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BEWARE Yacht charter cancellation

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

  1. Bamboo

    Bamboo Senior Member

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    I have no idea if this is the case but when mechanical items fail there is a cause. Sometimes a good portion of that failure can be attributed to improper use and care. Was the failure due in any part to that? What is the expected lifespan of your part? We're all maintenance schedules strictly adhered to and recorded? Could the parts that failed have been ordered in advance and therefore been on hand for quick replacement? Those and more questions would come into play if this goes further. Again, I have no idea of the answers.
  2. olderboater

    olderboater Senior Member

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    You're right so the question is, "is it a job where you get paid for how much work you do or what you accomplish." I don't know any other sales position that gets paid for orders taken. They all get paid based on orders shipped or deals closed. A yacht broker doesn't get paid a penny on deals that don't close, those that fail survey. In the case of a charter, it's not complete when the paperwork is signed. It's complete when the charter is taken and completed. Yacht sales brokers may work hard but they don't get paid for all the contacts they make, all those who say they're going to charter but never do. The goal for the owner, the broker, and the charter client is and should be a completed charter. That's the only measure of completion and success.

    So, you don't get paid for expected contracts. Just not the way sales works. Sales people spend hundreds of hours for every sale. They come so close all the time and brokers get paid by those they sell for, only when the seller gets paid. Not when it goes to escrow, not when it's signed. Final payment.

    The other oddity worked into these contracts is commission if the owner of the charter boat later sells the boat to someone met while chartering. The concept isn't unusual. As a real estate broker, if I introduce you, even after you cancel my contract, I still get paid. In recruiting, if I give you a temporary employee who you hire as permanent I get paid. What is unusual in these charter broker contracts is the time. Should it be for the next year? Two years? Or as some of these read for three or five years? Again, some are excessive. If I own the boat and have no intention of selling, it's not listed for sale, but then three years later I decide to sell and list with a broker. Six months later a client is working with that a broker who is aware of the boat and ultimately the client realizes they chartered it long ago, should the charter broker get paid for the sale or the brokers for the buyer and seller. These contracts indicate the buyer and seller brokers get paid but then the charter broker does too. The problem isn't the concept, it's the excess. If while guests are chartering they ask the captain to contact the owner and they decide to buy, certainly the charter broker should get a commission. It's just got to have reasonable limits.

    Charter broker shouldn't win at the expense of others. Hurricane is approaching, everyone agrees to cancelling the charter. Owner loses. Charter customer loses. Why should the charter broker still win, still get paid? They should lose like everyone else. For them to get paid would be like paying a realtor full commission when the home buyer is unable to get financing.
  3. olderboater

    olderboater Senior Member

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    A good point and the contract does have some distinction. Typically though there is charter management seeing those things get done, often the same company as the broker. If it's through owner or his representatives neglect or mistakes, then the person chartering merits consideration and so does the broker. However, that's not the way these contracts read. They read even if no one's fault, the broker still gets paid. They provide mechanisms for 24 or even 48 hours. They provide penalties that go to the chartering person if the owner doesn't make the boat available without major reason. I don't know the specifics of the OP's situation, but I know that the standard contracts say that even when cancelling is right and no harm on the part of owner or chartering person, the broker still gets paid, that their job is completed when the contract is signed. That is not equitable and not consistent with any other selling job.
  4. Lenny

    Lenny Member

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    Can you name any other sales person that receives their commission if the deal is not completed?
    Yacht Salesperson- NO
    Real Estate Agent- No
    Car salesperson - NO
    The boat owner, me, is facing a $25,000 to $50,000 repair bill. How come the agent has no responsibility to help pay for the repair.
    Spoke with two yacht owners and one Captain in the last few days. All three charter. NONE knew they would be stuck for the commission. ALL said they would strike it from the contract or NOT charter. ALL were very surprised that their broker had not disclosed this information.
    One of the boats charters for $130,000 per week plus plus. He was NOT happy he would be stuck for $26,000. He did NOT know.
  5. olderboater

    olderboater Senior Member

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    If this teaches you to read everything before you sign documents, it may be the best money you ever spent. Loan documents can include things you've never thought of. Simple things like cell phone contracts. There are apartment complexes including clauses prohibiting you ever criticizing them on social media. Health clubs that have no way out, even death, in a mobile society where you may move elsewhere. Then there's insurance. If you haven't read it, you don't know what you have insurance for.

    I'll give you a couple of the most common ones on boat insurance. Latent defects. Your boat sinks. Insurer says it was a result of delamination that was a latent defect in manufacturing. Not covered by many policies. Does yours have an implied warranty of seaworthiness clause? Many have found their loss not covered as the insurer said the boat wasn't seaworthy so not their problem. Do you get new parts or do they depreciate parts in a partial loss, only approving used part prices? What about salvage in a total loss? Do they pay salvage plus the value of the boat or is their payout limited to the boat value? All risks or not? Agreed value or not? What about your costs if stranded far from home or costs to get home? What about paying for the $7 per foot dockage while you're waiting for the repair? I see people every day compare boat insurance policies and all they have is the amount of hull coverage, the liability limit and the price. They can't possibly know which is the best.

    Yes, the contracts are very bad but you're presented bad contracts every day. I've seen people spend their life savings overturning employment contracts they'd signed and meanwhile their new employer was already fed up with the situation they'd created.

    You're purchasing something major to be shipped to you. When do you take ownership. This is known as F.O.B. or free on board. If it reads FOB port or shipper, that doesn't just mean you're responsible for the shipping cost, that means if there's a loss on the way, it's your loss. I knew a case of a wreck involving a new boat shipped to a dealer. The order was FOB Columbia, SC. The dealer was in Charlotte, NC. This meant that the shipper had no responsibility. The dealer also did not have insurance coverage. The freight company had no liability as the accident wasn't their fault. The responsible party was the truck that ran into them which didn't even have insurance. So, the owner/driver of that truck who had no money.

    I knew a manufacturer that was upgrading a lot of equipment and placed an order for four $250,000 units. The contract read in US dollars but there was one ominous clause that said that the dollar amount was based on exchange rates at the day signed, but the underlying currency was the Euro and the price would be adjusted based on the exchange rate at the time it was ready for shipment. Imagine the surprise when the purchaser got an invoice reflating a price of $1,130,000.

    One thing to know about agreements and contracts. If there are any items "snuck in" or unusual or even unfair, they're highly likely to be in favor of the one whose attorney designed the contract. If there's something you don't understand, bet on it not being in your favor. I would venture to say that I've been involved in or those under me involved in at least 400 leases over the years. We haven't accepted more than 10 of those as presented to us without change.

    I even line through sections of documents at my doctor's office. The one that says that they have no responsibility as to the insurance so if for any reason the insurer fails to pay the full amount then I'm responsible for the difference. Hold it. They have a contract with the insurer and the ability to check.
  6. bayoubud

    bayoubud Member

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    Does not surprise me that most in the brokerage business defend thir contracts to the bitter end. Over the last 25 yrs have seen brokers along with others get to the... "self serving and nobody is responsible for anything" contract. It is forcing many to pay a lawyer to review a contract before signing if not able to decipher the BS. Of course you can redline the BS and replace with your terms and if they no like... just walk (quickly).
  7. olderboater

    olderboater Senior Member

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    I haven't talked to any broker who defends it. The charter broker I know thinks it is insane and has never held a commission on an uncompleted charter.
  8. Lenny

    Lenny Member

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    Olderboater: Thank you for all you help. As to " have not talked to any broker who defends it" Obviously the broker and management company that charged me the $5,000, defend it. Also the management person said to me "this is standard contract used by everyone " I am not crying. I can afford the $5,000 loss. I just don't like being taken advantage of unfairly. You can only get away for so long with such practices.
    As to a comment that if the boat is not in good condition then the broker should get the commission.
    I can not speak about other boats. My boat has crossed the Atlantic seven times on her own bottom. I am an engineer and spend way too much money on maintenance. We just added a third steering system. We have at least two of everything. For example we have two systems so we can plug in anyplace in the world. Most boats only have one. There is NO boat that does not break. NONE. We sample and change ALL the oil ever thousand hours including, engines, TRANSMISSIONS, generators, zero speeds, oil sealed shafts, etc. The clutch is NOT in the oil of the transmission. If it was, we would have had metal particles years ago in the oil. We would have pulled the transmission.
  9. Lenny

    Lenny Member

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    Typo above: We change oil every 100 hours (HUNDRED Hours) not every 1000 hours.
  10. Pascal

    Pascal Senior Member

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    If it s in the contract in plain English, isn't that a form of disclosure? I find it hard to believe that owners wouls sign charter contracts without reading them
  11. olderboater

    olderboater Senior Member

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    Interestingly, I found an article on this very subject. It said "the MYBA terms will only be the final word if yacht captains and owners let the broker have his or her way." It was dated May 29.....

    2009.
  12. menkes

    menkes Member

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    I came to one conclusion from the story here:
    Never make a business or occupation from your hobby.
    It'll spoil your fun of the hobby.
    From my experience of almost 50 years at sea as a hobby, I know it !
  13. GhostriderIII

    GhostriderIII Member

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    Every 150 hrs we change the filters - there are six to do. We oil sample every thousand hours, but mainly just add another barrel into the tank. I never, ever heard of a broker getting commission on cancelled trip!
  14. Lenny

    Lenny Member

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    Spoke to another charter broker just to see what they would say. Seems that there was a hurricane years ago and many charters were cancelled. Some brokers went broke. They put in that clause to protect the brokers!!! When asked about the hurricane damage to the boat the answer was "they should have had insurance". Said all insurance policies have a deductible so the boat owner had a double loss, the charter fee and the deductible. Answer from the broker "We did the work we are entitled to get paid". The boat owner is their client. They obviously do NOT care about the client. Hard to do business with this outlook. "Buyer beware". Spoke with my attorney. Said many of their clients charter directly, WITHOUT a charter broker, because the contract is so one sided. Should have called my attorney before I signed the contract. My fault!!!
    Question: If I want to charter directly, WITHOUT a broker, where are good places to advertise? Are you allowed to pay and advertise on YachtForum?
  15. olderboater

    olderboater Senior Member

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    Is boating a hobby or business to you? Menkes made an important point of not mixing pleasure and business.

    You had this event happen to you while using a charter broker, by not reading the contract, but instead of another broker with a different contractor, you think you can somehow do it all alone? And you don't even know where to advertise or how to get customers? I think you should try alone and then, perhaps, you'd develop more respect for what brokers do. It's not easy. You say you're an engineer. You think a broker could just step in and do your job?

    We've chartered 10 times and never once with an owner not using a broker. Would you know how to arrange lodging around the world in the event of a breakdown and compensate properly plus get the guests on another boat or home?

    The broker did nothing wrong, just to make that clear. They presented a contract to you and you signed it. Now, you're furious over the contract. I wouldn't have signed it but had I done so, I'd abide by it without complaining.

    You want to charter on your own, then buy an ad in a yachting magazine. Spend the advertising dollars and see how it goes. Hire a salesperson. Well, except you can't afford that for one boat.

    I'd ask why you couldn't get a quick repair on the clutch, why two to six weeks, did you look at all possibilities including flying parts in, flying in help? When was the first indication of a problem?

    Did you ever consider the impact on the charter broker? They have a reputation with clients. They did their job. None of this was their fault, but they were the ones who had to pick up the pieces. You don't know what costs they incurred making their customer happy or what they pulled off based on experience and contacts they've taken years to build. You have no idea what the broker did to make up for your inability to perform.

    I'm sure Carl would be glad to sell you an ad spot on YF, if he was confident you could provide the service you're advertising.

    One more time let's make this clear though, the broker did nothing wrong. You choose not to read, that's not their fault. You sign, they didn't hold a gun to your head. Put the blame where it properly belongs. They also did nothing to make your boat unavailable to their customer.
  16. YachtForums

    YachtForums Publisher/Admin

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    We don't have a dedicated section for charter but if enough members were interested, we could set something up. In the interim, you could place a post in the Yacht Swap forum...

    http://www.yachtforums.com/superyacht/yacht-swap.311/
  17. olderboater

    olderboater Senior Member

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    I was trying to sell an ad for you, a display ad.
  18. RER

    RER Senior Member

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    It's not so complicated.

    1. Know your business, including industry standards.
    2. Read contracts before you sign them.
    3. Contracts are agreements. If you don't accept the terms, renegotiate or decline it and move on.

    This is not rocket science.
  19. Knight

    Knight Member

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    I've lost more than that just in surveys from crooked brokers
  20. olderboater

    olderboater Senior Member

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    Let's make one thing clear. There was nothing crooked about what the broker did in this case. The broker provided him a contract, which he signed. The broker held him to the terms of the contract they had. Yes, the contracts favor the brokers. They were developed by brokers. However, they are what they are and no one has to sign them. The anger of the OP really should be aimed at himself for signing a contract he didn't read. It could have had a more punitive clause in it and he not known. It may save him far more dollars sometime, not repeating that mistake.

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