Syndicate Agreement Legal Question

Comments below!

jfm said:
Pete we are polishing a turd here. Almost every sentence of the RYA doc is awful. I don't think any of us have the will to re-draft the whole thing!

You have to start at 6.1.
Why is the “if” condition included? Presumably because the triggering of this clause may never happen (e.g. the owners may simply agree to collectively sell the boat).

Do you think the (important) word “reasonable” qualifies just “cause”, or “desire” as well? I agree, they're pointless words so I will amend accordingly.

What precise function does the word “individual” do? I thought about this and I read it that each partner needs to be separately notified.

In 6.2
The “determining Party” expression is horrible and clumsy. Would "exiting Party" be an improvement?

The second sentence imposes an obligation. By when, on what terms, and what if he doesn’t? Sorry, I don't know how to fix that.

There is danger of dispute as to whether the important “do not wish” trigger is pulled so that should be by notice in writing. Good point, will add this.

And anyway this should not be drafted as a matter of mere wishing but one of actually getting chequebook out and buying. Understood, will try and address this.

I hate the “take on” expression but in any case it needs to involve D buying the share and executing a deed of adherence (in agreed form) to the syndicate agreement. When I read "take on" I didn't like it but left it in as the exiting party may just give the share (as opposed to selling it). But this is inconsistent with the other clauses so I will amend to "sell". Agree with your second point and will update accordingly.

And so on. I have to stop there because as noted above this is a turd/Mr Sheen situation. Bjb was right. You might think I’m being pedantic but these are divorce not marriage clauses. It's very difficult for me, with very limited drafting skills, to start from scratch.
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BruceK said:
My head is starting to hurt. I'm beginning to think a boat share be restricted to a husband and wife thing. He buys it, she owns it so he better play ball. The natural order of things and all. Too complicated otherwise.
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Well said.
I think I'm only interested in a share where the capital is not a huge amount and if the partnership falls apart one would basically walk away. The value of a boat you don't want any more is usually depressingly low. A forced sale of a boat you have a third of could easily wipe that value off the whole.

Currently I'm in a half-baked arrangement where I bung in some time and cash towards running expenses, but own no capital in the boat. It works for us. This is coming to a natural end with no regrets either way.
You have to take chances, but only with time and money you are happy to put down to experience.
I'm interested in doing some sort of share, because although I could afford the whole (fairly modest TBH) gig myself, I won't be able to use it intensively.
 
Here's what I hope is a new and improved version (6.1 and 5.2 only, of I'm on the right track then I can do the other clauses)....

6.1 If any Party wishes to sell his share of the Boat, he must notify each remaining party, in writing, of his wish to sell.

6.2 Upon such notice being delivered, the remaining Party(s) shall be given the opportunity to purchase the share of the exiting Party at such price as the Parties may agree. If the remaining Party(s) wish to purchase the existing Party’s share, they must do so within 30 days. If they fail to compete the purchase within 30 days or if the remaining Party(s) do not wish to purchase the exiting Party’s share then the exiting Party shall obtain agreement by another to purchase his share.
 
petem said:
Here's what I hope is a new and improved version (6.1 and 5.2 only, of I'm on the right track then I can do the other clauses)....

6.1 If any Party wishes to sell his share of the Boat, he must notify each remaining party, in writing, of his wish to sell.

6.2 Upon such notice being delivered, the remaining Party(s) shall be given the opportunity to purchase the share of the exiting Party at such price as the Parties may agree. If the remaining Party(s) wish to purchase the existing Party’s share, they must do so within 30 days. If they fail to compete the purchase within 30 days or if the remaining Party(s) do not wish to purchase the exiting Party’s share then the exiting Party shall obtain agreement by another to purchase his share.
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The initial 6.1 and 6.2 had a clause that said if the existing parties didn't want to buy the share and no buyer could be found within six months of the letter of termination, then the boat gets sold in It's entirety. I Think that was a fair clause as the terminating party could be held in limbo for a very long time and still be liable for all the costs of running the boat. However, I think things like law should be kept to professionals, just pay one to write the contract, easier and safer in the long run. (impo)
 
petem said:
That's now in a later clause that I haven't reworded yet. Note that the original RYA agreement was supposed to be drafted by a professional but that is garbage.
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I know what you are saying, I followed a "party" win a legal battle twice and lost it on appeal, that cost £300 Million just because of the contract wording was so crap written by "experts" . #nightmare #minefield
 
rafiki_ said:
Sorry Pete, in today’s world be a bit cautious using “he” as the third party. You might use “they” instead?
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Amended...

6.1 If any Party wishes to sell his share of the Boat, they must notify each remaining party, in writing, of their wish to sell.

6.2 Upon such notice being delivered, the remaining Party(s) shall be given the opportunity to purchase the share of the exiting Party at such price as the Parties may agree. If the remaining Party(s) wish to purchase the existing Party’s share, they must do so within 30 days. If they fail to complete the purchase within 30 days or if the remaining Party(s) do not wish to purchase the exiting Party’s share then the exiting Party shall obtain agreement by another to purchase their share.
 
That’s a great idea. Might be £20 very well spent.

Pete I have not tried amending your text because of the turd polish problem . Every sentence of 6.2 is awful, in a risky way for you. The first sentence is oxymoronic though harmless. The second sentence contains an obligation on one person to buy without a corresponding obligation on the other to sell- wtf?. And the obligation to buy is triggered by the mere existence of a wish ffs. What if you wish to buy for £100k but not £125k? Do you or don’t you have a wish? It’s just garbage. It doesn’t work for anyone to amend it on here. Turd polishing and see bjb’s wise words.

So try the £20 job!
 
jfm said:
What if you wish to buy for £100k but not £125k?
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Texas shootout, possibly?

Anyhow, regardless of the options, I think this is a substantial (rather than "just" legal) problem, in these shared agreements.
 
jfm said:
That’s a great idea. Might be £20 very well spent.

Pete I have not tried amending your text because of the turd polish problem . Every sentence of 6.2 is awful, in a risky way for you. The first sentence is oxymoronic though harmless. The second sentence contains an obligation on one person to buy without a corresponding obligation on the other to sell- wtf?. And the obligation to buy is triggered by the mere existence of a wish ffs. What if you wish to buy for £100k but not £125k? Do you or don’t you have a wish? It’s just garbage. It doesn’t work for anyone to amend it on here. Turd polishing and see bjb’s wise words.

So try the £20 job!
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If the leaver and remainers (for want of a better description :)) fail to agree a price then the seller would need so sell his share on the open market.

I'll download the £20 agreement but I suspect that:

a) the drafting won't be up to the standards that you would find acceptable;
b) it won't describe what I had in my flow chart above (and what I think we are all largely in agreement with) so will need amending (by me) which will bring up round full circle.
 
If you are all in agreement....including the the guy leaving.....does it matter right now ?

Are you hoping to buy them out or are you thinking of the next shareholder?

Best thing is to not need the contract...or do you suspect that will change?
 
There needs to be extraction certainty.
So if a leaver can’t find a buyer after a time period it’s liquidised and the balance of proceeds divided up .
Having said that to protect the likes of yourself, let’s call you an enthusiastic owner imho the syndicate should have a minimum run time ,say 4 years or what ever .In this period no one can cock off sos folks know again with some certainty where they are or will be in that period.

Once that time s there should be up the notice period window say Oct to Jan .If no notice is given then the syndicate with certainty rolls on into another season - booking flights , schedules of work , both members and maintenance of the boat .

But ultimately in a boat share syndicate every member must know in the back of there mind it’s a temporary bubble .
Ok in my world artificially kept from popping by the initial 4 years or what ever buy in , but after that every years a bonus .

I feel reading this Pete you want it be your boat ( in a cherished dreamy way ) go on for ever in a wonderland of shared ownership at 1/3 rd of the running costs etc and mentality can’t get your head around it may one day just end outside your control and thus you are trying to regain the ending / exiting control to make life harder for leavers .

The ultimate option to trigger a sale of a share and if unsuccessful for any reason, then go to syndicate dissolution and divide up the boat sale proceeds has always gotta be in there somewhere I,am afraid .

As others have said ( JFM ) partner ships work on trust and empathy - talking to each other .
Once a folks start waving bits of paper or worse emailing clauses of a contract how ever good / bad it’s written ..... it’s over .
 
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Portofino said:
I feel reading this Pete you want it be your boat ( in a cherished dreamy way ) go on for ever in a wonderland of shared ownership at 1/3 rd of the running costs etc and mentality can’t get your head around it may one day just end outside your control and thus you are trying to regain the ending / exiting control to make life harder for leavers .
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That's not the case in the slightest. We've had a few great years on the boat already (where did the time go?) and I'm not ready to bail out yet but might well be ready to bail in a few years, I simply do not know. But I certainly wouldn't want to be trapped in the thing nor would I expect any partner to be trapped.

As anyone who's ever met or dealt with me will testify, I'm pretty laid back and reasonable. My only reason for starting this was to get some clarity over the meaning of the standard RYA Syndicate Agreement.
 
petem said:
That's not the case in the slightest. We've had a few great years on the boat already (where did the time go?) and I'm not ready to bail out yet but might well be ready to bail in a few years, I simply do not know. But I certainly wouldn't want to be trapped in the thing nor would I expect any partner to be trapped.

As anyone who's ever met or dealt with me will testify, I'm pretty laid back and reasonable. My only reason for starting this was to get some clarity over the meaning of the standard RYA Syndicate Agreement.
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Apologies Pete , that’s what I see .Thx for the clarity.
 
petem said:
That's not the case in the slightest. We've had a few great years on the boat already (where did the time go?) and I'm not ready to bail out yet but might well be ready to bail in a few years, I simply do not know. But I certainly wouldn't want to be trapped in the thing nor would I expect any partner to be trapped.

As anyone who's ever met or dealt with me will testify, I'm pretty laid back and reasonable. My only reason for starting this was to get some clarity over the meaning of the standard RYA Syndicate Agreement.
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Shared boats always work fine until one party diverges from what the others want. It is always a problem no matter how much one tries. The contract as JFM says is ambiguous at best and guaranteed to result in exactly what it tries to prevent ie a shit fight. It would seem to me that the easiest solution here is complete clarity: if someone wishes to sell they give notice. At that point the boat is valued and if the other partners wish to buy them out then they pay that price. If not then the whole boat goes on the open market at which point if a bid comes in then either the remaining partners buy at that price (right of first refusal or a pre emptive right -seems fair as you wouldnt want to end up being a partner with someone you cannot stand) or it is sold and problem solved. the selling shareholder should absolutely have to pay their share of fixed costs until the point of sale. Not perfect - pre emptive rights sometimes put buyers off and prices can be manipulated potentially and of course there could be a case where absolutely no one wants to buy the boat and then what? - but at the end of the day a sole owner has this issue and unless he or she scuttles the boat or gives it away there are still fixed costs to pay. You are spot on to try to resolve this upfront in a clear and fair manner.
 
petem said:
That's not the case in the slightest. We've had a few great years on the boat already (where did the time go?) and I'm not ready to bail out yet but might well be ready to bail in a few years, I simply do not know. But I certainly wouldn't want to be trapped in the thing nor would I expect any partner to be trapped.

As anyone who's ever met or dealt with me will testify, I'm pretty laid back and reasonable. My only reason for starting this was to get some clarity over the meaning of the standard RYA Syndicate Agreement.
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Pete.
I think u r getting a lot of negative comments on what u r trying to do. Shame such advice wasnt mentioned when u did your thread on setting up a boat share a few years ago.

I hope u keep on going and see where u get.

There has got to be a compromise agreement even if it is a polished turd. It may even be a broad category outline agreement that the boat share parties agree between themselves and fill in the dots as to what they are happy with. The most obvious being what happens financially if they cant sell their share.

Without stating the obvious and I might have missed it but is there any way you and the party not wanting to sell can buy the 3rd share and go 50-50?
 
FARSCO said:
If you are all in agreement....including the the guy leaving.....does it matter right now ?

Are you hoping to buy them out or are you thinking of the next shareholder?

Best thing is to not need the contract...or do you suspect that will change?
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I have a partner selling and another buying. All very amicable but will result in a new agreement being signed, hence the query. I've no reason to believe I will ever have to rely on the contract but one never knows!
 
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