There are a number of procedures which have been known to be involved when it comes to the purchase of any ocean cruising vessel. During the purchase and sale of a vessel, there are a number of transactions which are complex and quite demanding (Giles, 1987, p. 53). There are therefore a number of legal processes and procedures which have to be followed during the vessel acquisition process. As more and more partners, companies, military sectors, and countries need services from the use of vessels, it has been necessary that there should be the installing legal structures which would effectively monitor and govern the processes in the acquisition of these vessels. These are processes and systems which are similar to those applied in the purchase of planes and others related canons. There are reasons why there should be these guidelines during the purchase and sale of these vessels. This is to ensure that all the processes are done in a competent manner, and all the vessels purchased by different organs can be easily monitored and identified.
During the sale or purchase of a vessel, different parties and organs have noted that the existing systems are very complex and demanding due to the transactions involved. This means that the purchasing of a vessel or a plane can be quite complex and discouraging (Lorange, 2005, p. 63). In the initial stage, the existing admiralty laws in the vessel acquisition processes may in many cases not apply in the issues which relate to the selling of a given vessel. This will only be involved when there are other circumstances being involved. A vessel to be purchased can be for individual ownership or for combined ownership, or sometimes being purchased for government purposes. Once a vessel to be purchased is considered to become a personal property, what applies is the Uniform Commercial Code, UCC and with this code, the state or nations courts can be able to have the relevant jurisdiction over the vessel. Basically, all the relevant issues and processes involved in the vessel acquisition will be in line with the ship building documentations and contracts as stated in the Act, the surveys in marine process, the mortgages involved, the charters or leases related to the process, among others. In many cases, it will be noted that the process of acquisition will begin with ship-building tenders, which results in the contract for building the vessel. The construction process for the vessel will be dependent on the requirements of the owner, and will also be built depending on the use the vessel will be put to.
The processes to be applied in the acquisition of a vessel will vary with a number of factors. This will depend on the use of the vessel, the size of the vessel, and the legal procedures that have to be addressed during the acquisition of the vessel. Since the purchase of a small vessel like a boat may be less demanding in the processes of acquisition, it will not be hectic as with that of commercial vessels. The purchase of small pleasure boats will usually be done in a way that satisfies the actual user of that particular boat, or the owner. This will be quite different from the case of commercial cruise vessels. During this process of vessel acquisition, there are a number of entities that are involved these include corporate entities in which the entity acting to be the owner is usually a charterer or a lessee. Due to very many reasons usually related to the provisions of tax, majority of the people who own a vessel will choose to have measures of holding the property in form of charters. The owner of the vessel thus becomes the charter. In addition, many people in different nations owning vessels are usually required to register the vessels in other foreign countries from their own due to issues of taxation (Susan Christopher, 2003, p. 31).
There are a number of documents that have to be applied for and used during the acquisition or sale of a vessel. The main documents that have to be considered during the sale of any vessel include letters of intent, the sales contract, the sale bill and a purchase order. These documents are applied as a whole in the process of the vessel acquisition. Among the documents likely to be used in the sale of a vessel are the letter of intent, a sales contract, a purchase order and a bill of sale. The letter of intent in the acquisition or sale of a ship is nothing but a small document used for holding the vessel during the time of survey or awaiting for suitable financing (William, 1988, p. 41). In most of the commercial cases, what is used most is the sale contract. The sale contract therefore sets in place the necessary conditions and terms that are appropriate for the sale, and at the same time it specifies the key obligations and rights held by the parties.
There are a number of items that are covered in the sale contract as one of the major important documents in the purchase of a ship. Some of these major items include the key descriptions of the particular vessel to be purchased, the identification number of the hull, the equipment identification and other relevant details, the relevant documentation details and numbers, and registration details, the inventory detail, the sale details, the place and date of delivery, the mortgage statements, the necessary claims, and liens. There should also be details indicating the conditions and terms of the survey (Susan Christopher, 2003, p. 34). These details are quite important whenever there is to be an acquisition of a vessel.
For any given vessel that is to be purchased from a shipbuilder directly, there are a number of considerations that have to be made. While majority of the contracts relating to a given vessel construction or in the supply of the materials for a vessel have been greatly discussed, it is still something that is not yet in the jurisdiction of the admiralty (Hubert, 1987, p. 91). There are a number of issues which have to be considered so that not a single negligence in the ship-building industry in both the design and architecture. Some of the things found in the shipbuilding industries include some key architectural naval companies, businesses manufacturing and supplying major parts and vessel component for the building process, and any other needed related support and service in the entire process. Since most of the contracts tend not to be within the admiralty jurisdiction, all shipbuilding companies and component manufacturers will tend to lie subject to suit within the admiralty jurisdiction in relation to the liability of the products they produce. These torts concerning the liability of products have over the years been seeing their introduction in the maritime laws. Although that is the case, the interpretations of the court still remain quite narrow when it comes to the subject. Therefore, the manufacturer of a vessel will have not a single duty with any form of negligence.
There have a number of issues which have ensured that the responsible departments ensure that all the operations and processes done in most of the processes of vessel acquisitions are pioneered in ensuring that all issues pertaining ship and vessel operations are keenly addressed. For example, after the occurrence of massive terrorism threats in the world, the processes had to be hastened so that it would ensure that there is an effective monitoring of the vessels, and their movements can be easily traced. This issue of terrorism has been known to pose the greatest danger on many innocent people and the reason the issue of ship acquisition has to be carefully determined. Looking at the size of most of the current vessels, it is very clear that any danger imposed on the vessel may bring the greatest threat to the users (Jimmy, 1975, p. 20).
Because of the existence of these threats, the waterways and ports through which these vessels cruise has been a big issue of discussion. From the current systems of vessel acquisition, the largest of commercial vessels including all other large vessels for recreational purposes have been required to acquire legal federal documentations and all the areas they cruise is indicated in the documentation (Jimmy, 1975, p. 28). With the smaller vessels, the requirement is for them to be registered mainly in the country or state in which they mainly operate. In some other countries like in the United States, there is a requirement for all the vessels to be purchased to be keenly documented and given a standard identification system. Once the acquisition process has been completed, the other important thing would is to have a legal identification of the vessels through a reliable system. Any identification system of a vessel will be applicable in ensuring that the Department of Ocean and Sea Transportation in different nations would be able to effectively and carefully identify all the critical information concerning any given vessel cruising in any given waterway or port. There should be the indication of the owners details, the processes in which the vessel was acquired, the any proceedings which may be necessary in when any form of law enforcements are to be done on the vessel.
This brings us to two major important issues in this question the first one is the acquisition processes, and the second is the nature of the identification process. Looking at the two issues, the process of acquisition deserves to be discussed the most. Therefore, the study will be aimed in looking at some of the weaknesses and strengths in the current vessel acquisition processes and then come up with appropriate proposals on how we can effectively come up with a system which is more effective and addresses all the issues and problems that have been noted in the current systems.
Therefore, concerned with all the existing legal processes in the acquisition of vessels, there has been the lack of an appropriate acquisition process. Therefore, it would be necessary if we could come up with a procedure which will be an effective Vessel Acquisition System (VAS). Basically, the objective here will be establishing the necessary new system which can effectively make the process effective and reliable, and be able to ensure that the future vessel acquisition processes are extremely appropriate. Once the process is adequate, it will be very easy to acquire and operate a ship in the global waters (Hoffman, 1962, p. 43). In order to come with an effective system, it should be necessary to analyse all the existing systems and see which parts need to be streamlined, and how the streamlining process can be done. The acquisition of most of the vessels is done through different legal processes since in many cases most of these vessels are purchased by nations, or jointly owned.
The aim of this study was to come up with better proposals which would be applied to effectively ensue smooth running of all the processes of vessel purchasing and acquisition. This follows the implicated hardships and problems which have been noted in the processes. This is because different organizations have found it very hard to acquire a vessel since the existing procedures and mechanisms are not friendly, taking a long time period, and ineffective. With the current processes, there have been plans and initiative efforts that have been put in operating and thus failing to incorporate the necessary requirements which may be applied in the acquisition process.
However the use of complex processes in acquisition can be quite effective especially for ships and vessels for the military operations. The new processes which should be applied should be compliant, effective and reliable, and therefore making it easy to import a vessel from a foreign land. This will ensure that the developed system does not in any way incorporate a rigorous process of vessel acquisition, but at the very time be able to meet all the necessary requirements so that the system cannot be easily compromised (Giles, 1987, p. 82). There are notions in many states and individuals willing to acquire vessels that there are some issues within the legal processes which are quite unacceptable and compromising the nature ship acquisition. The study will be focused on identifying these problems and by so doing be able to see how we can find a solution to the problem. This will come up with the necessary information which would help us in determining the status of our hypothesis that the current legalities in the acquisition of vessel are quite complex, inappropriate and totally in need of reformation.
Chapter Two Literature Review
Over the years, there have been a number of issues which have been responsible for changing the nature in which vessel acquisition and purchase has been done, and especially when there is the issue of importation of the vessel from a ship builder to use in another nation. The occurrence of these issues has seen the involved personnel coming up with harder terms and legal procedures in the acquisition process. These are changes which have been coming in place as the globe continues to experience better technological advancements (Abbot, 1984, p. 29). These procedures have been changing depending on the requirements that have to be put in place in ensuring that everything is done in the right manner. However, the system applied in the acquisition has not been able to meet the requirements of an advanced globe. Once it has been able to come up with a system, it would be declared to be reliable only if it offers integrity and efficiency in all of its operations for vessel acquisition.
During the early years of the last century, the procedures involved in the purchase of a ship were never complex as they are today. These changes have been brought about by the factors of globalization, industrialization and unionism. There are also other negative factors which have been noted to bring changes in these procedures. These factors have varied from terrorism, and threats in the use of vessels in the global waters. These factors have made the globe to come up with the necessary measures which addresses issues of purchase, identification and commercial use of vessels. Today, more and more nations have been finding it absolutely applicable in the purchase of vessels in order to improve trade and military operations (Levie Robert, 1979, p. 17).
The different processes that are applied in the acquisition of a vessel will vary with a number of factors. For instance, the way in which the vessel will be used, the legal procedures involved in that particular area, the size of the vessel, and the conditions on which that particular vessel is to be purchased (Giles, 1987, p. 84). In practical situations, the purchase of a small vessel like a boat will be less demanding in the processes involved in its acquisition. This will not be the case with big commercial vessels which have harder and more demanding processes of purchase. The purchase of small pleasure boats will usually be done in a way that satisfies the actual user of that particular boat, or the eventual owner. This will not be the case with the commercial cruise vessels. As we have already seen, during this process of vessel acquisition, there are a number of entities that are involved these include corporate entities in which the entity acting to be the owner is usually a charterer, or sometimes a lessee. Due to very many reasons that are usually related to the provisions of tax, majority of the people who own a vessel will choose to have measures of holding the property in form of charters. The owner of the commercial vessel will thus become the charter here.
Over the past few years, the number and nature of documents and the processes involved in acquisition have been on the change. Today, there are a number of documents that have to be applied for and used in the acquisition or the sale of commercial vessels. The major documents considered during any sale or purchase of a vessel will include letters of intent, the sales contract, the sale bill and a purchase order. These documents are applied as a whole in the process of the vessel acquisition. The use of documentation, however tedious and demanding it may be, has still been the most effective way through which the conduct of the business can be done. This ensures that all vessel owners meet these requirements before having the vessel allowed into the waters. This will ensure there is effective monitoring and management of the vessel operations.
From the documentations, the major documents that have been used in the sale of a vessel have been a letter of intent, sales contracts, purchase orders and bills of sale (Geoffrey, 1993, p. 47). Letters of intents in any process aimed in the acquisition or the sale of a vessel is just a small document which is used to hold the vessel during survey or when it is in the awaiting for a suitable financier. With commercial vessels, what are used most are the sale contracts. In this acquisition process, the sale contract is used to set in place the necessary conditions and terms that are appropriate for the vessel sale. The sale contract is used to specify the key obligations and rights which are held by the purchasing organ. In all the processes used in purchasing, there are several items that should be covered in the sale contract an important document in the purchase of a vessel. Some of these major items include the key descriptions of the particular vessel to be purchased, the identification number of the hull, the equipment identification and other relevant details, the relevant documentation details and numbers, the registration details, the inventory details, the sale details, the place and date of delivery, the mortgage statements, the necessary claims, and liens. There should also details indicating the conditions and terms of the survey since they are very important during the vessel acquisition process.
Before any purchase of a vessel, it would be necessary to note all the processes and legal processes which have to be addressed before the final purchase and acquisition. There is the use of Red Letter Clauses which have to be put in considerations before a ship has been purchased. Red Letter Clauses are important provisions with exculpatory clauses that are inserted in the contracts pertaining shipbuilding in order to ensure that all the duties, obligations, and rights of the builders are taken care of. Red Latter Clauses will basically be adopted in order to exclude any express or implied warranty on the vessel, put a defensive ceiling should there be any damage exposure on the vessel, limit the created time in filing suits, among others. Therefore, the rights and validity a under these Red Letter Clauses will be determined depending on the state law on the process of ship building industries and all contracts existing outside the admiralty jurisdiction (Geoffrey, 1993, p. 58). In most of the cases, the state law that has been applicable here is Uniform Commercial Code, Article 2.
In almost all machines and equipments purchased at large amounts of money, the issue of warranty has been very important. Warranties are therefore very important to both a ship builder and to any given corporation or individual purchasing a vessel straight from a given builder, or would be willing to rely on the naval architects services (Brooke, 1917, p. 44). The use of express warranties is very significant during vessel acquisition. Express warranties are affirmations of the facts that have been stated by the vessels seller and any other description of goods constituting the deal based between the seller and the buyer of the vessel. These are usually contained in the sale contracts which are usually written. Two major implied warranties will be very important the first one is an implied merchantability warranty and the Implied Fitness Warranty for a specific use. The implied merchantability warranty is used as an assurance that all the goods to be sold out meet the minimum requirements and standards of international trade and can satisfy the end user with the right purpose behind the usage of the good. On the other hand, fitness warranty is usually made for a specific purpose so that the commodity is taken by the end user to be able to meet the minimum requirements. In this case, the user will have based his idea on the sellers ability and skill of providing him with the best product which offers the best use experience.
Another important document in purchasing a vessel is a bill of sale. This is a document which undertakes to transfer the title to the purchased vessel (Giles, 1987, p. 38). Nations and states will have a special form in which the transactions for the vessel sale are to be done. For example, in the United States, the Coast Guard has a special form and in the acquisition terms, that only federal form is what will be used in the documentation of a vessel. Basically, a purchase order is just a document which acts as a contract normally used for the purchase from manufacturers or for the special order of a vessel. It is normally provided with the necessary limitations to liabilities and the items inventories included.
There is a lot of money involved when it comes to the acquisition of commercial vessels. Just as their size implies, these vessels would cost the buyer a lot of money which call for measure in which these monies have to be handled. Given to these large amounts of money, the vessel mortgage becomes the central in the transaction (Hughes, 1983, p. 44). The Ship Mortgage Act was passed in the year 1920, and conferred the lien maritime status into vessel mortgages. What this meant was that they would become entitled to the jurisdiction admiralty. However, this Act covered only mortgages on the vessels purchased in the United States and of over two hundred tons and above. In the year 1935, this Act was then expanded with the aim of relaxing the two hundred ton minimum requirement, and be extended to the appropriate status for the mortgage as under this Act. This would be extended to the mortgages values on foreign vessels.
The Congress came up with real efforts which would be applied in attracting the private capital investors to effectively finance the construction and vessel fleet operations. This did not come into place until in the year 1936 when the Merchant Marine Act (Goldrein, 1985, p. 32). Title eleven of this Act was useful in creating a federally accepted system which guaranteed the insurance and financing of vessels. After the enacting of Ship Financing Act, in the year 1972, the Congress came up with measures of expanding and consolidating Title Eleven program. This would be necessary when making an order in the making of ships and in the financing. This would result in risk-free operations which would be effective for both the investor and the buyer.
The initiation and development of the program Title XI since then has been able to bring great situational importance when it comes to the financing of commercial vessels. Without the financing it may not be easy to acquire the vessel (Goldrein, 1985, p. 36). The guarantee in this operation pledges its full belief and credit when it comes to the payment of interests and principals on the obligations guaranteed. This guarantee of the principal is usually restricted to about 75 percent of the cost incurred in the building, the re-construction and in the re-conditioning of the vessel, as it will be determined by Commerce Secretariat. The guarantee here will be secured by mortgages that are entitled to the required status as under Mortgage Act. Also, the existing vessels may be mortgaged when necessary as a way of securing any future ship-building.
For a mortgage to be able to have the preferred status, there are a number of formalities that have to be followed. Section 926 of the Act requires that three major conditions should be put into considerations before the mortgaging, the sale bill, or the conveyance to be admitted to the record (Goldrein Turner, 2003, p. 86). The major considerations that have to be put into consideration are one, any document or mortgage should be stating the grantor or mortgagors interest on the vessel, and also the interest mortgaged, sold or conveyed. Two, any other relevant document for mortgage should be acknowledged to a notary or any other qualified official in the public sector. Three, once the port in which the vessel was documented has been changed, the custom collector at the new port in which new documentation is to be done should be furnished with a copy which is certified, and showing all the details of the vessel as indicated from the original port.
The mortgage also sets in place a number of additional requirements. The mortgage in the acquisition and purchase of a vessel will include the property of all other integral part of the vessel and shall not be held as a preferred mortgage until it is able to provide for all the separate property discharge through the payment of the stated portion of mortgage indebtedness (Hubert, D 1987, p. 27). Once the preferred mortgage is able to provide for these separate discharges, the portion amount of the payment will therefore have to be indorsed through the documentations for the vessel. In that connection, a mortgagee should thus be compliant with all public notices and provisions as stated in the vessels Mortgage Act. The requirements are that mortgage is supposed to be recorded properly by the customs collector, and there should also be the provision of necessary information concerning that mortgage as indorsed in the vessels papers. Precisely, there are two documents supposed to be part of this documentation. The first of these two documents is the original document mortgage as executed by the two parties, the seller and the purchaser. The second acts as an affidavit document to an effect that this particular mortgage has been made or stated in good faith and absolutely without any notion of hindering, defrauding, or delaying any of the existing or even a future-day creditor of the lienor or the mortgagor vessel which has already been sold or mortgaged. This requirement therefore lies in the jurisdictional depths, and should the affidavit be not filed, or with improper filing, the mortgage will not be in a position of receiving the preferred mortgage status.
The search of liens has also been indicated as another very important integral in the acquisition or sale of a vessel. This is the case whether the vessel is a pleasure boat or if it is a big commercial cruise vessel (Hubert, 1987, p, 51). It has been already mentioned, any kind of a vessel will be highly burdened by any mortgage if it can be recorded duly. It is also possible for some other liens that have been recorded to be present. Once the vessel has been keenly documented, the appropriate search can be done by the states Coast Guard Offices and Marine Inspection. This is something which is done on the home-port of the vessel where the mortgages or liens which are remaining against that particular vessel this should be in accordance to the information as contained in the documentation files. If a given vessel has been registered, a thorough search will be done following the records with the countys clerks. From this information the court can be able to have its jurisdiction power in order to determine the port from where the vessel had been registered, or the place where vessels owner can be found or where the owner corporation is domiciled. Unfortunately, it has been noted that it can be possible for hidden liens to be present in such a way that they cannot be easily discovered during the selling time.
The present system in the purchase of a vessel is quite complex as implicated in all the relevant procedures. The complexity of the entire process has been found in the sale and purchase document, which has very many parts and procedures that have to be fulfilled in the entire process. Once given parties have come to an agreement about a given vessel acquisition, there are a number of common agreements they have to come with. In the consideration of the truthful premises and the necessary covenants as contained in the purchase agreement, and any other valuable good consideration, the appropriateness and adequacy of the receipt as acknowledged by the two parties, there are a number of agreements the two have to make (Johan, 1992, p. 46). In the procedures of acquisition, the vessel seller will thereby be willing or agree to sell the vessel, he should also convey and as well transfer it to the purchaser, and the purchaser will have to agree of purchasing the vessel from the purchaser, then upon the completion of the vessel and a successful delivery from the builder to the buyer, the two should present their documents to a Shipbuilding Contract which is subject to all the relevant terms and conditions as already set forth within the limits of the Agreement.
The vessel dealer and seller will be required to promptly make the necessary notifications and inform the Purchaser in form of writing if, at any given chance during the manufacturing and the contract performance, the production schedule of the ships builder is estimated to go beyond the actual agreed date of vessel delivery and the relevant delivery date will differ for more than five days. The manufacturing schedule will also need to be notified to the purchaser in the specific dates should the manufacturing of the vessel take more days as it had originally been anticipated. This makes the process quite tedious and complex hence demanding changes so that the process can possibly be done in a much easier manner (Milburn, 1985, p. 78). The procedures may be complex and undermine the rates in which more and more purchasers will be willing to purchase a new vessel. Should these processes be smoothened, then it will make the system more reliable, user-friendly, and extremely effective.
Still with the sale and purchase agreement as a very important yet demanding part of the documentation, the vessel seller, in the sole discretion, will be required to accelerate the procedure of vessel delivery, and the delivery date through the provision of a written document to the buyer. This forms a legal basis that the purchaser was supplied with the relevant document for any delays faced between the process of purchase and delivery of the product (Milburn, 1985, p. 83). Should in any case the seller in one way or another accelerate the date of delivery in persuasion of the subsection, the new date already stated will now become the Delivery Date in order to streamline the purposes of liquated determination of damages in accordance to Article VI and the right of the Purchaser of cancelling the Agreement pursuant in accordance to Article XI. In any extent that a given purchaser has some obligations in accordance to the Agreement as based on the date of delivery, the purchasers commitment to the obligations will be required to get an extension which is reasonable as required by the Purchaser, and the process should be in reference to all the necessary adjustments on the original date of delivery.
This will be the case provided that there is no any adjustment to the obligations of the purchaser in making the delivery payment in accordance with the Agreement. About fourteen days close to the stated or projected date of vessel delivery, the employees already recruited by the purchaser and the relevant agents and contractors prior to the projected delivery date will be entitled to have the access they would need from the vessel and even engage in any similar activities and also perform in it such a work as already specified by the purchaser (Lorange, 2005, p. 45). This provision is quite necessary since it helps the employees and clients to comfortably specify their duties and familiarize themselves with the vessel. This should be done provided that the activities done on the purchasers part does not in any way interfere with the work that is being performed on the vessel by the builder, or it does not contravene to form of collective bargaining as with the original agreement between the ship-builder and the purchaser.
With the Norwegian form of vessel sale and acquisition, very many requirements of documentation and signatories have to be done. Norway has been one of the ship-building countries supplying the biggest and effective ships in modern world. The documentation process of ship purchase or sale has been marred with very much requirements which in the process have been rendering the process quite demanding and time-consuming. The documentation process takes a very long time so that willing purchasers end up being scared in the process. This is what has been calling for amendments in the process so that people and organization can be able to acquire a vessel through a cheaper process.
Basically, from all the legalities and procedures involved in the purchase of a vessel, the requirements and commitments that have to be fulfilled are quite complex and the reason the necessary amendments have to be invented so that the process can be done in a better manner. This will ensure that the complexity of the acquisition systems and all the documentations does not interfere with the process and lead to discouragements in the purchase of vessels. Once that has been done, it will be quite easy for any corporation or individual to acquire a vessel within a very short time. This process will definitely improve the nature of the process and eventually bring about better performances in the business and mission in which the vessel is going to be used for.
Chapter Three Data Collection and Methodology
So as to come up with good data and results from the study which would give us the true hardships in the present vessel acquisition processes, it would be very necessary that we used a classical methodology which would ensure that the necessary information was obtained from the relevant people who have been involved in the business for the longest time possible. This would ensure that the relevant data is outsourced, and which would give the necessary recommendations on how the system can now be improved. In order to effectively understand the problem within the current processes of vessel acquisition by adopting the Norwegian form of vessel acquisition, we would involve the use of two indices. One of these two indices would be to come up with information regarding the views of the current acquisition process from the current vessel sellers and builders and how they feel about the present bureaucracy if the process is quite challenging, undermining and extremely ineffective.
The index would be to look for the views of the purchasers and any other people who may have in any way been involved in this rigorous vessel acquisition process. This can be seen as one index or approach to the study, but different views obtained from the two players would definitely be reliable in helping us come up with the necessary conclusions and recommendations which can be applied in making the process more attractive, friendly, and thereby making more and more people willing to purchase vessels, and the eventual outcome will be successful business and trade operational around the global setting. This is because most of the vessels today have been used for the purposes of trade and meeting organizations goals and objectives.
The use of this strategy in collecting the relevant data and information would be appropriate in and reliable in ensuring that we obtained reliable data. The process of vessel acquisition will be improved once the hurdles existing in the current practices are resolved in an intelligent manner. The information that will be gathered from the respondents will therefore be a good measure to what extend these systems becomes challenging, and in what ways have they been hindering the entire vessel acquisition process. In this study, the purchaser dissatisfaction with the process of vessel acquisition will be based on the actual time span within which a particular vessel will be delivered from the seller to the purchaser, and the number of documentations that have to be handled to the completion of the purchase system and delivery process.
In order to ensure that our data was of high quality and predictive enough, the main basis in the determination of the time and the process of vessel acquisition would be determined by the overall number of legal documents involved, the number of individuals and players involved in the purchase process, the number of days it may take to acquire a commercial vessel, and the causes that these delays in the process lead to. So as to ensure appropriate information is gathered, it would be better that we involve various sizes of vessel and see how every size of a vessel is handled when it comes to the purchase process. This will ensure that we have the right picture on how the differences exist, and this will be necessary when more studies are to be done with the aim of making the process simple and purchaser-friendly. It is assumed that the use of primary data, which will be mostly applied in this study, will be relevant for the study, as it is always the case. However, we should also understand that the process of acquiring primary data may not be always easy, it would be necessary to come up with means of ensuring that we also integrate secondary sources so that we can complement our primary-sourced data. This way we can be in a position of having the necessary proposals and recommendations in making the process easier and more reliable.
There are a number of factors which we had presumed to threaten the present process of vessel acquisition or sale. These factors include the very many documentation that have to be used in the process, the processes through which the documentation procedure has to pass, the number of players involved, and so on. Once these requirements have to be done, it becomes very tedious, and in addition, the vessel will also have to undergo another rigorous process of identification and marking once the transaction has been successfully completed. Therefore, it would necessary to evaluate all these factors and come up with reasonable amendment strategies that can be done on the process and making it more effective with vessel acquisitions. The other important thing in the study would be the determination of the reasons why there is the existence of these rigorous acquisition processes. This is necessary in ensuring that the final process that is advocated or suggested meets the same requirements as with the present processes. This is to ensure that we do not make the system more ineffective than we may have thought.
The other important thing was to effectively determine how the slowed process has been impacting on the industrial performance and corporations operations. This would be a key tool which would help us gain the necessary argument why the present vessel acquisition processes need to be addressed. From the impacts occurring from the process, it would be very necessary for the concerned to note the losses incurred in the process in terms of money and time, and thus they would be willing to adopt any newly proposed procedure addressing all these problems, and which can be applied with the lowest expenses and saving a lot of precious time. Therefore, in order to ensure that the necessary and useful data would be obtained, we employed the use of relevant questionnaires which were distributed to a number of parties and people who were working in different parts vessel transaction points and those individuals who may have been involved in the purchase of a vessel. So as to ensure that the data and information gathered was of very high quality, it was very necessary for us to distribute the questionnaires indiscriminately. The questionnaires were also distributed in different shipbuilding companies and to develop levels of the transactional structures in order to ensure that the data and information obtained would be varied and homogenous. This was necessary in helping in the capturing of the very relevant data which would give the true representation of the entire process and how tedious should be.
The questionnaires used had been structured in a way that they all contained open-ended short questions, and also the use of closed ended questionnaires. During the study, all the respondents who were to be interviewed had been required to ensure that they provided only the necessary information they had with them, and also indicate their suggestions on how the current process can be improved. This would also involve the use of e-questionnaires which will be posted in the internet so that the people willing to give the relevant information can be able to do so. This will ensure that varied data is obtained which can be of greater use in improving the systems. All the respondents had to be requested to give information and the main reasons why they thought the systems of vessel acquisition were inappropriate. The data that was collected was then used by compiling it together and coding it in order to reduce its bulkiness, and finally analyzing it by the use of linear regression techniques.
Chapter Four Critical Review and Analysis
In order to be able to critically review and analyse the process, it would be better that we enumerate the specific processes and documents that are applied during vessel acquisition and sale process. As we have seen earlier, there is a lot of documents used thus making the process hard and time consuming. If it could be easy to come up with a new system that solves all the problems faced with the current legal systems in the acquisition of vessels, then the process would be effective, time-saving, and encouraging more and more players to participate in the business. This will make it easy for any individual, state or corporation to effectively purchase a vessel.
From the initial stages, an individual or corporation wanting to have a commercial vessel may decide to apply for ship-building process in which a possible ship manufacturing country is identified. This company will thus be given the mandate to tailor the vessel depending on the requirements of the eventual owner. From the study, we note that these operations are quite complex and it is through such importation processes that a lot of time wasted, and even resources. From the data obtained, more and more people have been noted not be comfortable with most of the documents that have to be used during the purchase of a vessel. This is because of the procedures that have to be followed.
The issue of taxation has also been raised was the major reason why many importers of these vessels would rather register their vessels a charter other than lessees. Why is that so The imposition of exorbitant taxes during the process of importation will be quite discouraging, and the final result is decreased purchase of the vessels. Once that happens, experts have argued that it must definitely result in reduced economic growth. Therefore, the removal of the taxes, or trimming them to understandable limits, may be a finale solution which satisfies the requirements of importers thus making them increase their importations (Lorange, 2005, p. 68).
Because of these processes, which have a lot of bureaucracy, more and more people have been noted to be no longer willing to operate their vessels in their home countries. This is because of the existing purchase and operational requirements that may not be necessary after all. For example, a number of Americans owning these equipments and boats have been reported not to operate their vessels with the countrys name because of the intensive application processes. The issue of licensing, identification and monitoring has also been intensified in the country with more and more terrorism threats being announced (Mandaraka, 2002, p. 46). This may be a good idea, after all terrorism is known to pose the greatest danger to the people, but then, these procedures could be easily reverted by application of more user friendly operations and systems which improve efficiency without necessarily compromising the entire acquisition system.
The other great important thing that has been seen to derail the system is the legality of the documentation processes. Although the use of paperwork is something that has been done by man for so long, it should be noted that it is quite tedious and time-consuming. This is because there are very many places that have to be signed and therefore the eventual outcome will not be different should the process have had been done through use of electronic means. The use of papers has also been compromised after the occurrence of fire and the sinking of boats and big vessels this will usually result from the possible loss of the documents. Also, there are a number of issues that have to be addressed in order to ensure that everything is done in the right manner.
This issue of documentation is what has been worrying the greatest people. From this study, we have been able to agree that there are very many documented requirements that have to be met during the acquisition and of ocean cruise vessels. These requirements have hence been seen to make the process involve very many complex transactions. For instance, there has been the issue of admiralty law. Although this applies in the purchase of a vessel, it has also not been applying with the sale of a vessel. Only a few guidelines will have to be provided for an effective application of admiralty during the vessel sale. There is also the Uniform Commercial Act that has to be applied once a given vessel is to be purchased as an individual property or for personal use. This is quite a complex process which makes sure that any willing buyer meets the requirements of the Act. Because of the existence of the Act, the individual or corporation will have to look for these legal requirements and bring forth a document that acts to prove that the requirements have been keenly met (Michael, 1980, p, 57). Also, with this Uniform Code, the courts will also be given the necessary jurisdiction. This means that the process will once again be made complex as well.
This therefore leads us to believe that there are very many hurdles in the process. This issue of documentation does not end with the Formal Act. This is because the process will tend to be progressive from the initial request until the final vessel registration. During the very beginning, the individual may decide to go and buy a vessel that has already been completed, or may as well decide to have requirements in which the vessel should come with. This means that there will be a lot of discussions and negotiations before initiating the construction process (Michael, 1980, p. 50). After that stage, the two will then enter into an agreement that this particular ship-building company is going to build this particular vessel for this particular individual. In that case, when it comes to the acquisition or sale of a vessel, these issues will begin all the way from the contracting up to the registration process. For example, when an individual or a corporation is to purchase a vessel, the initial process is the tendering in agreement will contain the necessary information concerning the specifications of the vessel, the size, the eventual use, and so on. It is this agreement which binds the purchaser and the builder so that any withdrawal can be easily produced for legal explanations.
As well, there are a number of existing differences in the terms and requirements necessary for the purchase of a pleasure boat and that of a commercial vessel. For a small boat intended for personal pleasure purposes, the acquisition requirements will have to be made by the owner and in the same name of the boats actual user. This is not the case with the larger commercial cruise ships. This means that it would be a little bit more cumbersome to acquire a big vessel. During the purchasing process, there have been indications that even corporate entities will be involved in the vessel acquisition procedures. There is also the incorporation of an entity who, or which, acts as the rightful owner, and he becomes a charterer or a lessee. This means that an individual may decide to register his vessel as a charterer or a lessee. As from the study, we have noted that many owners of vessels will like to choose the charterer property owner because of the complex tax provisions existing during the purchasing process. This therefore brings in another weakness in the process acquisition processes. These are the major barriers that have been seeing more and more vessel owners registering their vessels with another country other than the countries they are citizens of.
As we have already noted, there are also very many documents that are used during the sale and purchase of vessels, whether for commercial or for private purposes. Some of the major documents that have been used as reported in the study are intent letters, sale contracts, bill of sales, and purchase orders. These are documents that have to be used in all the stages of the vessel acquisition. For instance, majority of the people working with the manufacturing industries and vessel monitoring and registration affairs appear to be much comfortable with the process. This is because they believe that the use of these documents is quite relevant and maintains the relevant integrity of the system. This ensures that all people willing to purchase a vessel undergo through the same rigorous acquisition process.
From the beginning of the acquisition process, there is the letter of intent. This is a very crucial legal document which is used in holding a vessel as it awaits a pending financing or vessel survey (Moloney, 2006, p. 49). At sometimes, instead of holding a ship with the letter of intent, a sale contract can as well be used to serve the same purpose. This contract is used to spell out the relevant conditions and terms behind the vessel sale. These documents are used in specifying the major obligations and rights of the both parties. With this document, a number of items have to be indicated concerning that particular vessel. These are items like the vessels summary, the identification number of the vessels hull, identification numbers for the engine and any other vital equipment, the registration of the components and the entire vessel, the inventories for all equipments included in the sale of the vessel, the price value of the vessel, and finally the terms of payment for the vessel.
Although the above documents are quite useful, the rate at which it will take an individual to acquire them is what brings the delays. As more and more people wish to have these vessels for trade operations and other military purposes, the process may take very long with a lot of delays (Patricia, 1983, p. 35). Because of the delays, a lot of precious time end up being wasted which could have been easily averted by the adoption of a better, fast, and reliable system. For instance, most of the details of any given vessel can be provided in e-documentations which can be easily accessible anywhere around the world instead of having them contained in a small piece of document. Once these details have been made available through electronic means, the owners of the vessel may be required to download the details with a password that has been provided by the dealer. This process will ensure that most of time is not wasted, and no much delay is experienced in the entire purchasing processes.
There are other statements giving the shipbuilder the ceiling preventing them from any liability should the vessel injure itself. This is because he has been able to build the product to his very best, and then he has sold it in its best condition. This thus sets the grounds that an admiralty claim can never be brought to the builder in case of a loss claimed should the vessel injure itself. This has been provided for by the Red Letter Clauses which have to be signed by the two parties. The other important occurs with warranties which are quite important for the builders of vessels and also to the ones with the decision of purchasing a vessel straight from its builder.
These are also other important documents that have to be signed during the purchase of vessels. This brings about a written agreement between the two parties about the vessel, and becomes binding between them. We should also be keen on noting that two warranties have been implied to be important during this process. There is the implied merchantability warranty, and the implied fitness warranty. These two have a role they play which becomes a legal bind between the purchaser and the buyer. With these warranties, it appears that they try to safeguard the builder so much than the purchaser of the vessel. For example, the fitness warranty specifies that the purchaser has pre-information and bases his trust on the companys ability to offer him with appropriate vessels which meet the international requirements, and therefore anything to do with the vessels self destruction wont place the manufacturer entirely responsible.
The other important document is the sale bill. This is a very important document used when transferring the necessary title to the already purchased vessel. Different countries have been reported to have different structures and guidelines in which their vessels are sold, imported, or exported. This makes them use different documentation procedures which are quite applicable depending on the nature of the people, the purpose of the vessel, and the area in which the vessel will operate in. this has therefore been seeing different nations trying to adopt the same in an effort to lessen the time taken during the vessel acquisition processes. The need therefore has been to bring the best of operations in the process so as to ensure integrity in the process and at the same time be able to serve the greatest number of clients as possible.
The other important documents used during the acquisition of vessel are purchase orders. Purchase orders are just contracts that are used when there is a vessel purchase straight from the manufacturers, or when there is an intention to order for one. This order will contain the provisions of liability limitations and the inventories that have to be included in the purchase (Patricia, 1983, p. 46). There should also be the need to search for liens whether the acquisition process is for a small boat or a big commercial vessel.
There is also the most complex procedure of meeting the requirements of the mortgage as under the Ship Mortgage Act. If all these documents were to be dealt with at once, it will prove to be hard and the reason it would be better to think of how this can be done in a better way. Therefore, the current process of acquisition has been very complex and demanding a lot of document signing. The only solution that can be given here is coming up with a system which ensures that the existing delay is greatly minimized, the time spent in the operations be reduced, and at the same time make all the follow-up processes such registration and monitoring as easy as well. Once a good system has been designed, it should be applied in all the acquisition operations and even be extended for use with plane purchasing and selling. This will save most of the time wasted in the operations, and at the same time be able to track a vessel once it has disappeared in the deep seas.
