Amending And Supplementing Standard Terms In Sale And Lease Back Contracts To Against Charterer's Misrepresentation

Sale and Lease back is one of the leasing structure,often used in shipping lease.There are two parts in sale and lease back structure: seller sell the ship to buyer,and then buyer(lessor)lease the ship back to the seller(Charterer).There are two types of contract in sale and lease back transaction: bareboat charter agreement and time charter agreement.Bareboat charter contract means lessor will not provide crew,charterer can possess the vessel to operate and in return to pay off charter hire to the lessor.The nature of Bareboat charter contract is a ship leasing contract.The differences among bareboat charter,time charter and Voyage contract are in voyage contract and time charter contract,the charter lease the vessel within a certain route or a certain period.Crew and Captain of voyage contract and time charter contract are employed by the owner,whereas,in bareboat charter contract,the crew and captain are employed by the charterer.Bareboat Sale and Lease Back means after lessor purchase the vessel,the lessor charter the vessel on a bareboat basis to the charterer.The goal of this transaction is for the charterer to realize a financing through sale and lease back.The reason that Lessor enter into the transaction is due to reliance on the Charterer representation on the vessel quality,market liquidity,no lien or debt on the vessel,vessels existing and future contracts,its financial status.Therefore,the major risk of sale and lease back transaction lies in whether charterer makes misrepresentation.This paper has illustrated through amending and supplementing standard terms in MOA,Bareboat charter contract to against charterer misrepresentation.Misrepresentation can include but may not limited to the following aspects: delivery status,quality,vessel value,debt and maritime lien on the vessel,financials and veracity of the time charter contract.Whereas,the existing standard terms in MOA and Bareboat charter contract cannot fully achieve the purpose of against charterer's misrepresentation.