THE FINE PRINT

A well-crafted con­di­tional ac­cep­tance can make or break a deal

Marlin - - CONTENTS - BY R ALEIGH P. WAT­SON, ESQ.

Af­ter spend­ing months on the YachtWorld and Boat Trader web­sites, you have fi­nally found the “per­fect” boat. You do a per­sonal in­spec­tion of the boat with your bro­ker and ev­ery­thing fits your needs, so you make an of­fer, which is ac­cepted. You set a clos­ing date and sched­ule the sur­veys and sea tri­als. Mean­while, vi­sions of bill­fish dance in your head. The whole process is mov­ing along seam­lessly, un­til you get the call from your bro­ker: The sur­vey re­vealed mul­ti­ple is­sues with the boat, which le­git­i­mately af­fect its value or re­quire im­me­di­ate at­ten­tion to re­pair. Nat­u­rally, you are bummed … but the deal isn’t nec­es­sar­ily dead.

AC­CEPT OR RE­JECT?

At some point dur­ing the pur­chas­ing process — typ­i­cally soon af­ter sur­veys and sea tri­als — a buyer must de­ter­mine if he wishes to ac­cept or re­ject a boat. The ac­cept/re­ject date is a cru­cial stage in a boat deal be­cause if a ves­sel is re­jected, then the de­posit is re­turned and the par­ties no longer have any obli­ga­tions to­ward each other. If the buyer ac­cepts the deal, then both par­ties are bound by the terms of the agree­ment. As such, if a buyer backs out af­ter ac­cep­tance, then he for­feits the de­posit and may be sued for more de­pend­ing on the terms of the agree­ment.

WHAT IS A CON­DI­TIONAL AC­CEP­TANCE?

A sim­ple re­jec­tion or ac­cep­tance sce­nario is ap­pro­pri­ate in some deals when ei­ther the boat per­fectly fits the buyer’s needs at the agreed-upon price, or be­cause the boat is sim­ply not in the con­di­tion he had an­tic­i­pated. In many sit­u­a­tions, how­ever, a con­di­tional ac­cep­tance is pre­sented to the seller. This is ar­guably the most im­por­tant tool for a buyer in a boat deal, and it oc­curs when the buyer “ac­cepts” the ves­sel but sub­ject only to ad­di­tional or dif­fer­ent terms than were present in the ini­tial pur­chase and sale agree­ment. A con­di­tional ac­cep­tance es­sen­tially acts like a coun­terof­fer, and the al­tered terms must be ac­cepted by the seller be­fore the par­ties can pro­ceed to­ward clos­ing.

USE IT TO YOUR AD­VAN­TAGE

As I men­tioned in a pre­vi­ous ar­ti­cle, the most com­mon terms or items to be ad­dressed in a con­di­tional ac­cep­tance are clos­ing date, pur­chase price and re­pairs. For ex­am­ple, the buyer

is will­ing to pur­chase the boat, but per­haps con­di­tioned only upon the seller fix­ing the ice ma­chine and one of the air con­di­tion­ers prior to clos­ing.

How­ever, a con­di­tional ac­cep­tance is also a good time to add or mod­ify other terms of the agree­ment, such as the de­liv­ery lo­ca­tion or pro­duc­tion of cer­tain doc­u­ments. For ex­am­ple, a buyer might be will­ing to ac­cept the boat but con­di­tioned only upon tak­ing de­liv­ery of the boat off­shore to avoid a state’s sales tax. Like­wise, a de­tailed doc­u­ment list can also be im­por­tant to a buyer: We pre­fer to have a seller’s doc­u­ment list at­tached to every pur­chase agree­ment. This is es­sen­tially a list of what doc­u­ments the seller is re­quired to pro­duce prior to clos­ing. Of­ten­times, we do not get in­volved in a boat deal un­til af­ter the sur­veys and sea tri­als are per­formed but be­fore the agreed-upon ac­cept/re­ject date within the con­tract. In such a case, we con­di­tion clos­ing on the seller pro­duc­ing the doc­u­ments in the list at­tached to the con­di­tional ac­cep­tance. These doc­u­ments in­clude things like cor­po­rate records, var­i­ous cer­tifi­cates and tran­scripts of the reg­istry, which might be im­por­tant to ver­ify own­er­ship and clear ti­tle of the ves­sel be­fore clos­ing.

The ac­cept/re­ject date is a cru­cial stage in a boat deal be­cause if a ves­sel is re­jected, then the de­posit is re­turned and the par­ties no longer have any obli­ga­tions to­ward each other.

MAYBE THE DEAL ISN’T DEAD

Re­mem­ber, a boat deal is not dead just be­cause sur­veys or sea tri­als re­veal de­fi­cien­cies that might be of con­cern. Rather than give up on a pur­chase, a buyer can draft a con­di­tional ac­cep­tance that re­quests terms they feel are nec­es­sary to pro­ceed to­ward clos­ing. In most do­mes­tic pur­chase agree­ments, the buyer is deemed to have re­jected a boat if he fails to give timely writ­ten no­tice of ac­cep­tance. As such, if a buyer presents a con­di­tional ac­cep­tance that is not coun­ter­signed by the ex­pi­ra­tion date, the ves­sel is deemed to be re­jected, and the de­posit will be re­turned. Hence, there is lit­tle harm in pre­sent­ing a con­di­tional ac­cep­tance with terms nec­es­sary to make you feel com­fort­able about the pur­chase.

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