CHAPTER 5: SECONDHAND TONNAGE

CLASSIFICATION RECORDS
A vessel's classificatio n society keeps a host of technical data relevant to each ship classed
by the society, recording visits by classification society surveyors for the entire classif ication
history of the vessel, surveys successfully passed, lists of defects discovered, and rep airs
recommended, performed and outstand ing . Once permission is forthcoming from the
sellers, this documentation is usually made available to identif ied and authorised potential
purchasers. Those potential p urchasers will usually appoint an experienced marine
engineer/surveyor to represent their interests, to examine the classification records of the
ship involved and thereafter promptly submit a relevant and detailed written report.
The information held on file by classification societies is confidential and will not be released
to outsiders by the society without the express written approval of the owners. It may
happen, however, that the new owner of a secondhand ship may need to refer back
throug h the class records from time to time to obtain background data for a current
technical problem. T his will not normally create any difficulty, written p ermission having
usually and routinely been granted to the new owner prior to purchase.
The writer has learned of problems, however, following the p urchase of a vessel at auction
after the financial demise of her former owners. In certain circumstances it has not been
possible for eventual new owners who bid successfully at auction to obtain written authority
from former owners who no longer exist as a corporatio n and, even if individuals who once
had authority can be traced, frequently they have no interest in being co-operative.
In the absence of written authority from previous owners, a vessel's classification society
may refuse to release historical d ata f rom their files, notwithstanding that the new owner
can prove good title to the vessel that they class. T he situatio n arises where the class
society are prep ared to classify the vessel under new ownership but will not release to the
new owners the vessel's class records under her former ownership . That seems to mere
bystanders to be an extreme position for a classification society to adopt and, having in
mind the industry's purge on sub-stand ard ship operatio ns, one which sits ill with their
responsibility to be custodians of the technical safety of the vessels they class. One is
entitled to suggest, for example, that if a new owner is unaware of a potential latent def ect
in their newly purchased ship when such vital information is contained in undisclosed class
files, those new owners might find it difficult to properly protect themselves, the ship and
those who sail in her from the possible effects of that defect.
At the very least there may be lesso ns to be learned f rom class records, if only to highlight
something to be borne in mind and perhaps checked out before bidding at an auction.
Presumably a liq uidator/receiver will be in a positio n to issue written authority to insp ect
classification records and it is to be hoped that by a mixture of diligence and
commonsense, those with a genuine need to insp ect class records will be given the
opportunity to do so.
This potential difficulty in obtaining class records is also something to bear in mind when
buying a ship throug h normal S&P channels. It is, perhaps, a good idea as a matter of
routine to insist that sellers instruct their class society regarding the release of class records

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SALE & PURCHASE: WILLIAM V. PACKARD

and, as p art of the hand-over documents, p rovide a certified copy of written authority to
that society to make available to the new owners all class records and documentation
existing in the classif ication society archives. Althoug h reluctant to add yet more
documentary requirements to the necessarily complex exchanges of pap er at times of
closing, I make no excuse for inserting this requirement into the B uyer's Checklist which
appears at Fig ure 5.6 .
Ev en if the owner, sale and p urchase b roker, and potential b uyer were all based, for
example, in Lo ndon, it may not necessarily be that the vessel is conveniently classed by
Lloyd's Register, with their locally-based record bank. A b uyer may have the problem of
seeking classification data contained in a foreign centre - perhaps with the American
Bureau of Shipping in New York, or with Det norske Veritas in Oslo . Furthermore, the buyer
may have little id ea of how to discover and appoint a reliable foreign surveyor for the task of
examining classif ication records. In such circumstances, they will probably rely on the sale
and purchase broker, who throug h his business contacts can usually recommend
competent surveyors prepared, experienced and able to perform such tasks.
Altho ugh a relatively small sum, the costs of examining classification records vary from
centre to centre, depend ing also on the age and record of the ship concerned and,
therefore, upon the quantity of material to be sorted through. Some surveyors charge fees
for such work in accordance with a grad uated "ag e scale", whilst classification societies
submit a nominal "search fee" for producing the records for inspection.
A surveyor's object when examining a ship 's classification records is threefold . He has to
check and report to his p rincipal on the classificatio n status of the vessel. Secondly, he has
to draw attention to any defects reg ularly posing problems d uring the ship's career. T hirdly,
he sho uld use his knowledge and experience to identify any parts of the vessel's hull and
machinery which the records indicate may cause difficulties in the months and years to
come.
For the first part of his b rief, a surveyor will normally trace a ship's lif e back to her last
Special Survey since it may reasonably be assumed that, upon completio n of that
inspection, the vessel was in good condition, with the exception of any Conditions of Class
possibly outstanding . Conditio ns of Class are recorded in what is termed a Sp ecial Reasons
List and must receive attention within a certain time limit. It is usual to negotiate the
purchase of a vessel, subject to her d elivery, with Class Maintained and Free of
Recommend ations (ie; that is, free of Conditio ns of Class) and Notations . From inspection
of the classification records, a surveyor should be able to confirm that a vessel's class is
maintained, failing which he can identify shortcomings. He can also check whether the
ship's trading certificates - such as saf ety equipment and saf ety radiotelegraphy are current
or shortly due to expire, and can draw his principal's attentio n to any outstanding
recommendatio ns or notations.
It may be that o utstanding recommend ations (Co nditions of Class) shown in the records,
have received app ropriate attention, b ut the head office records have yet to be bro ught up
to date by the Classif ication Society. In practice, there can be a time-lag between a rep air,

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CHAPTER 5: SECONDHAND TONNAGE

a classification surveyor's approval of same, and his report reaching the head office files. If
any Conditio n of Class repairs remain outstanding, however, the potential b uyer has the
choice of insisting on appropriate attention prior to hand-over of the vessel, or perhaps
negotiating a red uction in the asking price in return for taking on the responsibility.
Unlike Recommendations, No tatio ns listed in the Sp ecial Reasons List are not Co nditio ns of
Class, but concern relatively minor defects discovered by a classification surveyor, and left
to be dealt with at an owner's convenience. Certain owners, though, rarely find such rep airs
"convenient". A purchaser not wishing to accept the responsibility for repairing an ind efinite
number of such minor def ects would be best advised to negotiate either their repair prior to
the vessel's delivery, a price reduction, or a f urther insp ection by a classification surveyor at
the seller's expense. This sho uld confirm that a repair of any "notational" item remains good
and that subsequently the notation can be removed from the Special Reasons List, or can
continue to be postponed indefinitely.
In order to assess the possibility of recurring damage to any part of the ship, the surveyor
examining the Classificatio n Records will need to trace the vessel's career from the First
Entry Report, and the results appertaining to the builder's G uarantee Trial . A knowledgeable
surveyor will then be able to read from the record of subsequent def ects any potential weak
spots in a vessel's construction, and can alert the buyer accordingly.
At the end of his inspection of a ship 's classificatio n records, a surveyor should be in a
position to sub mit to his client a full report, giving both the current status of the vessel's
classification standing as well as a potted history of her technical career and ind ications of
her f uture reliability.

FIRM OFFER
At this stage a potential buyer should be able to evaluate the p urchase with considerably
more accuracy than at the start of his enquiries, and can decide whether or not to take a
serious interest in acquiring the ship .
Once buyers reach this point and maintain their interest, they will very likely ask their
brokers to submit to the sellers a full firm offer - almost always nowadays by fax or e-mail for the purchase of the ship, setting out the major terms and conditions of the offer, which
will include the right to insp ect the vessel. (An opening firm offer checklist is shown in
Figure 5.1. An example of a typical opening firm offer is to be found in Figure 5.2).
Especially at times of high d emand for merchant ships (usually when the freight market is
booming), some b uyers consider themselves able to appreciate the approximate value of a
vessel from either a brief description, or from the fact that a reliable, well-known owner is
selling the ship . Not wishing to miss an opportunity, that buyer may attempt to reach the
head of any list of potential purchasers by immediately offering to buy the vessel o utright ,
always subject to eventual satisfactory inspection of the ship and her classification records.

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SALE & PURCHASE: WILLIAM V. PACKARD

Fig 5.1

CHECKLIST FOR OPENING OFFER

Place, Date & Time

For Account of
Subject Reply here by Date & Time
Identity of Sellers
Name Vessel
Brief Uncontroversial Details (eg: B uilt/Classed/Deadweight)
Price
Deposit
Closing
Subject
o Inspectio n (Where & When)
(Afloat/Drydock)
(Hull/Cargo Compartments/Machinery)
o Inspectio n logs/certificates
o Inspectio n Class Records
o Sp ecial Survey Status
Delivery
o Range/Port/Place
o Laydays/Cancelling
o Safely Afloat
o Free Charter
o Free of Cargo
o Free Stowaways
o Free Blacklistings
o Class Maintained
o Free of Recommendatio ns
o Free of Average Damage
o As Insp ected (Fair Wear & Tear Excepted)
o Surveys Up to Date Valid for ?
o Certif icates Valid for 6 months
o Free of Encumb rances
o Free Maritime Liens
o Free any other Debts whatso ever
Vessel's eq uipment, stores, spares, bunkers, lub eoils
Drydocking Clause (SALEFORM 1993 - Clause 6)
Buyer's Onboard Observers
Notices
List of Closing Documents
Private & Conf idential
Arbitratio n Londo n
English law to apply
Subject Details MOA based SALEFORM 1993/NIPPONSALE 1999
75