The owner of a thirty-metre motor yacht based in Antibes receives monthly cash calls from his management company, without itemised invoices. A shipyard happens to tell him that the manager takes a commission on every quotation. He wants accounts, and then to change manager before the season.
An agency, with its obligations
The manager recruits the crew, orders maintenance, pays suppliers, arranges charters and keeps the vessel’s accounts. These acts are performed in the name and on behalf of the owner: that is the very definition of agency (mandat, Article 1984 of the French Civil Code). Each management company’s own contracts set out the duties and remuneration in detail, but cannot do away with the agent’s fundamental obligations.
The right to obtain accounts
Every agent must account for its management and hand over to the principal everything it has received (Article 1993 of the Civil Code). The owner may demand a breakdown of expenditure, the invoices, statements of the operating account, the contracts concluded in his name and the commissions received. A commission paid by a supplier to the manager and not disclosed to the owner is a sum “received by virtue of the power of attorney”: it must be handed over.
A refusal to account justifies a formal notice, followed by an action for an account, possibly preceded by a measure of inquiry to obtain the documents.
The manager’s liability
The manager is liable for its mismanagement (Article 1992 of the Civil Code): unauthorised expenditure, budget overruns, failure to keep certificates up to date, poor selection of crew, breach of the vessel’s social security or tax obligations. The owner must establish the breach and the resulting loss.
Changing manager
The principal may revoke the agency whenever it sees fit (Article 2004 of the Civil Code). The contract often provides for a notice period, or even an indemnity. Revocation must be organised: handover of the ship’s documents, crew contracts, account access, the register and the certificates. An ousted manager may hold on to documents; their handover should be provided for in the letter of revocation and, if necessary, ordered by the court.
What the firm checks first
- The management agreement: duties, remuneration, notice.
- The accounts, invoices and statements provided.
- Undisclosed commissions and kickbacks.
- The contracts concluded in the owner’s name.
- The timetable for handover to the new manager.
For the firm’s involvement, see Advice to shipowners and yacht owners.
Further reading
- Yacht not returned by the skipper or the charterer: recovering the vessel
- Boat damaged in winter storage or dry stack: the custodian’s liability
- Yacht finance leases: what happens when rentals go unpaid
For owners whose yacht is based on the French Riviera, see our page French yacht lawyer on the Riviera.
This analysis is part of the firm’s work in maritime law.
Frequently asked questions
May the manager receive commissions from suppliers?
Any sum received in performing the agency must be handed over to the owner, unless expressly agreed otherwise (Article 1993 of the Civil Code).
Can the management agreement be terminated mid-season?
The agency is revocable (Article 2004 of the Civil Code), subject to the notice period or indemnity provided for in the contract.
How can the yacht’s documents be recovered?
By an express request in the letter of revocation and then, if necessary, by a court order.