MYBA E-MOA 2021

The MYBA Memorandum of Agreement (‘MOA’) is the most respected and commonly used form of standard terms and conditions for the sale and purchase of second-hand superyachts.

Hill Dickinson was mandated by MYBA to update the MOA and, following several rounds of discussion and approval by the MYBA board and industry professionals, a new version was launched in November 2021. However, several years after its publication, and the majority of sale and purchase transactions are still using the previous version, which dates back to 2008. 

Given our involvement in the drafting process we thought it would be interesting to discuss: (i) MYBA’s rationale for the update; (ii) what the key changes are in comparison to the 2008 MOA; and (iii) why industry uptake has been slow.

Why was the MYBA MOA updated? 

Since 2008 the way business is done in the superyacht industry has changed. MYBA decided it was time to overhaul the MYBA MOA to bring it into line with current market practices and changes in regulations. Having consulted with key stakeholders in the industry, MYBA found that there was a desire to ensure that the MYBA MOA remained the most professional form of superyacht sale and purchase contract in the market and that the industry wanted to focus on front-loading the documentation, making the provision of due diligence documentation a contractual obligation and clarifying terms where disputes have typically arisen in the past to ensure that their clients have the best possible experience when buying / selling a superyacht. 

What are the main changes?

The MYBA MOA is widely acknowledged to strike a fair balance between the rights and obligations of the Buyer and Seller. The backbone of the MOA therefore remains the same, however there have been some key changes to the terms. We have summarised some of the main changes below:  

• Inventory: Previously under Clause (16), the parties could agree the inventory within 7 days of signature. Under the 2021 E-MOA this needs to be agreed and attached to the MOA at the time of signature. 

• Commission Agreement: The 2008 MOA was silent on the brokers’ Commission Agreement. Clause (37) of the 2021 E-MOA now expressly refers to a separate confidential commission agreement to be entered into between the Seller and the Brokers at the time of signature of the MOA. 

• Due Diligence / ‘KYC Documents’: The 2021 E-MOA includes an entirely new Clause (40) which sets out the deadlines by which each party must provide their ‘KYC Documents’ and by when such documents are to be approved. 

• Deposit: This is no longer stated to be 10% in the 2021 E-MOA but is to be agreed commercially. 

• VAT: The boxes on page 1 have been expanded to include a specific reference to the VAT status of the Yacht. The information in boxes A-L (as before) forms part of the Seller’s warranties under Clause (15) (see below). 

• Seller’s Warranties: These have been expanded to include a warranty as to the VAT status of the Yacht and to include, in respect of charter vessels, a warranty in respect of any claims relating to charter commitments. 

• Partial Loss: As the 2008 MOA was silent on partial loss, the parties would previously have had to rely on the force majeure provisions in such an event. Now there is a clear procedure which applies regardless of whether the partial loss is due to an event of force majeure or not which sets out the basis upon which the contract will continue if the Yacht can be repaired within 30 days or will be cancelled if the damage cannot be repaired in that timeframe unless the parties agree otherwise. 

• Clause (26): The 2021 E-MOA specifies that the Deposit must have been received by the Stakeholder prior to commencing the Sea Trial under Clause (26). 

• Clause (27): The 2021 E-MOA clarifies the definition of a “Defect”’ in respect of the Clause (27) Condition Survey; the starting point for the 7-day period during which notice must be served; and which elements must be satisfied for valid notice to be served on the Seller. In particular, the Buyer’s Marine Surveyor must provide a “Surveyor’s Statement” which must be attached to the Buyer’s notice under Clause (27)(a) to the Seller. In addition, Clause (27) permits the Buyer to instruct a professional to obtain oil samples once the Deposit has been received by the Stakeholder. 

• Cancellation: If the Buyer rejects the Yacht under Clause (26) or Clause (27) the cost of the fuel incurred during the operational trials in respect of the Condition Survey and in moving the Yacht to and from the haul out facility will be deducted from the Buyer’s deposit (in addition to the cost of any specific requests in relation to the Sea Trial and Condition Survey costs, to the extent unpaid) before the Deposit is returned to the Buyer. 

• Assignment: The 2021 E-MOA clarifies that any nominee must be in the same beneficial ownership as the original Buyer and that any such nomination must be notified to the Seller no later than 7 days prior to the Completion Date. 
   

Now it’s online, how does it work? 

The other significant change to the 2021 E-MOA is that it is (as the name suggests) electronic. It operates much in the same way as the MYBA E-Charter Agreement and is made available to established yacht brokers and lawyers operating in the industry. Once approved, a subscriber can log in and input the relevant commercial details into the MOA using the online platform. The platform generates a unique serial number for each MOA which indicates which version of the contract is being used. The creator of the MOA can then download the draft and share it as a .pdf. They then log back in to make any changes. Attachments such as addenda can be uploaded to the platform. 

Why has the uptake been slow? 

One industry concern has been the issue of confidentiality. MYBA has confirmed to us that all of the data is encrypted and that once an MOA is finalised on the platform, it is automatically deleted 7 days later. This offers some comfort, but with online security now being such a sensitive area we are interested to see how MYBA will tackle this going forwards. 

There is often hesitancy to move from the known to the unknown and this tendency has been compounded by MYBA’s decision to limit usage of the agreement to those with access to its online platform. While MYBA’s motivation – being to reduce the risk of fraud – is commendable, it has created a practical barrier to more widespread adoption. However, we believe any inconvenience this approach has caused is easily outweighed by the improvements the new version incorporates.

For further information or support please get in touch.