Introduction
This article analyzes the legal implications connected to the professions of brokers and yacht managers, that have key roles in the yachting industry, especially with regard to superyachts sale and purchases. In particular, Italian courts have recently ruled on the following topics: (i) “as is / as she lies” clauses and hidden defects; (ii) brokers’ entitlement to commission; and (iii) incomplete sale terms and the legal consequences for deposits.
- “As is/ as she lies” clauses and hidden defects
The Italian Supreme Court, with its decision no. 7287/2018, ruled on a case regarding a vessel sold “as she lies”. In the instant case, no defects were found before the sale, but were discovered after the purchase. Therefore, the buyer sued the seller before the Court of Genoa, alleging his liability because he was aware of such defects before the delivery of the vessel. The first-instance court held the seller liable and the second-instance court upheld such decision. The case was then referred to the Italian Supreme Court, which established that:
- The “as is / as she lies” clause is effective and it aims at excluding the seller’s liability in relation to the defects of the sold vessel. However, such clause is subject to the following limitations:
- The parties may limit or exclude the warranty for hidden defects, provided that the seller has not concealed the defects in bad faith or with fraud;
- The seller is responsible for “hidden defects” if he illegally hides the defects.
In light of the above, the Italian Supreme Court deemed the seller liable because there was evidence that he intentionally concealed the defects. Due to the seller’s bad faith, the “as is/as she lies” clause was considered null and void, determining the impossibility to exclude the seller’s liability for hidden defects.
- Broker’s entitlement to commission
The Court of Grossetto, with its decision no. 5/2018, ruled on a case concerning the broker’s entitlement to commission. In particular, a broker sued the buyer of a vessel, claiming the payment of his commission from the latter, after the execution of a vessel sale agreement between the buyer and a bank (as seller). The broker argued that the commission was due because he put in contact the parties involved and because his activities enabled the execution of the sale agreement between the parties. However, the buyer refused to pay the broker such commission, because his captain has contacted the broker without the buyer’s authorization and, then, it was actually the buyer who contacted the seller and negotiated the deal, without involving the broker. The Court, after having ascertained that the sale was finalized without the broker’s involvement, rejected the broker’s claim, because:
- The broker’s commission is due if the deal is actually closed consequently to the broker’s activity;
- The simple introduction of a client is not sufficient in order to justify the broker’s entitlement to commission;
According to the Court of Grosseto’s reasoning, it is not strictly necessary that the deal is closed as a direct and exclusive result of the broker’s activity, but the broker is obliged to prove that he has actually put the parties in contact in order to claim his right to the commission.
- Incomplete sale terms and the legal consequences of the deposits
The Court of Arezzo, with its decision no. 898/2017, ruled on a case where the buyer has sent an offer to the shipyard, without indicating the terms of payment and the delivery date. The offer, which only mentioned the payment of a deposit pursuant to article 1385 of the Italian Civil Code (i.e., caparra confirmatoria), was accepted by the shipyard, but the buyer sued the shipyard because it failed to deliver the vessel, despite the payment of the deposit, and apply to the Court, requesting the termination of the agreement for seller’s failure to deliver the vessel and the order to the seller to pay double of the deposit in compliance with the provisions of article 1385 of the Italian Civil Code. The shipyard, in its defense, argued that it was not in default because the buyer did not pay the purchase price. Since the offer did not provide for any terms regarding the payment of the price and delivery, the Court stated that:
- In such case, the rules of the Italian Civil Code apply. Therefore, pursuant to article 1183 of the Italian Civil Code, the good shall be delivered upon execution of the relevant agreement and the purchase price shall be paid upon delivery of the good.
- Since the shipyard failed to provide evidence of the delivery occurred, the agreement was terminated and the Court ordered the payment of the double of the deposit to be made by the shipyard.
Conclusions
Recent Italian case law highlights how small procedural gaps can turn into major disputes. In fact, we recommend brokers and yacht managers to confirm who is authorized to negotiate, record your role and commission triggers in writing, and maintain a clear paper trail of introductions and communications. On the contract side, don’t rely on an “as is/as she lies” clause alone, pair it with transparent disclosures and documented access to surveys. Finally, avoid incomplete offers: always set payment milestones, delivery date/place, acceptance steps, and deposit mechanics, so default legal rules don’t decide the outcome for you.