The shipowner and shipyard's relationship with the seller

 

 

 

In practice, although the identity of the bank or financial institution is the lessor, which provide the ship, the ship owners but they usually do not participate in the selection, trade negotiation and consultation, ship inspection or ship under construction inspection and other related activities in the buying and selling, because the bank on these problems such as do not have professional knowledge and skills. In fact, before the shipowner and shipyard or seller approached, the owner often has been in contact with the shipyard or the seller, some even have already concluded the building contract of the ship or ships business agreement. In practice, though with the shipyard or the seller to enter into a contract and pay the price is the lessor, due to the final use of the ship's owner, so about the details of the ship building or buying and selling is often determined by shipyard or after negotiation between the seller and owner. But that does not, of course, means that the shipyard is the lessor's agent or the seller, on behalf of the shipowner and the owner. Unless there is authorized, shipyard and do not represent the lessor or the seller. In the existence of agency relationship between the shipowner and shipyard or the seller shall be determined according to the specific facts.

 

 

 

Between the lessor and the shipowner and shipyard or sell the direction of the owner of assurances about the shipping quality, performance, function and so on also should not restrain the lessor. Branwhitev Worcester Works FinanceLtd is a case involving the car hire purchase, the lessee in the case that you have a car Talbot, but want to change a Rapier car. Car dealers sold for 430 pounds a Rapier to the lessee, and acquired the lessee for 130 pounds of Talbot. The balance paid by the lessee five pounds a month. Even didn't look at the lessee signed automakers offer financial documents, and there is no digital files. Automakers in the lessee has signed the document filled in 649 as the price of the car, xzc other hire purchase price is 805 pounds, a deposit of 130 pounds, monthly pay 18.14 pounds. Financial firms bought the Rapier car for the price of 649 pounds, deduct the pay 519 pounds to 130 pounds. Financial firms signed sent a hire purchase agreement to the lessee, the lessee is ignored, and no pay. Financial companies and to recover the car, and require the lessee to pay all the rent. Court dismissed the financial company's request, the reason is that the financial company and there is no valid contract between the lessee. The lessee for refund of the deposit, the first-instance court rejected, its appeal was rejected by the court of appeal. Case first house, the house of lords that financial company shall return the £ 130.

 

 

 

Lord Morris does not make their own decision establish agency relationship exists between auto and financial company, but he seems to be the automakers have received money as a finance company received the money. LordMorris view supported by most, but the Lord Reid and Lord Wilberforce disagreed. Although Lord Wilberforce agreed to finance company shall return the 130 pounds, but he thought in the agency relationship between the automakers and financial firms.

 

 

 

The case involves the general equipment finance lease, and general equipment finance lease and although ship financing lease shall be governed by the laws of the same, but should have obvious difference between. In general equipment finance lease, the lessee may be through the lessor to buy equipment, or equipment suppliers in the provision of equipment as well as financial leasing services. In the above MercantileCredit, trading has been set up as early as before the financing lease. Although between the lessor and the equipment supplier does not exist agency relationship, of course, but there are also may exist agency relationship between the two. In ship financing lease arrangements, however, whether it's owner, but after seeing a suitable ship preliminary contact with relative party after negotiation with the lessor of the financing lease, or only after negotiated with the lessor finance lease relationship began to look for of the ship, on the ship, including its quality, performance, price and other details are the content of the owner with opposite party consultation, usually do not participate in the lessor. In ship financing lease arrangement, therefore, whether to sell new ship shipyard or sell secondhand ship seller is considered the possibility of the lessor's agents should not too big. In addition, if the way of ship financing lease is by buying ships from owner and then rent to the owner, the so-called problem would be gone, because the seller is actually of the owner.

 

 

 

The relationship of the owner and shipyard and the seller

 

 

 

Under normal circumstances, the owner only with the lessor has a contractual relationship, relationship with shipyard or the seller did not contract. Relative principle according to the contract, the owner does not directly to the shipyard or the seller based on the contract claim. In other words, the owner cannot claim on shipping quality, performance and function of the claim or claims, nor to the shipyard or the seller made a similar claim or claims, it is obviously quite unfavorable for shipowners. Practice of the solution is: in the case of a lease is a new ship, owner may request the shipyard directly to their own quality assurance or allow the lessor will guarantee to the owner, which can be directly to the shipyard warranty claims; The ship if the lease is secondhand ship, the owners can ask the sellers themselves guarantee ship no problem in terms of quality, performance and function. And aiming at the problems in the process of ship construction, the identity of the owner can charge people involved in ship construction whole process, and can according to the shipyard and the lessor of the building contract of the claim and the claim for compensation. Owners can also persuade the lessor agrees to owner directly with shipyard construction or purchase contract, or the seller. Due to the ownership of the ship will not change, therefore, the lessor shall will agree to this request from the shipowner. In the case of English law to apply, the shipowner shall also have the opportunity to according to a 1999 (third right) contract law directly to the shipyard or the seller of any claim. Unless agreed by the parties to rule out in the contract, the law is applicable, of course, so the owners need to do is ask lessor don't rule out in contract with the shipyard or the seller of the contract (third right) act apply. In practice, the lessor for shipyard or the right to claim the seller tend to be transferred to the owner's side, with the ship, in other words, the name of the owner's own claims to the shipyard or the seller. On the issue in 1988, the international unified private law association convention on international finance lease owner directly to the shipyard is specified or the right to lodge a claim against the seller.

 

 

 

The ship's delivery

 

 

 

Ship delivery here refers to the lessor to deliver the ship, the ship owners if the ship financing lease involves new ships, shipyard to the lessor according to the building contract of the ship is usually the lessor according to the contract for financial leasing to the owner of delivery time. Even if the finance lease is a second-hand vessel, the seller in accordance with trade agreement will ship also tend to be delivered to the lessor the lessor shall, in accordance with the financing lease contract will ship when delivered to the lessee. If the ship financing lease is the after-sale lease back way, although the owner from all people to the lessee, but actually does not occur the actual delivery of the ship. Because of the owner sell ship is to get money, the possession of the owner did not give up the ship. So the ship's delivery is actually the virtual, and according to the buying and selling on the ship's delivery and financing lease contract of the agreement in the ship's delivery is at the same time. Both sides need to do is to determine a point in time as a ship's delivery time, the ship's fuel oil, lubricating oil and equipment number and status, the level of ship, classification as well as the insurance and so on all points shall be determined in accordance with the agreed upon period of time, determine the corresponding rights and obligations in accordance with the same point. Although the owner kept possession of ship, but his identity by all the people turned to the lessee.

 

 

 

Lease

 

 

 

While for the lessor to lease the shorter, the better, the shorter the lease means that the shorter the duration of the lessor at risk also. On the contrary, the longer the lease, the lessor is also means that the greater the risk. But the lessor must face the reality is that of the owner in the financing lease period shall pay for the shipping cost is the sum of profits and the lessor is the amount of the rent. To make a short lease possible premise is that the market must be on owner's side. To ensure that the owner can be in just a few years by working to earn the ship all the acquisition cost and profit of the lessor. In fact, the lease is longer is one of the basic characteristics of ship financing lease, ship leases are generally more than 10 years, 15 years or longer. Long lease term is not an accident, and should be a necessity. Financing lease as a ship financing and bank loans and other financing way is different, one of the most of the ship in the arrangement of loans, as the owners must provide repayment guarantee of the borrowers, the repayment guarantee include set on ship's mortgage and guarantee provided by a third person. In the ship financing lease arrangements, however, due to the lessor's ship register all himself, so the ship mortgage is no longer meaningful. Although is the essence of the financing lease financing, financing is in the form of lease. Time charter in general case, as the lessor's owner against charterer's benefits don't pay the rent according to the contract should be removed from the ship, which refused to allow owners to continue using the ship. As long as the owners from the ship in time, usually is not a great outstanding debt. A relief is a real relief for shipowners. But for the lessor in the financing lease of a ship, the benefits may not be very effective, because the ship is not the lessor wants to keep, have ship at first, it is not the purpose of the lessor, but means.

 

 

 

In the absence of the performance guarantee, the lessor is willing to provide owners in the form of lease financing will depend on the owner's ability to pay the rent and its reliability. If the owner is credit in good condition and lower the credit risk of the company, the lessor provides financing also won't have too big concern. But this does not mean that owner's credit standing is the only basis of ship financing lease transactions. As long as the owners to find reliable for ship to rent house, the lessor can offer by way of financing lease financing. In this case, though the rent house there is no credit risk of the owner to find, but if the lease is much shorter than the lease financing lease, the lessor's interest is still not well. So, the lessor should not only see the lease of the owner concluded with a third person is reliable, but also to ensure that the lease term is equal to or longer than the duration of the ship financing lease. As long as you transfer the lease of the owner to the third person to the lessor, the lessor has actually not much concern for the credit status of ship owners, even if the owner of bankruptcy, the lessor can still require the third person to perform the lease. This is the ship financing lease term is usually long.

 

 

 

From the perspective of owners, it seems that there is no reason not to accept the lease long ship financing lease arrangement. Because the longer the leasing limited means that the issue of the owner shall pay the amount of rent, the lower to the owner and the smaller the pressure. Sometimes owners may wish to agree on before they become the real owner of the ship at the end of the lease, due to the change of the market, for example, selling ships can achieve greater profits, mortgages or owner needs to shipowners to other financing services. Owners need to do is just in the financing lease contract and pay all the rent in advance to get a shipping option, this option exercise conditions, as long as specified by the lessor shall not against it.

 

 

 

The rent

 

 

 

Owner is in accordance with relevant provisions of the contract for financial leasing shall pay the rent according to the lessor's calculation for total amount of investment and return on investment, then according to the length of the lease share to each issue. Rent levels of specific factors include: ship's purchase price, the lessor financing costs, tax breaks, the length of the lease, the lessor's risk compensation and profit, etc. Book and make or buy boat ship price refers to the lessor pay price, this is the main part of the rent. It is hard to imagine that the lessor may not by financing to purchase the ship, so the lessor's financing costs will also be reflected in the rent. Usually including interest and costs the cost of financing, financing cost of high and low first depends on financing at the time the overall supply and demand status of the capital market, but the lessor's financing ability will also affect the financing cost of high and low. Financing lease as a financing is often based on tax breaks, the lessor will themselves can enjoy favorable to the shipowner, such as tax breaks to provide financing lease conditions on the owner's more attractive. The lessor to the owner of the tax incentives, the greater the rent more tend to be low. Due to the owner during the lease period to pay rent usually will cover all the cost of the lessor and reasonable profits, therefore, the shorter the lease, the amount of each rent will tend to be high. On the contrary, the lease is long, the issue of the owner shall pay the rent will tend to be low. The lessor's own financing provided by the ship owners with financing lease is not back to back, the lessor in the financing of the risk and cannot be directly transferred to the owners of financing lease arrangement. The lessor and the risk themselves, such as the lessor's own financing usually adopt a floating interest rate, while in the ship financing lease rent is fixed, in other words, the lessor to undertake due to adverse changes in interest rates may bring the risk of loss; Again, such as the lessor throughout the lease term is always the shipowner, as a result, bear the loss may bring the risk of loss to the lessor of the ship. The lessor usually against these risks makes the corresponding response, this response is often the final reflect the price of a certain amount of compensation in the rent. The lessor is engaged in the pursuit of profit is the purpose of ship financing lease, the lessor for the profit level height will directly affect the amount of rent per issue.

 

 

 

In most of the ship financing lease arrangement, owner is usually pay a monthly rent, and the ship at the same time charter, the rent is usually prepaid, namely owner to pay before they begin using the ship. Although in accordance with the lessor's cost and profit calculation amount of the monthly rental fee is often not an integer, but the owner pays by the month rent almost must be an integer. Difference is usually adjusted by the last phase of the rent, so the final phase of the rent amount is usually larger than the amount of rent before, paid by the owner at the expiration of the lease, somewhat akin to the balloon repayment of loans of the ship. But in practice also has an agreement of the owner shall pay the number before the start of the leasing period rent or agreed amount of shipping financing lease arrangement.

 

 

 

Currency

 

 

 

Ship financing lease will also have problems with currency trading, the owner shall pay the rent in what currency. In terms of the shipowner, they clearly want to use the dollar as the rent payment currency, because owner's operating income is almost the only currency, in the international shipping industry largely invisible in euros or other currencies to pay rent or freight. Income and pay the money of the same performance make the owners to avoid the risk of exchange rate changes. The shipowner whether to agree to use the dollar as a trading currency is often depends on the nature of the lessor, if the lessor is a international Banks or multinational bank's leasing company, use dollars or other currencies shall not become a problem. But if the lessor is a no bank background rental company, and not a lot of multinational business, they are likely to adhere to its own currency as a trading currency. USES the currency as a trading currency other than dollars will not actually to the ship financing lease transactions bring obstacles, the owners need to do is to change in exchange rate may bring to guard against the risk of can.

 

 

 

Absolute liability clause

 

 

 

Absolute responsibility (hell or high water) clause refers to the obligations stipulated in the contract the lessee pays the rent is absolute and unconditional, and the lessee cannot refuse to pay rent for any reason or reasons. So absolute liability clause is also known as "unconditional payment terms" (unconditionalpayment clause). Almost all of the ship financing lease will be absolute liability clause in the contract.

 

 

 

Regulations in accordance with the terms of the absolute responsibility, the obligation of the owner, in accordance with the contract, pay rent is absolute and unconditional, any case does not constitute the reason of the owner refuse to pay the rent. Although the wording of the absolute liability clause has obviously unreasonable place, from the perspective of the content of absolute terms itself obviously is very reasonable, but the surface of irrationality is the financing nature of ship financing lease arrangement. The ship is the lessor according to the owner's willingness to build or purchase, have ship is not the will of the lessor, but the owner's wishes. By way of financing lease is in order to solve the problem of ship owners do not have enough funds to purchase, rent is actually the owner pay the cost of financing in the form of profits and pay the lessor. In the shipping department according to the owner's willingness to produce or purchase and always under the owner's actual control, the obligations of the owner pays the rent has certainly not because of any problem in the ship itself or its operating and affected, in other words, even if the ship due to not attributable to the cause of the shipowner and stop the operation, the owner still has to pay the rent in accordance with the contract. Court will usually absolute liability in terms of validity and enforceability of the 1991 Colorado Interstate CIT Group corp. v/Equipment FinancingInc case involves a large computer leasing, absolute liability clause is included in the lease agreement. The 10th circuit court think this clause is effective, the reason is that freedom of contract.

 

 

 

Based on the freedom of contract concluded that absolute liability clause should be only for containing the terms and conditions of the lease contract, in the ship financing lease arrangements, based on the nature of trading arrangements should also can be absolute liability clause valid conclusions. But in SuburbanTrust and Savings Bank vUniversity of Delaware, Delaware absolute federal district court rejects the validity of the clause. The case involving a computer service contract, the contract contains a clause content and absolute liability similar to abandon contradictory clause. Service providers in the contract after the consent of the university of Delaware, transferred to the plaintiff. Months after the contract execution, service providers are no longer providing services, the university of Delaware, stop the payment. The assignee based on absolute liability clause, but the court said the absolute liability clause in the contract unenforceable. Thought to give up contradictory clause by the court for violating Delaware "uniform commercial code" cannot perform the provisions of article 9-318.

 

 

 

It is not difficult to understand is that in the above case actually does not have a rental. In the general service contract, allowing the service person in refusing to provide service at the same time also has the right to get remuneration should be more ridiculous.

 

 

 

Although the lessor in the financing lease contract and owner will have absolute liability clause, specify owner shall assume all risk and liability of the vessel, but the lessor shall not allow construction of the vessel or the seller ruled out the contract and the legal responsibility. If the owner has been conclude with shipyard the building contract, the lessor is often need to the identity of the buyer accepting the building contract of the ship. In accepting the transfer, the lessor shall not accept any absolute liability clause or similar rules and words.

 

 

 

The ownership of the implied warranty

 

 

 

Implied warranty is the legal obligation of the lessor, in other words, no matter whether there is a contract, the lessor's obligation. The rules for the sale of goods act 1979 the obligation of the seller shall enjoy the ownership of goods. The sale of goods act 1979 also made further provision for the above content, namely the legal obligation of the rules is the nature of the clause in the contract, rather than a general guarantee. Once the violation of the terms, contract opposite party can claim damages not only, but also may terminate the contract.

 

 

 

Although the rules are for sale, but this provision shall also apply to the financing lease, including ship finance leasing. According to the British in 1973 the supply of goods (implied terms) act provisions, ship financing lease arrangement of the lessor shall guarantee on the ownership transfer of the ship, they have a sale of the ship, and the owner can enjoy undisturbed possession and use of the ship.

 

 

 

Although ship financing lease in the form of a lease, but the essence of which is financing, namely the lessor to provide funds to help owners buy ships. In terms of the owner, although it is to rent the lessee of the vessel, but from the time of ship financing lease arrange consultation, he is for the ownership of the ship, never had a lease end also the idea of the ship. For the lessor, unless the owner's default or other accident, nor did he take the meaning of the ship. Although the lessor retains the ownership of the ship, but the moment the ship delivered to the shipowner, the shipowner's intention is to transfer the ownership of the ship. Ship financing lease, therefore, though not in the form of buying and selling, but this does not affect the lessor to enjoy full ownership of the guarantee of the ship. Unless otherwise agreed between the lessor and owner, owner is no reason to accept the fact that the lessor of the ship is not ownership, because it means the owner after agreed to pay all the rent is still may not be able to obtain the ownership of the ship. Lessor ship should not only to enjoy the full ownership, but also should have all of the other may affect or hinder the lessor to the owner the right to transfer of ownership of ship, such as ship construction involves the transfer or use of intellectual property rights, etc. In short the lessor shall ensure that the owner can be undisturbed occupy and use the ship. In 1988 the convention on the international unified private law association international financing lease has a similar rules.

 

 

 

In the general equipment in the arrangement of financing lease, the lessor or whether to enjoy the ownership of the leased property ownership is defective may have problems. In ship financing lease arrangements, however, because of the ownership of the ship must be registered to against a third party, so whether the lessor of the ship ownership is usually a more specific problem. Due to the sale of goods act 1979 requires only the seller when the ownership transfer of the rights and therefore may produce a question is whether the lessor must at the time of the ship financing lease contract to enjoy full ownership of the ship. There is no doubt that both sides can make a agreement, that is, whether the lessor at the time of the contract should have the ownership of the ship. If without the problem.any, based on the above analysis, the lessor shall, at the time of the financing lease contract to enjoy the ownership of the ship.

 

 

 

Quality and performance to ensure ruled out of the ship

 

 

 

In the ship financing lease away almost without column there will be a clause in the contract, expressly agreed upon the lessor to the ship and its possible defects whether is suitable for the purpose and shall not be liable for any owner. If the ship financing lease is a second-hand vessel, financing lease usually contract, owner ships and shall undertake liability for its choice; If the ship financing lease is a new ship, will be agreed upon in the contract for financial leasing, shipowners and shipyards will negotiate and conclude a treaty specifications and other technical problems, and responsible for ship construction supervision. Such conventions of the reason is that the lessor is according to the requirement of the owner's order or purchase of the ship, the essence of this agreement by the terms of the contract law applicable. Unless when mandatory law, through in the contract agreed by the parties to exclude certain rules of law applicable in the vast majority of countries are allowed.

 

 

 

Legal obligations

 

 

 

The British in 1979 and the sale of goods act 1982 the supply of goods and services act has implied warranty about the goods quality and performance. This applies to all business contract, also applies to the lease contract and the contract for financial leasing.

 

 

 

Whether ship financing lease contract has an agreement, as to provide ship the lessor must meet the statutory implied warranty. The statutory implied warranty mainly involves two aspects, namely the ship has a satisfactory quality (satisfactory quality) and vessel for all purposes (fitness for all purposes). Unless otherwise agreed by the parties, the so-called satisfactory quality in terms of ship is not complicated, as long as the ship conform to the requirements of the corresponding class and have a certificate, you should have satisfactory quality. Suitable for all purposes can be divided into two meanings, the first layer of meaning is refers to the lessor provides ship is worthy of the name, such as bulk carrier whether can load the cargo, whether global ships sailing from any unreasonable restrictions, etc.; The second meaning refers to the ship is in compliance with the lessor provides the specific use of ship owners, such as the owner is to use ship loading of iron ore in Australia, if the lessor know this purpose, but the ship in the cargo bay offers no Australia ladder (Australian) ladder is not suitable for all purposes.

 

 

 

Should note that for all purposes by the lessor know owner's specific purpose. In other words, the owner has a specific purpose, but the lessor is not informed, even if the ship does not comply with the owner's specific purpose, the lessor does not constitute to ship a breach of warranty of mode suitable for all purposes.

 

 

 

Of course, in terms of ship, don't know of the owner in the lessor any purpose, under the condition of the ship shall also be provided for the design of the ship and the first class represented by the specific purpose.

 

 

 

Rationality

 

 

 

Although British law allows the parties eliminate or mitigate implied obligations in the contract, but the terms of the contract must meet the reasonable requirements.

 

 

 

So-called reasonable requirements, according to the contracting party knows or should know the situation in the contract to rule out an implied obligation is fair and reasonable. And English law to determine whether also explicitly provided reasonable concrete situations, these situations include: contract both sides mutual contracting status; Shipowner whether demand can be met by other means. Shipowner whether to be induced and shipowners' is it possible to conclude a treaty with others without having to have a similar agreement; Shipowner whether he knows or should know to exempt or mitigate the lessor is included in the contract the provisions of the implied obligations and whether there is a similar trade practices; The lessor under the condition of not meet the conditions to eliminate or reduce their liability, whether in the contracting when looking forward to the lessor can satisfy the conditions reasonably; The ship is built for shipowner's specific requirements or modification. According to these requirements, the lessor in the financing lease contract and owner provide ship out as one of implied warranty should be fair and reasonable. There are at least three reasons why; First, purchases of ship this is not the shipowner's subjective will, the lessor not their own use shipping intentions; Second, the lessor purchases the ship owner's own choice, in the case of after-sales leaseback, ship owner's assets, namely originally the lessor of the ship did not understand; Third, ship if there are any defects, is directly related to the lessor's own interests.

 

 

 

In R&B Customs Brokers Ltdv United Dominions TrustLtd case, the plaintiff is engaged in the freight and shipping agency company, the company is a director for the company through the financial company of the defendant bought a car for themselves. Trade agreement stipulated in article 2 (a), in addition to the consumers to buy, eliminate all about status, description, or for purposes of quality assurance and conditions. The director signed the agreement and left the car. A month after the director spotted the tear in the roof, let the third person to repair but failed. After a few months the plaintiff refuses to accept the car and put in a claim to the defendant defaults, and the defendant lodged a claim against the third person. The first-instance court that have received the defect notice because the plaintiff before the signing, therefore cannot rely on the sale of goods act 1979, 14 (2) on sale the implied warranty of quality. But the court said the car does not conform to the plaintiff to buy its purposes, that is not fit for the road in Britain, and the plaintiff is as consumers from buying cars, so the sales agreement 2 (a) because of the unfair contract terms act 1977, 6 (2) of the ordinance and is invalid. The court's decision is: the defendant to compensate the plaintiff's loss, a third person for compensation for the losses. The third person appealed but was overruled by the court of appeal. Dillon, trial on appeal, the appeal court judge that if the plaintiff is not a consumer identity, buying and selling agreement exclusion of implied warranty is to meet the requirements of "reasonable".

 

 

 

But in Purnell Secretarial Services & Another v LeaseManagement

Services, the lessee is bought by financing lease copiers. While the lessee clearly tell salespeople when buy copiers must be can make paper plates, but the photocopier is actually no this function. Although the lessee the direct communication with PPC the seller directly, but the financing lease contract is with the plaintiff, the financial company signed.

 

 

 

Rent for the lessor to request, the lessee advocates the copier is not suitable for a particular purpose and puts forward the counter claim. First-instance judgment of plaintiff, the reason is that as the lessor of the plaintiff is a financial institution, can be quoted exclusion clause. But the appeal court has made a different decision. DonaldNicholls appeals court judge that the lessee is not must rely on the unfair contract terms act 1977, 11 (2) and annex 2 guidelines, the lessee can also rely on the unfair contract terms act the provisions of article 3.

 

 

 

According to the rules, adopt standard format of exclusion of liability in the contract shall meet the reasonable requirements as stipulated in article 11 (3). Article 5 above, however, obviously cannot meet the reasonable requirements as stipulated in article 11 (3). The court of appeal in that article 5 actually ruled out the possible defects of photocopiers all responsibilities, including specified warranties or conditions, so such exclusion is not reasonable. The court of appeal and thought that the plaintiff as the lessor shall have the lease item, the seller's cognition, namely the photocopier shall have the function of the production of paper plates.

 

 

From the above case, it seems that only in the applicable of the unfair contract terms act 1977 article 3 can be quoted when the rationality standard specified in appendix 2, but in fact this standard applies to all questions about the rationality. In Overseas Medical Suppliers Ltdv received Transport ServicesLtd, Potter appeals court judge explained.

 

 

 

Can see from the above case, English law, the removal of their responsibility is effective in determining the lessor is the difference between a business and consumer transactions. Obviously, in the case of the lessee is the consumer, the lessor to exclude liability usually need to meet the more stringent requirements, and in the commercial business, reasonable standard is more relaxed. Although in general equipment finance lease, the lessee the lease equipment for consumption or for business may not be very clear, but in the ship financing lease arrangements, unless the lease is a yacht, or lessee shall is unlikely to be in a position of consumers. It is not difficult to conclude that the practice of the lessor to exclude liability is generally effective.

 

 

 

International supply contract

 

 

 

English law on the exclusion or limitation of liability clause must be reasonable regulation applies only to the contract, and shall not apply to international supply contract (international supplycontract). In other words, the factors involved in the international ship financing lease the exclusion or limitation of liability clause in the contract is no longer restricted by whether reasonable.

 

 

 

International supply contract refers to the business in the sales contract concluded between the parties in different countries, or an offer and acceptance in different countries to complete the contract, as well as the contract goods delivery to outside the country of origin. From the perspective of the nature of the financing lease contract of the ship, and almost all types of ship leasing contract shall be in conformity with the above about the definition of international supply contracts. However, the court or the tribunal finds that the parties to a contract only or mainly in order to avoid the unfair contract terms act outside the law of the country apply for English as applicable law of contract, the unfair contract terms act is still applicable to the contract.

 

 

 

The format contract

 

 

 

Format is not uncommon in the ship financing lease contract, most of the lessor, the bank or financial institution all want to use our contract format and the so-called standard terms. In the format contract when the contract is concluded, all the exclusion or limitation of one party in the contract liability clause could be invalid.

 

 

 

What kind of deal with a standard format of the deal is not very clear in English law, both in common law and statute law has not stipulated the unfair contract terms act applies to the principles of format contract. Bowsher British high court judge in British Fermentation Products Limitedv Compair ReavellLimited though not listed in the case of general principles, but he thinks that if the format contract often used is a very important factor.

 

 

 

In addition, as mentioned earlier, the unfair contract terms act 1977 article 3 has been specified, in the format contract case, not a party to the contract have default in their quoted eliminate or reduce their liability for breach of contract.

 

 

 

Responsibility of prohibited

 

 

 

There is no doubt that is not as long as willing to can contract agreed by the parties to exclude any liability, belongs to the mandatory provisions of law shall not be excluded by a contract.

 

 

 

According to the foregoing, in the ship financing lease contract, the lessor cannot eliminate in 1979 through the contract article 12 and the sale of goods act 1973, the supply of goods (implied terms) act as prescribed in article 8 of the ownership of the ship and the ship owners don't interference possession and use of the implied warranty of the ship. But article 14 of the sale of goods act, 1979 and 1973, the supply of goods (implied terms) act as stipulated in article 10 of implied warranty, and ship with satisfactory quality and fit for owner's purpose will be the contract to be ruled out, as long as the contract out of the provisions of the statutory implied warranty conform to the unfair contract terms act 1977, the reasonable standards prescribed in article 11.

 

 

 

The operation and management of the ship

 

 

 

Ship management includes many aspects of content, such as possession of the ship, the ship management, ship maintenance, crew employment and equipped with and shipping insurance arrangement. Ship management is to ensure that the owner can pay the rent in accordance with the contract, the relevant provisions in the contract for financial leasing ship is often will directly affect the operation and management of the owner of the ship, and the ability to pay the rent in accordance with the contract.

 

 

 

Shipowner's possession

 

 

 

In in the arrangement of financing lease, the lessor to ship retained ownership, while the owner to enjoy the possession and use of the ship. Own (possession) refers to the actual control, in JA Pye (Oxford) Ltd v Graham, of the house of lords Lord Browne - Wilkinson argues that possession should include two meanings, namely the intention of the actual possession and possession.

 

 

 

Only actual possession of the truth, therefore, is not necessarily constitute the legal meaning of possession, and thus lack legal protection of occupants. In terms of ship financing lease, as a possession of the owner in the ship for a third person who had suffered damage to intentionally or negligently, the owner shall have the right to the third person to extract litigation, claims, without the need for all people to the lessor. In TheWinkfield, British Collins appeals court judge is pointed out that between man and in possession of a third person, is the ownership.

 

 

 

The verdict in as early as Jeffries v The Great Western RailwayCompany get suitable case, Lord

Campbell also pointed out that in view of the third person has fault, itself is a kind of right. In ship during the lease term of the agreement, unless the owner's own reasons lead to the right of possession and use of the ship adversely affected, the lessor shall ensure that the owner of the ship's possession and use of the unaffected or interference. Once the owner's possession and use of the vessel caused by the reason of the lessor's rights of interference, the lessor shall bear the responsibility.

 

 

 

The maintenance of the ship

 

 

 

The lessor throughout the lease period is still to register all of the vessel, the ship has always been the property of the lessor, so the ship maintenance should be of concern to the lessor. But of all the ship financing lease arrangements, be responsible for the maintenance of the ship is always of the owner, not the lessor. Reason mainly has three aspects, first of all, although the lessor is to register all of the vessel, but it is not the lessor will have ship, they will retain the title to the ship in fact just in order to guarantee the interests. Once the owner's default or unable to pay the rent, will retain the title to the ship to the lessor by selling to compensate for the loss of the ship. From this perspective, the lessor need to do is to ensure that the ship maintenance and maintenance of properly, and to ensure that the ship maintenance and maintenance of properly, the lessor may through the various shipping certificate test and verify, without the need for the actual implementation of the ship's maintenance. Second, since during the entire lease ship are in the control of ship owners all the time, even if the lessor, responsible for the complete ship maintenance the lessor is also difficult to actually do their jobs. Finally, the ship maintenance for a bank or financial institution as the lessor is not easy. Banks and financial institutions do not have the ship maintenance of the professional knowledge and experience. In practice, ship maintenance basically won't have the participation of the lessor, even knowing it.

 

 

 

Although owner is through the financing lease won the possession and use of the vessel, but as the owner is the fundamental aim of the ship financing lease contract. xzc remain the owner of the ship under the actual control, so the owner is no reason to shirk or refuse to undertake maintenance obligations of the ship. In ship financing lease also seldom see both sides in the dispute about how to maintain the ship problem. The maintenance of the owner on ship financing lease, with their own ship maintenance will not have any substantial difference. Fleet has a certain scale of owners often under the premise that the rules of classification work out its own rules and regulations for ship maintenance and operation process.

 

 

 

Although the lessor is unlikely to actual involved in maintenance of the vessel, but the ship financing lease often stipulated in the contract the lessor check the rights of the ships. The lessor shall themselves or entrust others at any reasonable time to various ship inspection or test, the purpose of such inspection and test is to ensure that the ship is in good working condition, and in accordance with the provisions of the country of registration and classification of the ship and requirements. In addition, during ship docking, owners are generally obligated to notify the lessor, so that the lessor can specify others use of vessels in dock opportunity to compare detailed inspection or testing of the ship.

 

 

 

Ship management and its limit

 

 

 

Ship management for owners is not only a right, is an obligation. Ship management as a right refers to the owner to operate undisturbed and through the operation of the ship's profit, to pay the rent for the financing lease contract. Ship management as a duty, however, refers to the owner must pass the ship management to make a profit. There is no doubt that owners want their business without any limitation by the lessor. But there are a lot of ship financing lease contract restrictions are in fact many ship owners. For example: the owner cannot rent ships, in the form of light rent rent way or owner is not able to ship in order to rent more than a year, and so on. The lessor in the financing lease contract of specified in the various restrictions on ship management obviously from the lessor's interests, to the owner's operation of the ship to limit the way is to ensure that the ability of the owner pays the rent. However, this limitation is not always a meaningful, sometimes even is unfavorable to protect the interests of the shipowner.

 

 

 

Do not allow the owner to rent way rent ships should be understandable, the lessor is no reason to make their own ship to a third person and they have no contract relationship management, and will ship light rent processing actually also does not conform to the owner of ship were obtained through the financing lease in the first place. Don't agree with the period of the owner to more than one year rent way rental ship is cheng way is owner through the most common way of its operating profit. Mode in order to rent rent ships is simple and relatively stable mode of operation, to ensure have fixed income at the same time, the owner actually give up the use of market changes and their management ability to increase revenue opportunities. It is through to the operator of a ship in the shipping market rent way into the ship, to rent or voyage way rent ships. But the owner if you can find a rent levels above the level of the financing lease rent long-term leases, unless the lessee's credit is extremely reliable, otherwise, the lessor shall not be not only prevent, but also should feel glad.

 

 

 

Unlike for ship finance through bank loans, ship financing lease is actually based on the long-term leases of the owner and the third person. It is the long-term leases of the owner and the third person that made the bank agreed to provide funds to the owner in the form of financing lease, it is also the long-term leases of the owner and the third person to determine the ship financing lease is often long-term. In ship finance bank loans, the Banks want to owner by operating in the market earn profit to repay the loan and interest payments, if not, the bank will depend on the borrower to provide guarantee to solve the problem. In ship financing lease arrangements, the period is long, the bank can hardly hope to shipowners have always been able to stand out in the market, superior performance surxzc management ability. Banks agreed to by way of financing lease funding owner should not be based on the owner's special operation ability in the market, but the long-term leases of the owner and the third person, especially with strength and good reputation of the third person's long-term lease. To limit in the mode of operation to the shipowner means the owner does not have a sufficient to pay the rent of lease, but by limiting the mode of operation of the ship owner doesn't solve the problem of the owner how to earn enough money to pay rent.

 

 

 

Of course, the owner of the ship management must be legitimate, and conform to the characteristics of the shipowner, and performance. Vessels shall be prescribed by the first class, the area of operations, and in accordance with applicable laws concerning Marine environmental protection and pollution prevention regulations and requirements. Not only the ship shall comply with the relevant provisions and hold all the necessary certificates, to work the captain and crew on the ship, and even the owner's employees, agents, and contract parties shall comply with the relevant laws and regulations.

 

 

 

The arrangement of the Marine insurance

 

 

 

Although in ship financing lease, the lessor is to register all of the vessel, but is responsible for the ship to deal with all sorts of insurance is usually of the owner, not the lessor. For shipping insurance is not only the requirements of the shipowner, is also the owner of its own interests. The lessor and owner can be in the same policy as joint insured (co - assured), the lessor in the capacity of a ship registration all appeared in the all insurance policies, and the identity of the owner as the lessee or managers were found in all insurance policies. The choice of the underwriter is usually decided by the owner, this not only because the owner has the professional requirements and skills, but also because of the owner by fleet insurance helps to save the cost of insurance. But sometimes, the lessor will have their own choice of the underwriter, even the choice of insurance broker. Finally how to choose the insurance and the insurance broker is usually a lessor as a result of consultation with the shipowners. The lessor is by other means of financing for shipowners to provide financing lease arrangements, the lessor should be pay attention to their own finance and our offer owner coordination between the financing lease. Such as their means of shipping insurance put forward any requirements as well as the requirements are satisfied in ship financing lease transactions, and so on.

 

 

 

Owner for shipping insurance insurance mainly includes: the hull risks, war risk and protection and indemnity risks. Hull (hull & machinery risks) is the nature of property, namely in ship may suffer from various risks and damage. But as the practice of the Marine insurance, hull often include part of liability insurance, namely collision liability. Most of hull underwriter will provide three-quarters of collision liability. War (war risks) also is a kind of property, only the insurer only for conventions of war risk caused by the damage compensation of the ship. Protection and indemnity risks (protection & indemnity risks) is a kind of liability insurance, the insurer undertakes is actually the owner in accordance with the law or contract shall be the liability to third parties, these responsibilities include s cargo damage of life or personal injury compensation, the crew and the tort liability, etc.

 

 

 

Although the lessor is to register all of the vessel, but the ship financing lease generally stated in the contract, in addition to the total loss of all partial loss by the owner to receive insurance compensation. This is because the owners need to carry out the repairs, insurance indemnity of the ship and the lessor owns insurance compensation should be meaningless. However, when on a total loss of the ship, just not the same. As long as the total loss occurs, both actual total loss or constructive total loss and total, the underwriter will all insurance amount to pay. Because the ship has gone, as the ship registration of all of the lessor should get insurance compensation. As for the insurance money should be how to distribute in the shipowner and the lessor is the problem of financing lease contract of the ship. If both parties didn't reach agreement, the distribution of the insurance indemnity shall follow the principle of fair, should consider the factors include: the lessor has received (that is, the owner has already been paid) accounts for the rent amount and proportion of the total amount of financing lease, ship suffered total loss of reason, as well as other various factors.