Necessary attentions of the buyers of Second-hand vessel

(Ⅱ)：the buyers to attend to some items during bargaining
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x$|a0` Source： LIAONING BANDCN LAW FIRM  [url]www.bandcn.com.cn[/url]  written by : Liu Jun +o |,B2p WE
General situations of second-hand vessel trade markets6BRKEik.Zv

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Chinese second-hand vessel trade markets are mostly located in Shanghai, Dalian, Zhoushan in 2G2K)Y!be/b%E x+m2D1q
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Zhejiang province, Fuan in Fujian province, etc. The trade markets in Shanghai and Dalian focus in large
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and middle vessels and foreign vessels, and the else in small vessels. The buyers also ought to master
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the supply and demand situations of second-hand vessels. Usually, vessels over 5000 gross tonnage on
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&u `K4`T)R!N-M sale is scarce but the demand on them is to the contrary. So is the demand on engineering vessels or
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1I;i*iXG.gE] specialized vessels. For foreign second-hand vessels on sale, most ship owners are from Japan and S){'cnw{HS

"\Z|~ l4k Korea. The trade of foreign second-hand vessels is usually unknown outside because it is involved in the
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competent authorities approval and tariff. At present, trade of second-hand vessels on internet is +\{xAli(oZ,|{
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widespread and the markets of it are more and more mature. So, the buyers may easily achieve p.Y!l3Dw

/]%~8q@2y#c4\9b information on second-hand vessels on sale.4O/L6R3^4Z&Ibhm
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D#GH5a bfNu The buyers should set an appropriate standard for purchase
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|*j&L F9@]K.F Firstly, the buyers should ascertain which type and what deadweight tonnage of second-hand vessels to A T E S
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purchase. Most buyers buy the vessels for the purpose of operation. Generally, the buyers apperceive #^}h2s3bw"B3GGn

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icA$YpM3p business chance in shipping market or they master steady channels to obtain cargo for transportation,
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then they decide to buy which type and what deadweight tons of vessels according to the situations said /IsXG1@j#BQ,C
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above. Secondly, the buyers should pay attention to the age of second-hand vessels. In making decision
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to buy what age of vessels, the buyers must take into consideration of Chinese compulsory regulations 7uQ Og3t
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of aged and old vessel. Ministry of Communications of China had enacted Administration Regulations of O_Ez7yz0lKl
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Aged and Old Transportation Ships, which took effect on August 1, 2006 and renewedly provides /m9w6S r0b

ezH(v%K~1n#k(g~ classification standard on aged and old vessel, age of vessel for special and regular survey and
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-l~c"S[@ compulsory scrap. Provided the buyers do not learn about these regulations and purchase one vessel /qB*Br8U2doQ2k

dSK*ZD| nearing to or coming at age of vessel for compulsory scrap to fly Chinese flags, the buyers shall
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undoubtedly encounter many troubles when in operation of the vessels in future. When above said
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X k)tm{z situation occurs, the buyers may probably make the vessel fly a flag of convenience. However, the
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vessel flying flag of convenience is difficult to obtain qualification to engage in the maritime transport
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~M$xWS between the Chinese ports. As a result, the buyers maybe not reach the purpose of purchasing the
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$G%d6E;?)ZK Gt second-hand vessel. Thirdly, the buyers must also ascertain built country, classification,
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deadweight tons, engine type and horsepower, etc. the more particular are the standards set, the more WKJ,x&gR&k^
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possibly the vessels are finally bargained after original selection. But the buyers should practically set the
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standards for purchasing second-ship vessel. Lastly, the buyers must decide appropriate bargain price r#k*^1|&@5~Jy

RB:EMx3kS and the price should match other standards. When vessel type and tonnage are fixed, the price depends
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f8FW8z"ppi on age of vessel, situations of vessel, design grade of vessel, etc. e2EA4hOfLo
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E_#F[ @:QiL The buyers to prepare much for purchase
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The buyers should prepare much before purchase, including but not limited to purchase qualification and Bg/jm2B:Yo

*Wk7ViG u } operation qualification, payment, application some certificates and practical operation, etc.$m;Jxa2k8B*|

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Firstly, the buyers ought to obtain relevant qualification for engaging in international or between Chinese
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ports carriage by ocean. The buyers ought to obtain approval from their superior in charge to purchase
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second-hand vessel. If the buyers import second-hand vessel overseas, they ought to apply to Ministry
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ksetNi;CI of Communications of China and competent authorities of mechanical and electrical products imports bK_:^0m*cd
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and exports for approval, as well as apply to custom for payment or abatement of tariff. Secondly, the 0C.i{5J
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buyers ought to prepare for payment. According to international practices, the buyers usually prepay the

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'N0\] c1Tq7N deposit of 10 per vessel price to the sellers after survey on board if the buyers think the said vessel
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ly+\4RhR)T Np(F~ suitable. The else of vessel price is usually paid before deliver and acceptance of the said vessel. In

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addition, the buyers should prepare for purchase of the second-hand vessel in finance, operation, safety
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k9b+BkC-re+Pi on sea, engine management and set up safety management system, man seaman provided with IC6F(Xc8y

N?aD4@1m.Q%x cl#J qualification certificate. Thirdly, the buyers ought to prepare materials for application of second-hand
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*~#P'?W&yYk vessel certificates. If the buyers do not plan to change the said vessel??s nationality, some present vessel
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4R9CiW%_N8K;I certificates need not apply renewedly. Besides, the buyers may prepare relevant materials for application `H;iX
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for vessel certificate after acceptance of the second-hand vessel. Even the buyers may apply in advance
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some temporary certificate before acceptance so that the buyers shall operate the said vessel as soon B3J2xsV7I/z
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as they accept the vessel. Lastly and very importantly, the buyers and the sellers are both provided with
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dok4P,e5[)vp resolution of the shareholders convention or the board of directors of the companies on agreeing to
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purchase or sale of the said vessel, or else, the vessel sale contract is probably deemed void when the
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parties have disputes on the contract.
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n|0ahG The disputes of the second-hand vessel sale contract are often affected by shipping markets.j;_2~6FAu

/Dg;g"K+UX When tremendous changes excess the buyers?? and/or the sellers?? foresight in shipping market happens, %n%_,_'C'CYT}!Q8^

`!d|e:S dY;{I probability of dispute will greatly increase. If shipping markets are good and the freight is increasing, the
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-D OF(bMj.F price of the vessel is certainly rising. At the time, the buyers are not choosy about the defect of the vessel
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'Cd_k%Dm to terminate the contract or demand a lower price, but the sellers will be very particular with the buyers?? WYq4B+bS/c+a-K&@

;Vcrs+[p performance. On the other hand, when the shipping markets are stagnant, the situation will be opposite.
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&Ae&}^E Nv*k:x9O The buyers ought to weigh upon shipbrokers?? roles and identify good shipbrokersr*Hv|yI
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Shipbrokers are very important during the second-hand vessel sale and purchase. For example, they
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G/D0ZT${ play a role, sometimes a key role in supplying suitable information for the buyers, passing on offer and TX7l0rA

p:wq)|N[-R N counter-offer, negotiating sale clauses, survey on board, deliver and acceptance of the said vessel, even Zbk-M(}"}q6U

O:Sth1l W claim by the buyers, dispute settlement, etc. Therefore, the buyers ought to select competent
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shipbrokers. In the second-hand vessel sale, the buyers?? risk is greater than the sellers, especially ts,mh(T%Dj9y
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L5~p7z$l-D.\ purchase from a single-vessel company. The buyers may learn about fame, efficiency and operation size
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of shipbrokers and their company.