deny at all that the agreement between the seller and the buyer is a must.

But fwiw, if I were buying/selling a boat from a seller/buyer and a "pure" broker (meant as a third party with reference to the transaction, albeit possibly entitled to claim a commission) would raise objections to whatever I agree with the seller/buyer, I know exactly where I would tell the broker to stick his/her objections/contracts...
I'm assuming of course that anything I agreed with my counterparty is not affecting whatever the broker is entitled to get for his job.

M, partly correct, I wear two hats and one as a builder and another as a pure broker , both require different contracts, T&C's etc and yes changes can be added and clauses removed, to a point. Of course you can tell a broker to mind his own business and do whatever you want, but a professional broker is not there simply to stick and advert in MBY and collect his commission, there is a lot more to it than that. Of course you can find a broker that will quite happily write you any contract in any form you want and agreed with the seller and off you go.

To be clear I am not talking about changes that allow for issues such as sea trial, retained monies for works, what if this or that doesn't work etc. I am talking about material changes that alter the contract with reference to documentation, title, VAT status, money laundering, liens etc. The standard contracts are there for a reason, in general they are tried and tested and stand up to rigorous scrutiny.

Again all depends what risks you are prepared to take and the seller is prepared to agree, but to suggest the broker must agree to any and all changes between both is unreasonable, he also has risk and liability in the sale process he is not just a facilitator with no liability to either party.

I have walked away from proposed sales before, if I am putting my name to a sale I am not doing so unless I am satisfied its workable, legal and I can stand over it and my ass and that of my client is covered if it goes wrong.

 

[Nautical]

Yup, all agreed MapisM

OK Trev maybe we are at crossed purposes on that point. I honestly cannot imagine a case where as buyer or seller I would care whether the broker's PI was in place or not. I wouldn't take material credit risk against a broker that I wasn't happy with in any case, and I cannot see any other protections that I need and that depend on the PI cover of someone else (namely the broker).

But if in the general market buyers/sellers do for some reason want the broker's PI insurance to be effective, then of course they would have to refrain from executing a deal that invalidated it

Remember by the way that by doing VAT due diligence and mentioning it, you might (under UK law at least) be creating a duty of care that didn't previously exist. As a broker, you'd generally prefer caveat emptor to prevail. Take care!

J you are a very experienced boat buyer and have a monumental amount of knowledge on these matters (to put most brokers to shame) ,nevertheless most buyers don't have that level of experience and do want as much protection as they can garner from all sides, PI just being one. Others maybe different but I try and be as fair a straight with both sides, if I see them agreeing to something that may create a problem later I will say so, if they are hell bent on having it as the want and want to re-write it themselves they don't need me in the first place, I'll take my commission and leave them to it but it won't be under my contract or my services

VAT, yup that does get covered under clause X, sub para X section X caveat X ..... !