The Norwegian Saleform 2012 organises the sale of a second-hand ship in short clauses, each with time limits and automatic sanctions: a 10% deposit within three banking days, an inspection that sets the reference condition, a cancelling date, delivery as inspected save for damage affecting class, and a warranty against encumbrances. These clauses are negotiated through riders before signature.
A shipowner buys a twelve-year-old bulk carrier from a Greek seller for eighteen million dollars. The broker sends a Memorandum of Agreement on the Norwegian Saleform 2012, four pages the whole market knows and almost nobody rereads. The buyer signs, pays the deposit, sends its superintendents. Three months later, the ship is delivered with a class recommendation nobody had seen, a four hundred thousand dollar bunker claim from a Singapore supplier, and an engine that breaks a connecting rod on the first voyage. Each of these three problems matches a clause of the form, and each of those clauses has already been litigated.
The Saleform is not a French contract. It is written in English, almost always chooses English law and London arbitration, and its case law is that of the English courts. But it applies every day to French buyers and sellers, to ships entering or leaving the French flag, and to the French banks that finance them. Here are the clauses on which disputes focus, what the courts have said about them, and what should be changed before signing.
A standard form that does not remove the need to negotiate
The Norwegian Saleform, published by the Norwegian Shipbrokers’ Association and adopted by BIMCO, is in its 2012 version, which succeeded the 1993 version. It organises the sale in a few steps: signature and deposit, inspection, notice of readiness, delivery against payment and handover of documents. Each step is governed by short time limits, expressed in banking days, and by automatic sanctions. In 2022 BIMCO published a competing form, SHIPSALE 22, which is more detailed, but the Saleform 2012 remains the reference instrument of the second-hand market.
The form is designed to be completed by additional clauses, the riders, and it is in those riders that each party’s protection is won or lost. A contract signed on the bare form, without a rider, leaves the buyer with thin warranties and the seller with obligations it does not always measure.
The deposit: ten per cent that becomes a debt
Clause 2 requires the buyer to pay a deposit, in practice 10% of the price, within three banking days after signature, into a joint account opened with a named deposit holder. The 2012 form learned from the difficulties of the 1993 version by making the period run from the deposit holder’s written confirmation that the account has been opened, which means that the bank’s compliance checks must be done before signature, not after.
The deposit is not a mere advance. In The Griffon, the buyer of a ship for twenty-two million dollars had not paid the 2.16 million deposit on time, and the seller terminated. The Court of Appeal held, upholding the High Court, that the seller could claim the amount of the deposit itself, as a debt accrued before termination, and not merely damages measured by the difference between the contract price and the market value (Griffon Shipping LLC v Firodi Shipping Ltd, [2013] EWHC 593 (Comm), affirmed [2013] EWCA Civ 1567). In a falling market the difference is considerable: a seller who resells its ship at the same price has suffered no loss, but it still collects the 10%. Clause 13 of the Saleform 2012 in fact states expressly that if the deposit is not paid, the seller may cancel and claim compensation for its losses.
A buyer who is not certain of its financing within three days therefore does not sign; it negotiates a longer deposit period or a written condition precedent, knowing that signature alone binds it.
The inspection: what was seen and what was not
Clause 4 offers two options. In the first, the buyer has inspected the ship and its classification records before signature, and the contract is firm. In the second, the inspection takes place after signature, and the buyer has a short period, usually seventy-two hours after the inspection, to declare whether it accepts the ship; its silence counts as a withdrawal from the sale, and the deposit is returned.
The inspection is only as good as the inspector. It is visual, involves no opening up of machinery, no trials and no thickness measurements, and it sets the reference condition for delivery. That is why experienced buyers supplement clause 4 with a rider giving full access to the classification society’s records, previous survey reports and port State control records, and with an inspection of the engine by an independent surveyor. Sellers, for their part, make sure that the inspection report records precisely the condition found, because clause 11 compares delivery with that condition.
Clause 6 adds a diver’s inspection, at the buyer’s request and expense, before delivery. If the diver finds damage affecting class, the seller must drydock the ship at its expense, and the clause sets who bears the drydocking costs depending on whether the defects are confirmed, and deals separately with the tailshaft. This is a regular source of dispute, because drydocking shifts the delivery date and brings the cancelling date into play.
Delivery: the cancelling date and the notice of readiness
Clause 5 sets the place and window of delivery, with a cancelling date after which the buyer may walk away from the contract. The seller sends approximate and definite notices, then a notice of readiness when the ship is physically ready, and the buyer then has three banking days to pay and take delivery.
Clause 5(c) is the anticipation clause: a seller that foresees it will not be ready by the cancelling date may give notice proposing a new date, and the buyer must then choose, within three banking days, between cancelling and accepting the new date, failing which it is deemed to have accepted. Disputes arise from notices sent too early, before the ship is really ready, or from imprecise notices. A premature notice of readiness is invalid and does not start the payment period; a buyer that needs to get out of a contract in a market that has fallen twenty per cent examines that notice with the care one can imagine.
The condition of the ship on delivery: clause 11 and The Union Power
Clause 11 provides that the ship is to be delivered and taken over as she was at the time of inspection, fair wear and tear excepted, free of damage affecting class, with her class and trading certificates valid, without conditions or recommendations outstanding. It is the only condition warranty the form grants, and it refers back to the inspection.
Under the 1993 version, sellers argued that these words were enough to exclude the implied terms of English law, in particular the duty of satisfactory quality under section 14 of the Sale of Goods Act 1979. In The Union Power, a ship delivered with a connecting rod bearing about to fail suffered an engine breakdown on her first voyage; the High Court held that the phrase “as she was at the time of inspection” was ambiguous and did not exclude the statutory warranty, so that the seller was liable for the defect (Dalmare SpA v Union Maritime Ltd, The Union Power, [2012] EWHC 3537 (Comm)). The Saleform 2012 responded to that decision by adding clause 18, the entire agreement clause, under which the written terms are the entire agreement and any term implied by law is excluded to the extent permitted by law. The drafters of the form have indicated that under English law this clause should exclude the implied terms of the Sale of Goods Act.
A buyer on the Saleform 2012 therefore buys, absent a rider, a ship in the condition seen at inspection, with no quality warranty, and its protection rests on three things: the quality of its inspection, the class maintained without recommendation clause, and the specific representations it has had inserted on the points that matter to it, consumption, condition of tanks, repair history. The seller, for its part, must beware of class recommendations it is unaware of: a recommendation outstanding at delivery is a breach of clause 11, whatever its good faith.
Encumbrances that follow the ship: clause 9
Under clause 9 the seller warrants that the ship, at delivery, is free from all charters, encumbrances, mortgages and maritime liens or any other debts, and undertakes to indemnify the buyer against the consequences of any claim arising before delivery. This clause deals with the bunker, repair, wages and salvage claims that follow the ship as maritime liens and can lead to her arrest in a foreign port months after the sale.
The indemnity is only as good as the seller. A seller that is a single-purpose company, dissolved the day after the sale, will pay nothing, and a buyer whose ship is arrested in Singapore for an earlier bunker invoice will have to pay to free it. Real protection comes through a retention on the price, a bank guarantee or a parent company guarantee, negotiated in the rider, and through a search for liens before delivery. Under French law, article L. 5114-8 of the Transport Code lists the privileged claims, and a private sale does not purge them; only a judicial sale extinguishes the liens.
The documents: clause 8 and the appendix
Clause 8 refers to an appendix listing the documents the seller hands over at delivery against payment: a legalised bill of sale, a deletion certificate or an undertaking to delete the ship from the register, a certificate of ownership and freedom from mortgages, corporate resolutions, class and trading certificates, and the documents needed to register the ship under the new flag. Disputes arise from an incomplete appendix or from a seller that cannot provide a document the buyer’s register requires.
A buyer that intends to register the ship in France must check before signing what the one-stop shop of the French International Register or the francisation office will ask for: article L. 5114-1 of the Transport Code requires any transfer of ownership of a French-flagged ship to be made in writing on pain of nullity, article L. 5114-2 organises registration in the ship register, and the ship mortgage, moved within the Transport Code to articles L. 5114-6-1 et seq. by Ordinance no. 2026-265 of 8 April 2026, must be created and registered under those texts if a French bank finances the purchase. A French seller, conversely, must obtain the discharge of its mortgages before delivery, which requires its bank to be ready on the day.
Defaults: clauses 13 and 14
Clause 13 deals with the buyer’s default: the deposit is released to the seller, which may also claim compensation for its losses and costs. Clause 14 deals with the seller’s default: if the seller has not given notice of readiness or cannot make a valid transfer by the cancelling date, the buyer may cancel, the deposit is returned with interest, and the seller owes compensation if its default is due to proven negligence. The asymmetry is intended: a defaulting buyer pays without discussion, a defaulting seller pays only if its fault is proved, and that proof is difficult when the delay comes from the shipyard, the registry or the bank.
The rider is where the balance is restored, for example by providing liquidated damages payable by the seller in case of non-delivery, or by specifying what amounts to negligence.
Governing law and arbitration: clause 16
Clause 16 offers three options: English law and London arbitration under the rules of the London Maritime Arbitrators Association, New York law and arbitration in New York, or any other law and place chosen by the parties. The first dominates the market, and it has two consequences for a French party: the applicable case law is the one described above, and the proceedings take place in English before London arbitrators, with the costs that implies.
The Vienna Convention on the International Sale of Goods never applies, since its article 2(e) excludes ships. The Rome I Regulation allows the parties to choose their law, but the overriding mandatory rules of the place of delivery, on customs, tax and international sanctions, apply whatever law is chosen. A French buyer that prefers French law and the Paris Maritime Arbitration Chamber can obtain them if it has the necessary bargaining power, and gains the application of the warranty against hidden defects of articles 1641 et seq. of the Civil Code, subject to exclusion clauses that are valid between professionals.
What the form does not deal with
Three subjects absent from the form now produce as many disputes as the clauses themselves. International sanctions, first: a ship that has called at a sanctioned port, a counterparty on an asset-freeze list, a payment routed through an exposed bank, can block the transaction or expose the buyer, and the rider must contain representations and a termination right on this point. Environmental compliance, next: the energy efficiency index, the annual carbon intensity rating and, for a ship calling in the Union, the obligations to surrender emission allowances that we have dealt with elsewhere, affect the value and operability of the ship and must be checked before the inspection. Finally, the tax treatment of delivery: the place of delivery governs VAT and any duties, and a ship delivered in an EU port to a buyer unable to show its commercial use may face a tax claim.
What the firm does
We review and negotiate Memoranda of Agreement on the Saleform 2012 and SHIPSALE 22 for buyers, sellers and banks, drafting the riders on the deposit, inspection, class, liens and sanctions, and coordinating delivery with registries and lenders. When difficulties arise, we handle the pre-litigation discussion on the notice of readiness, the cancelling date or the condition of the ship, and we assist our clients in London arbitration with our correspondents, or before the Paris Maritime Arbitration Chamber when French law has been chosen.
Further reading: Port State detention of a ship in France: release and appeals.
Frequently asked questions
What happens if the buyer does not pay the 10% deposit within three days?
The seller may cancel and claim compensation for its losses (clause 13). Under English law, the courts have held that the seller may claim the amount of the deposit itself, as a debt that accrued before termination, even if it has suffered no market loss (Griffon Shipping LLC v Firodi Shipping Ltd, [2013] EWCA Civ 1567).
Does the seller warrant the quality of the ship under the Saleform 2012?
No, absent a rider. Clause 11 provides for delivery in the condition found at inspection, fair wear and tear excepted, without damage affecting class and without outstanding recommendations. Clause 18, added in 2012 after The Union Power ([2012] EWHC 3537 (Comm)), excludes terms implied by law to the extent permitted, which under English law targets the satisfactory quality warranty of the Sale of Goods Act 1979.
What does the clause 9 warranty against encumbrances cover?
The seller warrants that the ship is free, at delivery, of all charters, encumbrances, mortgages, maritime liens or other debts, and undertakes to indemnify the buyer against claims arising before delivery. That indemnity is only worth something if the seller is solvent: a retention or a bank guarantee is the only real protection against a later arrest for a bunker or repair claim.
Can the buyer cancel if the ship is not delivered on time?
Yes, at the cancelling date set by clause 5, with return of the deposit and interest. A seller that anticipates a delay may propose a new date, and the buyer must reply within three banking days, failing which it is deemed to accept (clause 5(c)). The seller owes compensation only if its default results from proven negligence (clause 14).
Is the diver’s inspection compulsory?
No, it is at the buyer’s option and expense, before delivery (clause 6). If it reveals damage affecting class, the seller must drydock the ship at its expense, which delays delivery and may bring the cancelling date closer.
Which law applies to a Saleform signed by a French buyer?
The one chosen in clause 16, usually English law with London arbitration. The Vienna Convention does not apply to ships (article 2(e)). French overriding mandatory rules on customs, tax and sanctions apply in any event, and the transfer of a French-flagged ship must be in the written form required by article L. 5114-1 of the Transport Code.
Is a notarial deed needed to sell a ship in France?
No, but writing is required on pain of nullity for any transfer of ownership of a French-flagged ship (article L. 5114-1 of the Transport Code), and the transfer must be entered in the register provided for by article L. 5114-2. The Saleform bill of sale, with the documents in the clause 8 appendix, meets this requirement if it is properly drafted.
What is the difference between the Saleform 2012 and SHIPSALE 22?
SHIPSALE 22, published by BIMCO in 2022, is more detailed on documents, time limits, international sanctions and conditions precedent, and its clauses are drafted to reduce the ambiguities litigated under the Saleform. The Saleform 2012 remains the most widely used form on the second-hand market, and most brokers offer it by default.
Hervé Guyader, avocat at the Paris Bar, doctor of law.