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BEWARE Yacht charter cancellation

Discussion in 'General Yachting Discussion' started by Lenny, Jul 25, 2017.

  1. Lenny

    Lenny New Member

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    We have been chartering for a year and had wonderful reviews from the guests.
    We were suppose to start a week long charter next week and the clutch plate on the transmission broke. Impossible to get the parts and repair in less than 2 to 6 weeks.
    There is a "Force Majeure" clause which states not responsible if beyond my control.
    The APA had been paid and needed to be returned. I asked for wire instruction from the broker and he sent them including a bill for the entire broker commission 15% and his management commission of 5%, total almost $5,000!!!
    To make matters worse, if they chartered another boat for the same client, same time period, I still have to pay and the brokers get TWO commissions!!!!
    The contract with the broker is VERY long. I am an engineer not an attorney. The broker had spoken to me numerous times about cancellations but never said I would also have to pay all the commissions. No question my fault for not understanding the contract BUT:
    Not only am I out the $5,000 in commission but we are stuck for dockage that we can not cancel.
    Yacht brokers - not paid unless they sell your boat
    Real estate agents - not paid unless they sell your property
    Car salesmen - not paid unless they sell you a car.
    I can not think of any sales person that gets paid if the contract is cancelled.
    If I had know that I am stuck for the brokers fees, if a charter is cancelled, and not my fault, I never would have chartered.
    Again my fault for not understanding the contract, but broker should have said something.
    Needless to say we will no longer charter
    QUESTION: Do other Owners and Captains realize that if they cancel a charter thru "Force Majeure", not their fault, they will be stuck with these very unfair charges?
    Just want to put this out their so others will not make the same stupid mistake as I did. Again this is MY fault.
  2. olderboater

    olderboater Senior Member

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    I'm guessing you used an MYBA agreement. They are contracts by brokers for brokers. However, there are many other charter contracts in use. Under Clause 24, here's the paragraph.

    a) The commission shall be deemed to be earned by the Broker and the Stakeholder upon the signature of this Agreement by the OWNER and CHAR TERER and payment of deposit funds by CHARTERER and be payable by the OWNER on the full Charter Fee plus the Delivery/Re-delivery Fee, if applicable, but excluding running expenses, according to Clause 20 on previous page, whether or not he defaults for any reason including force majeure . In the event of Cancellation by the CHARTERER, the commission shall be deducted as an expense from the deposit.

    There are several other contracts in common use which do not have those terms in them.
  3. Pascal

    Pascal Senior Member

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    I ve had this issue a couple of years ago but it was just for a day charter when we couldn't make it back to Miami from the exumas in time due to weather. Commission on a day charter is no big deal

    As to not chartering any more, put it in perspective... you're not going to cancel charters very often. But yeah, when the broker is able to raccess book the guests they shouldn't be getting double commission. Good luck getting brokers to accept different language.
  4. Lenny

    Lenny New Member

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    We are in the NorthEast for the summer, and there is a real shortage of quality boats for charter. By not chartering, I hit the brokers where it hurts, in the pocket. We turned down many charters, which I believe they could not fill. At the charter boat show in Newport, there were a lot more brokers than boats available.
    I will NOT deal with people who are totally unfair. Two commissions, commission even if the charter does not go. You think the broker and/or management agent would have said " Understand that it is in the contract, BUT, both the 15% and the 5% are the same company" ( The broker for the charter and the management company, both work for the same small company). "Perhaps split the fees". I do not care about the money, just this is really unbelievable in any kind of business relationship. In the end they loose not me.
    Put this out on the forum to advise others to not make my mistake.
  5. olderboater

    olderboater Senior Member

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    And two lessons learned. One a warning re: Charter contracts. Perhaps the biggest though is never to sign any contract without reading it completely. The MYBA contract is so obviously self serving for brokers. Basically, we get this, this and this and doesn't matter, but we're not responsible for anything, nothing at all.
  6. captholli

    captholli Senior Member

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    Yacht Charter Brokers, MYBA contract "by brokers for brokers" and it keeps getting amended with new verbiage yearly at their meeting . Watching the yacht crews wine, dine and entertain this bunch of merry partiers at the Antigua Charter show for seven days strait 18 hours a day is down right disgusting but it seems that yacht brokers are the first contact to "lets turn your yacht into a business" that has owners so vested in the belief that 12 weeks of charter will really offset the expenses of ownership but soon realize that the wear and tear to the interior soft goods, water toys and machinery take a big bite of any financial gains produced by those 12 weeks. Besides keeping the crew busy and giving them the opportunity to make some extra money I cant see half of the commercially registered vessels realizing any significant reductions and many charter yachts are returning to private use after the fact. I like the clause that if a charterer purchases a yacht that he or she may have chartered within 3 years than they get a chunk of that commission also. FLIBS 5 day affair. Monaco show 4 day affair. Antigua Charter show 7 days of the best food, drink and hospitality that a 5 star yacht can serve up under the guise of inspecting the vessel and crew to have an idea of matching the vessel with potential charter client. Pretty sweet deal that the brokers and mgmt. companies have owners lining up for every year...
    Last edited: Jul 26, 2017
  7. Lenny

    Lenny New Member

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    Impossible to make any money on a charter yacht. Once you factor in crew salaries, wear & tear, insurance (extra if you charter) loss of use of your boat, etc you can NEVER break even. The one advantage is you can depreciate the cost of the boat. A big plus if you need the deduction. That being said, I will NEVER charter my boat again and advise my friends of the one sided contracts. No charter boats, no fees for charter brokers or management companies, bibi brokers. Get what they deserve!!!!!!
  8. olderboater

    olderboater Senior Member

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    Well, if I was going to put a boat into charter, I would never consider doing it under the MYBA contract and there are charter brokers who do so under other more reasonable contracts.

    I also would never wine and dine them to the excess so many do. I've never done that in any business. It turns a legitimate profession into a sleazy one sometimes.

    Incidentally, I do believe many courts would overrule the clause 24 a. They would see the by broker for broker aspect and consider it unconscionable and inequitable. Problem is it's not worth the time and money to do anything.

    In my world of normalcy, the commission isn't earned when the contract is signed. It's earned when the charter is complete.
  9. olderboater

    olderboater Senior Member

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    Lenny, I have a question our of curiosity but also concern. Have you read your boat insurance policy completely, every word?

    The vast majority of people have not. We get careless about signing contracts by trusting and sometimes it's not warranted. There are some horrible boat insurance policies that are sold widely to win price battles.

    You can't go to a doctor today without signing several things. You sign that if the insurance doesn't pay, you will. Why should you? The doctor has a contract with the insurer and should do what they can get paid for. Medicare has a policy. If the doctor accepts Medicare Assignment, then without you specifically signing for some service, they cannot charge you even if Medicare doesn't pay.

    Now you're asked often to sign things on tablets saying you've been provided and read certain documents.

    We lease a lot of buildings and in most cases we took over an existing lease, but 95% of the time we will not sign their lease. Most commercial landlords have horribly one sided leases and people sign them because they think they have no choice.
  10. Lenny

    Lenny New Member

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    I have NOT read completely my boat insurance policy. Will send it to my marine attorney today. Thanks for the information.
  11. olderboater

    olderboater Senior Member

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    You also should read it. I know it's boring and some is confusing. However, it tells you things you must do to protect your rights. It has the kinds of things that keep you from a tow turning into a huge salvage bill and the insurer not paying. But, yes, good to have attorney read anything we sign. Many of the documents are created by attorneys on the other side.
  12. Pascal

    Pascal Senior Member

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    Problem is that there are many owners trying to charter their boats and desperate to sign any contract...I don't think there is a shortage of charter yachts in New England and there sure isn't one down here in so fl / Bahamas

    As to costs, don't forget the $2000 to 3000 annual foreign charter license in the Bahamas...they're cracking down on boats that don't have one.
  13. olderboater

    olderboater Senior Member

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    Most of the small boats chartered in the Bahamas and Caribbean use the CTI (Caribbean Terms Inclusive) contract. There's also specific charterer contracts and Standard Eastern Mediterranean Terms (SEMT) and Greek Terms (GT). Here's a contract without the clause being discussed. It says nothing about Broker receiving commission on a cancelled contract.

    https://www.regencyvacations.com/wp-content/uploads/Sample Caribbean Contract.pdf

    AYCA (American Yacht Charter Association) has the same provision as MYBA.
  14. bayoubud

    bayoubud Member

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    Two commissions...yep that does sound like a creative broker contract...:rolleyes:
  15. Lenny

    Lenny New Member

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    How many yacht owners or Captains, that use this fine Forum, are aware of this clause?
  16. olderboater

    olderboater Senior Member

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    17? Just a guess. Does closest to the real number win a prize? Sorry, couldn't resist.

    I am aware as is my wife as is our crew. I look very carefully at anything I sign and require a form like that to be emailed to me in advance to review. Since we're on the customer end, we can't control the deal that the owner made with their broker, but we do control one aspect and refuse to sign anything saying that if we cancel (within their parameters) the broker still gets full commission. We've lined through and initialed that three times, having the broker initial also. Once they said they wouldn't and we said, no deal then and they changed their mind. We never have cancelled but not going to agree to that. I'd encourage any customer to get trip cancellation insurance.

    I was also made aware of this practice by the broker we've used to charter as well. They don't use this form on boats they have under charter but obviously run across it on boats under charter with others.
  17. olderboater

    olderboater Senior Member

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    Also, warning to all. Never put your boat under charter without also having an attorney read the contract. There are too many pitfalls. I hate to see someone like Lenny victimized by such an inequitable contract.
  18. bayoubud

    bayoubud Member

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    X2...ob as you said earlier...the yacht broker contracts are "self serving and nobody is responsible for anything"... except the person signing the contract! Makes it hard for the honest people working in this industry to overcome this sort dishonesty.
  19. Lenny

    Lenny New Member

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    As I said before, their loss not mine. I only chartered for the write off. We are going to the Med for two seasons. Was going to go to the trouble of having the boat able to be chartered there. Not that difficult for us since we would just put the boat back in class. Last owner let it lapse, but we could do it at our next haul out. Boat would charter for $50,000 per week plus plus. Broker would have made a lot more money than the $5,000 he charged for the cancelled charter. His loss. I actually had a call from someone who wanted two weeks in the Med next season. Told them only thru a broker since too much possible legal problem. That is a $20,000 commission that they lost with almost no work. I just called the people and told them my problem.
  20. Focal

    Focal New Member

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    Well in all fairness, he's doing twice the work. He lives off commissions and it was to be expected he'd offer a contract securing his pay day.

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