A good broker is your best asset. A poor broker waits for their commission to come in. Whether the aim is to build, sell or buy a yacht, or to secure charters, it is customary (but not necessary) in the industry for parties to be introduced by a broker.
Who pays the broker?
The seller in sale and purchase, the builder in new construction, and the owner in charter agreements.
Can the broker negotiate the contract?
Yes, if acting as an agent and English law applies. The principal would be bound by the terms agreed. If the applicable law is not clear, the rules regarding agency may become a complicated matter. Check the implications with a local lawyer and get the terms of the agreement in writing.
Do I need to pay commission?
The role and the entitlement of brokers is clear when MYBA forms are used. If these are not used, address the issue and put it in writing otherwise you will be at the mercy of the law applicable to where the relationship was formed. Under English law, a broker will be entitled to a commission if they are the effective cause of the sale.
There is recent case law involving commission payments, either wrongly claimed or wrongly avoided. For example, in one recent case, the broker was denied commission as his involvement was too peripheral to be deemed an effective cause of the eventual sale.
What is a Central Agency Agreement?
A fixed-term and exclusive relationship with a broker/brokerage house to take care of the marketing of the superyacht, when it comes to sale and chartering. If contracts are signed, the broker is entitled to commission.
Look out for: • Minimum marketing activity. • Commission after termination. • Applicable law (brokerage agreements governed by the laws of Florida can be tough on a seller).
Copyright: Clyde & Co.