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The better way to sell a yacht – the 2021 MYBA E-MoA

Posted: 11/04/2022

For the first time in over 15 years - and with the benefit of experience from various contacts across the maritime industry – MYBA, the worldwide yachting association, has made material amendments to some of the key terms in its internationally recognised sale and purchase contract.

These changes seek to address and clarify many of the issues which frequently crop up during the negotiation of a yacht or superyacht sale. They also seek to reflect common practices in the industry that have developed over the years including, most recently, those relating to the Covid-19 pandemic.

With MYBA’s sale contract being the most frequently used agreement for second-hand yachts and superyachts sales worldwide, these changes are likely to have a significant impact on the way the majority of yacht sales are now conducted in the industry.

In practice, once the parties have agreed to adopt MYBA’s terms, they are rarely amended significantly.  A good knowledge of those standard terms and the recent amendments is therefore essential for market participants across the industry including shipyards, brokers, stakeholders, owners and lawyers. 

Some of those key changes are set out below.

Inventory: Instead of being agreed after the contract has been signed (which left the buyer with uncertainty as to what items were to be included on delivery), the inventory must now be agreed and attached to the contract before it is signed by the parties.

Force Majeure: Most likely as a result of the issues arising out of the pandemic, the Force Majeure provision has been amended to allow the parties to terminate the contract if delays caused by the force majeure event exceed 30 days. This provides an end date for the non-faulting party and means that these delays cannot continue for an indefinite period.

Most importantly, the change also requires the party intending to rely on the Force Majeure provision to notify the other party of that claim within two days of a triggering event. This is a process that yards will be accustomed to from similar provisions in build contracts.

VAT/tax: The seller is now expressly required to warrant that no undischarged tax/VAT liability has been incurred in relation to the yacht up to the date of its delivery. Depending on the market’s reaction to the change, there may be a concern that, as the seller has to provide an express warranty (and assuming liability) for the prior VAT position, this may lead to greater pressure on a buyer to accept incomplete or poor evidence of the past VAT position. In turn, after the seller has completed the sale and moved on, this may leave the buyer with difficulties in proving the position to any tax authorities and/or a subsequent buyer.

The broker’s commission: This clause has been extended to catch any direct arrangements between the parties’ sister entities, instead of merely between the parties themselves, and to ensure that parties cannot avoid the commission fee obligation by transacting a sale through sister companies.

Post condition survey damage: There are now express provisions that provide the seller with an opportunity to fix any post condition survey damage, however caused. Such damage can now be rectified by the seller to the standard of the buyer’s approval within 30 days. This is in contrast to the previous terms where no such opportunity was provided for, giving rise to a greater likelihood that the buyer might immediately or unfairly repudiate the contract.

No sea trial/condition survey until deposit paid: It is now clear that no sea trial or condition survey can take place until the buyer has received the deposit.  It should also be noted that the new requirement is that the deposit must be “received by” the stakeholder as opposed to “paid to” the stakeholder.

KYC due diligence: KYC and due diligence requirements are now set out in greater detail and depth, with the parties having to meet the requirements set out in both Schedule A (setting out various due diligence documents) in addition to Addendum 1, which relates to the yacht’s certificates etc . The changes also now expressly require information to be provided on the ultimate beneficial owners.

The stakeholder obligations: There are now more detailed obligations and time limits imposed on the stakeholder.  The stakeholder must now confirm that the KYC information discussed above is in order within the relatively short time period of eight days. Failure to do this will result in the contract being automatically cancelled.

In turn, however, under the amended terms, the stakeholder has greater legal protection when acting in accordance with the contract, including indemnities and an express waiver of liability from the seller and buyer for loss caused by its actions, unless that loss was a direct result of the stakeholder’s negligence.

The amendments help address some of the issues regularly arising in a yacht sale or purchase. For example, they clarify the use of the Force Majeure provision and give the buyer the right to rectify damage caused to the yacht post condition survey. The changes also go some way to addressing the perceived imbalance that the MYBA agreement is generally considered to be “seller friendly”.

Except for larger superyacht transactions where the Norwegian Sale Form (NSF) can sometimes be adopted, the MYBA MoA has historically been the “go to” text for yacht and superyacht sales. This is primarily because the MYBA MoA provides for early signature before the sea trial and condition survey. 

The additional obligations placed on the stakeholder and the tight initial eight-day time limit (following signature) to satisfy KYC/due diligence may erode that advantage slightly. However, on balance, it seems likely that the 2021 amendments to the MYBA MoA will further build on this pre-eminence as the yacht and superyacht sale/purchase contract of choice – particularly now it is available in the MYBA-E electronic format.

If you have any questions in relation to these amendments, please do not hesitate to get in touch with Grant Eldred or Remie Grice.

Grant Eldred

Email Grant +44 (0)20 7390 2210

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MYBA E-MOA 2021

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The MYBA Memorandum of Agreement (‘MOA’) is the most respected and commonly used form of standard terms and conditions for the sale and purchase of second-hand superyachts.

Hill Dickinson was mandated by MYBA to update the MOA and, following several rounds of discussion and approval by the MYBA board and industry professionals, a new version was launched in November 2021. However, over a year has passed and the majority of sale and purchase transactions are still using the previous version, which dates back to 2008. 

Given our involvement in the drafting process we thought it would be interesting to discuss: (i) MYBA’s rationale for the update; (ii) what the key changes are in comparison to the 2008 MOA; and (iii) why industry uptake has been slow.

Why was the MYBA MOA updated? 

Since 2008 the way business is done in the superyacht industry has changed. MYBA decided it was time to overhaul the MYBA MOA to bring it into line with current market practices and changes in regulations. Having consulted with key stakeholders in the industry, MYBA found that there was a desire to ensure that the MYBA MOA remained the most professional form of superyacht sale and purchase contract in the market and that the industry wanted to focus on front-loading the documentation, making the provision of due diligence documentation a contractual obligation and clarifying terms where disputes have typically arisen in the past to ensure that their clients have the best possible experience when buying / selling a superyacht. 

What are the main changes?

The MYBA MOA is widely acknowledged to strike a fair balance between the rights and obligations of the Buyer and Seller. The backbone of the MOA therefore remains the same, however there have been some key changes to the terms. We have summarised some of the main changes below:  

• Inventory: Previously under Clause (16), the parties could agree the inventory within 7 days of signature. Under the 2021 E-MOA this needs to be agreed and attached to the MOA at the time of signature. 
• Commission Agreement: The 2008 MOA was silent on the brokers’ Commission Agreement. Clause (37) of the 2021 E-MOA now expressly refers to a separate confidential commission agreement to be entered into between the Seller and the Brokers at the time of signature of the MOA. 
• Due Diligence / ‘KYC Documents’: The 2021 E-MOA includes an entirely new Clause (40) which sets out the deadlines by which each party must provide their ‘KYC Documents’ and by when such documents are to be approved. 
• Deposit: This is no longer stated to be 10% in the 2021 E-MOA but is to be agreed commercially. 
• VAT: The boxes on page 1 have been expanded to include a specific reference to the VAT status of the Yacht. The information in boxes A-L (as before) forms part of the Seller’s warranties under Clause (15) (see below). 
• Seller’s Warranties: These have been expanded to include a warranty as to the VAT status of the Yacht and to include, in respect of charter vessels, a warranty in respect of any claims relating to charter commitments. 
• Partial Loss: As the 2008 MOA was silent on partial loss, the parties would previously have had to rely on the force majeure provisions in such an event. Now there is a clear procedure which applies regardless of whether the partial loss is due to an event of force majeure or not which sets out the basis upon which the contract will continue if the Yacht can be repaired within 30 days or will be cancelled if the damage cannot be repaired in that timeframe unless the parties agree otherwise. 
• Clause (26): The 2021 E-MOA specifies that the Deposit must have been received by the Stakeholder prior to commencing the Sea Trial under Clause (26). 
• Clause (27): The 2021 E-MOA clarifies the definition of a “Defect”’ in respect of the Clause (27) Condition Survey; the starting point for the 7-day period during which notice must be served; and which elements must be satisfied for valid notice to be served on the Seller. In particular, the Buyer’s Marine Surveyor must provide a “Surveyor’s Statement” which must be attached to the Buyer’s notice under Clause (27)(a) to the Seller. In addition, Clause (27) permits the Buyer to instruct a professional to obtain oil samples once the Deposit has been received by the Stakeholder. 
• Cancellation: If the Buyer rejects the Yacht under Clause (26) or Clause (27) the cost of the fuel incurred during the operational trials in respect of the Condition Survey and in moving the Yacht to and from the haul out facility will be deducted from the Buyer’s deposit (in addition to the cost of any specific requests in relation to the Sea Trial and Condition Survey costs, to the extent unpaid) before the Deposit is returned to the Buyer. 
• Assignment: The 2021 E-MOA clarifies that any nominee must be in the same beneficial ownership as the original Buyer and that any such nomination must be notified to the Seller no later than 7 days prior to the Completion Date.   

Now it’s online, how does it work? 

The other significant change to the 2021 E-MOA is that it is (as the name suggests) electronic. It operates much in the same way as the MYBA E-Charter Agreement and is made available to established yacht brokers in exchange for a fee. Once approved, a subscriber can log in and input the relevant commercial details into the MOA using the online platform. The platform generates a unique serial number for each MOA which indicates which version of the contract is being used. The creator of the MOA can then download the draft and share it as a .pdf. They then log back in to make any changes. Attachments such as addenda can be uploaded to the platform. 

Why has the uptake been slow? 

One industry concern has been the issue of confidentiality. MYBA has confirmed to us that all of the data is encrypted and that once an MOA is finalised on the platform, it is automatically deleted 7 days later. This offers some comfort, but with online security now being such a sensitive area we are interested to see how MYBA will tackle this going forwards. 

While there is often hesitancy to move away from the known to the unknown, we are of the view that that the main reason for the lukewarm uptake is that the online platform has created a barrier to access (especially given that currently only established yacht brokers are eligible to apply to purchase credits to use the 2021 MOA). We raised this concern with MYBA and understand that they are in the process of obtaining board approval to allow maritime lawyers to have the same rights of access as yacht brokers. We would certainly welcome MYBA’s approval of maritime lawyers being given access and think it will be the watershed moment in terms of the 2021 E-MOA becoming the industry norm. In the meantime, yacht brokers can nominate their client’s lawyer to be given access via their account.

For further information or support please get in touch . 

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• What you Need to Know about MYBA and MYBA Contracts
• Charter advice

What is the first thing that comes to mind when you think of a luxury yacht charter? Probably sun, sea, incredible food, fun, and relaxation, right? And you’d be correct (that and so much more)! Terms and contracts don’t really fit in this picture. However, to get to the fun and relaxation, there is a little paperwork that needs to happen.

One of our core values at Otium Yachts is TRUST , so we try to make everything as simple and transparent as possible. We want you to feel confident in us as your broker and fully informed about the process and details so there are no surprises at sea. That is why we decided to write this blog specifically about MYBA contracts, to explain what they are, and why this is our preferred contract to use with clients.

What is MYBA?

The Mediterranean Yacht Brokers Association (MYBA) is a worldwide yachting association that was founded in 1984 by a group of yacht brokers whose goal was to promote the highest standards of professionalism and ethics in the yachting industry and to set a standard for charter agreements.

MYBA created the industry’s most respected and widely used contracts – the MYBA Sales and Purchase Agreement (MoA) and the MYBA Charter Agreement . These documents are regularly updated to ensure they stay in sync with the ever-changing needs of the global yachting market. With these contracts, clients can enjoy the peace of mind that comes from knowing these contracts have been prepared to the highest standard by industry professionals, with the client in mind .

Benefits of MYBA Contracts

1. Professional Industry Standard

The MYBA contract is the result of 40 years of experience from pioneers in the yachting industry. Some owners and agencies have their own charter terms and conditions – therefore, their own contracts. However, we prefer to trust something that has been prepared by industry professionals with decades of experience booking yachts around the world.

MYBA contracts are not available to all brokers . To have access to a MYBA contract you need to be an established and experienced broker with a proven record of professional excellence in the yachting industry. Such brokers invest a lot of time, money, and energy traveling to charter shows, inspecting yachts, and meeting the crews, owners, and Central Agents. So, brokers who have access to MYBA contracts typically only work with Central Agents or Stakeholders that they have personally met or reference-checked with their trusted colleagues. All of this benefits the client.

2. MYBA Contracts can still Work with Gulet Terms

As we mentioned in our last blog (Yacht Charter Terms and Agreements Explained), there are two sets of terms under which yachts usually operate and they are quite contrary (operating terms – the terms under which a yacht operates, and lays out what is, or is not included in the charter rate):

• Western Mediterranean Terms (WMT), also known as “MYBA Terms”

Under WMT (OR MYBA) terms the charter fee includes charter of the yacht and equipment, crew wages and food, ship's laundry , basic operating consumables, and insurance of the yacht for marine risk, third-party claims, and the crew for employer's liability insurance. The charterer will be charged extra  and at a cost to the yacht, for all other expenses. These expenses include food and all beverages for the charter guests, fue l for the yacht and auxiliary craft, dockage , VAT if applicable, taxes , harbor fees , communications , guest laundry , and shore-side electricity and water . 

• Gulet Terms

Generally speaking, larger luxury crewed charter yachts operate under “MYBA terms” , and smaller standard crewed yachts (gulets) operate under “Gulet terms” . As we explained in our previous blog, different terms suit yachts for different reasons. However, regardless of the terms under which a yacht operates, we can (and prefer to) use MYBA contracts. Under Clause 8 of the MYBA contract, it states what is included in the charter rate and what is extra . However, there is a SPECIAL CONDITIONS section where we can state anything that is contrary between certain terms. For example, under SPECIAL CONDITIONS section we can put “contrary to Clause 8) of this Agreement Charter Price Includes: fuel for 4 h of the engine work daily, fuel for the generator 24/7, fuel for tender transfers to/from the yacht, Wi-Fi, VAT...” and other conditions specific to yachts operating according to the Gulet Terms. Hence, we can make adjustments required by certain terms and still use our favorite type of contract.

3. MYBA Contracts Offer the Best Protection for Clients

The MYBA contract clearly defines all terms related to yacht charter; from delivery, crew, and captain’s authority, to cancellation, breakdown, insurance, and the very important Clause 20 regarding payment of the charter fee. Every possible scenario has been covered ; the MYBA contract offers protection to the client like no other contract. Clause 20 is the essence of the MYBA terms and contracts. It states that all funds received by the broker are immediately transferred to a Stakeholder (if the broker is not the Stakeholder) and then held by the Stakeholder in a designated account – safeguarding the client’s money . Fifty percent of the Charter Fee is paid to the owner of the yacht on the first day of the charter . The APA (Advanced Provisioning Allowance) is also paid to the Captain or the owner prior to embarkation . The remaining 50% of the charter fee is not paid to the owner until the first working day following the successful completion of the charter . If there are any complaints or issues raised, the funds are held until there is a resolution between the parties (with or without arbitration). In short, clients can trust that their money is safeguarded .

MYBA Contracts are our Preferred Contract

For all of these reasons, MYBA contracts are our preferred contract . We hope these two blogs (this blog and Yacht Charter Terms Explained ), help clear up this side of chartering a yacht. As always, contact us if you have any questions, and trust that we will handle your inquiry with care and professionalism from beginning to end. Otium Yachts , we are here for you.

Written by Clyde & Co experts, our guide covers every aspect of owning or selling a superyacht.

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Sales & Purchase

The sale and purchase of a superyacht can be a highly emotional experience

• Points for sellers to consider
• Points for buyers to consider
• Basics of superyacht sale & purchase

The reality is that you must never underestimate the importance of having a thorough understanding of the legal processes, statutory certificates, transaction documents, tax position and various different forms required for the sale or purchase of a superyacht.

Surround yourself with people who know what they are doing and have a good track record including: surveyor, lawyer, superyacht manager, broker and VAT adviser/accountant. Make sure your form of agreement, special terms and document list are all in writing. The most common form of agreement for sale and purchase of second-hand superyachts is the Mediterranean Yacht Brokers Association (MYBA) sale and purchase form, known as the MYBA Memorandum of Agreement (MYBA MOA). Any additional terms or amendments of the standard terms should be recorded (eg transfer of any charters currently booked for the season or specific art works to be removed). It is important that any agreements made verbally are recorded in writing.You should consider carefully before signinganypersonalguaranteewhichunderwrites the obligations of the selling or buying company. This may compromise the ownership structure you have carefully put in place, and it could cause tax problems on the sale.

• Are there any mortgages, charges or other encumbrances registered against the superyacht (as these will need to be discharged at delivery)? This is a question any prudent buyer should ask and if you are selling, you must ensure that you can present the Transcript of Registry showing that your superyacht is unencumbered. The process can get more complicated if there are mortgages registered against the superyacht.

• What is the process? Agreement signed, conditional upon sea trial and survey. Deposit paid (the standard deposit is 10% of the purchase price but a different sum could be negotiated). Always have the sea trial first and, if you’re happy, move on to the condition survey conducted by a marine surveyor. It is never advisable to do the condition survey before the sea trial, but if you cannot avoid it you must ensure that the MYBA MOA is amended to adequately deal with this. Typically, the MYBA MOA will have an addendum which will deal with all documents that will be delivered by the seller to the buyer and vice versa.

• Who should the deposit be paid to? It is customary for the seller’s broker or lawyer to hold onto it. However, you can commercially agree for it to be held by the buyer’s broker or lawyer. Any party holding a deposit should be an established company and they are likely to need up-to-date customer information. If you cannot agree on who holds the deposit, you could get a bank to act as the stakeholder.

With regards to VAT on the purchase price, should delivery be in international waters or within the EU?

Are all of the superyacht’s statutory documents in order?

Is the superyacht financed? If so, consent from the bank to sell is usually required.

Who is my broker? Should I enter into a central agency agreement?

Is the buyer known? Who is the ultimate beneficial owner? Do I want a personal/parent company guarantee, if a single purpose company is the buyer?

What do I need to do if the buyer is changing flags?

What do I need to do if I am selling with charters in place post-closing?

What are the closing mechanics and how are funds released? Will it be through SWIFT or by waiting for funds to hit the account or conditional SWIFT (pre-placing funds but not received until the Protocol of Delivery and Acceptance is signed)?

Is the superyacht VAT paid? Or is VAT accounted for? Has VAT been claimed back?

What will be my owning structure, and do I need a VAT structure setup?

Will this be a pleasure superyacht and registered private, or do I want to charter the superyacht?

Do I want to keep the same flag? Will the current flag affect the use of the superyacht? What is involved in changing flags? Will the new flag accept this kind of superyacht onto its register as a private or commercial superyacht?

Where do I feel comfortable with the deposit being held?

Are there any special conditions, or items I want left on the superyacht (ie transfer of upcoming charters or specific items fixed prior to closing)?

Do I want to keep the current crew?

Do I want a personal guarantee from the ultimate beneficial owner or a parent guarantee of the selling company?

Have all the vested interests in the deal been declared?

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The new version of the MYBA Memorandum of Agreement

In this issue, we continue our analysis of the main changes to the 2021 MOA – Second Part

by Federico Santini* – photo by Guillaume Plisson

We reported in the previous issue on the introduction of the seller’s warranty in respect of the yacht’s VAT status . A second significant change concerns Clause 16 (INVENTORY), which relates to the inventory, i.e. the list of equipment, goods and spare parts included in the sale and which must therefore be delivered on board at the time of delivery of the yacht. In the previous version of the contract, the parties had 7 days from the signing of the MOA to agree the inventory, whereas in the new version the inventory must be agreed and signed by the parties together with the MOA, to which it becomes an annex. This change is certainly appropriate in order to avoid subsequent disputes, which are quite common in practice, concerning the absence on board of goods which the buyer has inspected on the occasion of the first visit on board.

CLAUSE 25 DEALS WITH THE DEPOSIT TO BE MADE BY THE BUYER INTO THE DEPOSITARY’S BANK ACCOUNT AFTER THE SIGNING OF THE MOA.

Another amendment concerns Clause 17 (SEA TRIAL/CONDITION SURVEY), which has been incorporated with the provision that neither the sea trial nor the condition survey may commence until the interested party has confirmed to the seller and the buyer the receipt of the deposit . This amendment is also appropriate – and has often been included in the Special Conditions or in a separate addendum – particularly in cases where the date of completion of the sea trial and dry survey referred to in clause (9) is very close to the date of signing the MOA, so that the seller is indemnified for any damage to the yacht at sea or on shore that may be caused by the buyer’s actions, or for any expenses incurred by the buyer. Closely related are the amendments to Clause 25 (DEPOSIT), which governs the deposit to be paid by the Purchaser into the Participant’s bank account upon execution of the MOA.

Firstly, the reference to 10% of the sale price has been removed so that the parties will negotiate the amount of the deposit as any other commercial term . Second, the stakeholder’s obligation to inform the buyer and seller of the receipt of the deposit is introduced. Thirdly, the time limit of four working days within which the deposit must be paid by the buyer has been maintained, but the condition of prior compliance by the buyer and seller to provide the stakeholder with the anti-money laundering documentation referred to in Clause 40 – a new clause which will be discussed later – which is necessary for the stakeholder to legally receive the funds, has been added. Important changes have then been made to Clause 27 (CONDITION SURVEY), which sets out the terms and conditions of the survey and the notification of any defects found during the survey, for the purposes of any subsequent claim for rectification or reduction of the purchase price, or for the purposes of any rejection of the yacht.

photo by Guillaume Plisson for Imperial

Clause 27 governs the manner in which the dry check is to be carried out and the manner and time limits in which any defects discovered during the dry check are to be reported.

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Once you have chosen the ideal yacht, checked availability and price for your chosen dates and ports of embarkation/disembarkation, we will send you out the contract.

This will be either the standard MYBA Agreement with or without amendments or EMT Contract with or without amendments.

The MYBA (Mediterranean Yacht Broker Association) is a global trade association, founded in 1984 by a group of prominent yacht brokers with the aim of promoting the highest standards of professionalism and ethics in the yachting industry both throughout and the Mediterranean and worldwide and standardising the method of charter agreements.

In the MBYA terms contract ; the charter rate includes the hire of the yacht with all its equipment in working order, tools, stores, cleaning materials, the crew’s wages, the crew’s subsistence, the insurance of the yacht for marine risk and third party claims and the crew for employer’s liability. All other operating expenses are payable by the charterer such as fuel for engines and generators, fuel for tenders and motorised water toys, harbour fees & taxes, custom clearances, all food & drinks, pilotage fees, communication costs and others.

Some yachts (mostly motorsailers and gulets) are contracted under the EMT (Eastern Mediterranean Terms) sometimes known as Gulet Terms . Within EMT the charter rate includes; fuel for up to 3-4 hours cruising per day, fuel for generators (usually limited to A/C usage hours per day), public harbour fees & taxes.

We will provide full details of any charter terms that vary from standard MYBA terms or EMT when presenting the relevant yachts

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East Med Yachting LTD, New Connexion House, Shepley, HD8 8AE email: [email protected] Tel: +44 7817 306 054 East Med Yachting offers professionally organised luxury crewed charters in the East Mediterranean. East Med Yachting

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A comprehensive guide to understanding charter paperwork

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By Editorial Team   26 January 2023

Like anything else in life, it is important to have a contract in place to set out any rights, obligations and cancellation policies. The charter contract is designed to cover every eventuality, providing peace of mind for both you and the yacht owner, and includes all pertinent information relating to the yacht charter ; such as dates, locations, payment structure and insurance. Read on for a comprehensive guide of what to expect from your yacht charter contracts.

In this article:

What is a charter contract?

What do they cover, don’t be afraid to speak up, types of contract used, myba charter agreement, caribbean terms inclusive (cti), standard eastern mediterranean terms (semt), greek terms (gt), bespoke agreement addendums, non disclosure agreements, cancellation, need more advice.

A charter contract is a comprehensive and legally binding document designed to protect both the charterer and the yacht owner, which sets out the rights and obligations for both parties. The standard yacht charter contract has been developed and amended over the years to cover as many eventualities as possible, and has proved a fair and equitable agreement for all parties involved.

All yacht charter contracts will include the following details;

• Start and end ports
• Charter duration
• Maximum number of guests sleeping and cruising
• Cancellation policies
• Payment structure
• Insurance details

For most standard yacht charter contracts the following items are typically inclusive of the base charter fee;

• Hire of the yacht, including all water toys and equipment (in full working order)
• Wages and food of the crew for the duration of the charter
• Ship’s laundry
• Insurance cover for marine risk and third party claims

The main differences in terms of expenses between the various contract agreements tend to be whether or not they include food or fuel.

It is essential that charterers have a full understanding of the yacht charter contract and how they will be affected by it, therefore they should take the time to read it and familiarise themselves with the content.

It is important to speak up should you have any questions regarding the contract or are unsure as to how the payment structure is applied or how costs are calculated.

Yacht charter brokers are experts in this field and very familiar with the different types of yacht charter contracts used, and will be happy to discuss any queries you have or clarify any complex terms or clauses, so don’t be afraid to ask.

The contract used is typically specified by the yacht and the choice of contract can be influenced by the size of vessel and location within which it is operating.

There are a number of standard contracts used by the yachting industry. The most common ones are;

• Mediterranean Yacht Brokers Association terms (MYBA)
• Caribbean Terms Inclusive (CTI) and 

Most yacht charters operate using MYBA terms, which is the industry standard that has been adopted worldwide.

MYBA – the Worldwide Yachting Association – developed their MYBA terms (formerly known as Western Mediterranean Terms) in conjunction with industry professionals, such as coastguards, lawyers and the International Maritime Organisation (IMO), and has since become the gold standard for yacht charter contracts globally.

Often referred to as a "plus all expenses" agreement, under the terms of a MYBA contract expenses such as food and drinks for the guests, fuel (including for main engines, tenders and jet skis), personal laundry, communication costs and berthing fees are charged on top of the base charter fee. 

This may seem unfair at first glance, however this provides for an à la carte approach for guests, where only expenses incurred during a yacht charter are charged at cost with no mark-up. This makes sense in places like the Mediterranean which boasts an abundance of spectacular dining options, including myriad Michelin-Starred restaurants, where guests will regularly eat ashore.

Advanced Provisioning Allowance (APA)

In order to make the payment structure coherent for guests, the additional expenses for the charter party will generally be covered by the  APA , paid from an escrow acccount set up prior to embarking, and often equates to approximately 25-30 percent of the base charter fee. 

For more in-depth information about the APA and costs in general, please read the guide below, which offers a comprehensive breakdown of the costs involved on a yacht charter.

Caribbean Terms Inclusive are also commonly used within the charter industry, particularly for smaller vessels venturing to the Caribbean . Also known as Standard Caribbean Terms, CTI terms are often described as “mostly all-inclusive”. 

As well as the items included in the base charter fee outlined above, CTI terms also generally include the following:

• Three meals per day 
• Fuel for four hours of cruising per day

Some drinks may be included, however premium beverages such as expensive wines and Champagne will be charged as an additional expense. Further fuel costs will also be applicable over the four hours (including for tenders and jet skis etc.), plus berthing fees and communication costs.

Although MYBA and CTI are the most commonly used contract terms, there are other yacht contracts which charterers may come across when booking a yacht rental, which are often dependent on the size of the yacht and where the yacht is travelling to.

As the title suggests, this type of contract is generally only used for yacht charters around the East Mediterranean , and operates much the same conditions as CTI, however where CTI covers three daily meals, SEMT will only provide breakfast and lunch on the basis that guests are likely to eat ashore most evenings. These terms also include harbour and berthing fees.

The charterer will be required to cover any additional fuel costs, food (evening meal), beverages, personal laundry, communication costs and any berthing fees outside the agreed cruising area.

National and/or local taxes may also be applicable.

Greek Terms are sometimes used for smaller yachts chartering around  Greece and operate in much the same way as MYBA terms, with the exception of harbour and berthing fees within Greek waters which are included under the GT agreement.  

Addendums are used to add terms or make changes to a contract without invalidating the original document, for example changing the yacht charter location after the contract has been finalised.

Addendums can grant a certain amount of flexibility when negotiating terms between the charter broker and the yacht owner or their management company, and must be agreed and signed by both parties, as well as the yacht charter broker.

Force majeure provisions

During 2020-2022, COVID-19 affected all areas of commerce worldwide, and luxury yacht charters were no exception. Despite the recent relaxation of rules, the number of cancellations incurred as a result of the pandemic acted as a wake-up call for the industry, as well as yacht brokers and their prospective charter clients.

Owners understand the need for some assurances when booking a yacht charter and will generally allow an addendum to be added to the charter contract that includes penalty-free cancellation and postponement policies, subject to terms. 

These can greatly alleviate concerns for anyone looking to book a yacht charter during times of uncertainty.

MYBA special addendum

All MYBA agreements now include a special addendum to their charter contract which stipulates that in the event of any COVID-19 issues arising before the charter commences the following will take place. Either;

• A change of charter destination
• Rescheduling of the charter, or 
• Penalty-free Cancellation

Failing agreement of the first two points, the yacht charter will be cancelled and charterers will be entitled to a full refund without incurring any penalties. 

Hurricane Addendums

There is a standard hurricane addendum that can be added to basic charter contracts which allows charterers to reschedule if a storm has been named and heading towards their planned destination within 48 hours of the start of the charter. 

For anyone planning a yacht charter during the hurricane season, your broker will likely advise the purchase of additional cancellation insurance to cover all bases and provide some peace of mind. 

Whether you are a celebrity or not, non-disclosure agreements are fairly standard when it comes to chartering a luxury yacht. Everyone has the right to privacy and yacht crew are well-versed in matters of discretion when it comes to welcoming new guests on board.

The terms of the non-disclosure agreement can be agreed upon between the yacht charter broker and yacht owner prior to commencement of the charter.

In general terms there are two types of cancellation;

• As a result of a force majeure event
• Cancellation for any reason

Force majeure

Only owners have the right to cancel a yacht charter for reasons of force majeure, for which there exists no legal definition but is understood to mean "unforeseeable circumstances that prevent someone from fulfilling a contract". It should be noted that the cause of cancellation must be directly attributable to the unforeseen event.

If this happens, the charterer is entitled to a full refund of any monies paid to date. Alternatively, both parties have the option to mutually agree to an extension of the yacht charter equivalent to the time lost, or postponement to a later date.

Cancellation for any other reason

If the owner cancels the charter for reasons other than a force majeure event then the charterer shall be entitled to a full refund of any monies paid, plus damages based on a percentage of the charter fee dependent on the proximity to commencement of the yacht charter.

If a charterer cancels then they are deemed to have repudiated the contract, whereby the owner may withhold any payments already made, as well as recover any further sums due.

Owner's obligation

Where a cancellation has been made by the charterer, an owner has an obligation to try and mitigate this loss by re-letting their yacht. If successful, any excess funds, less expenses, shall be reimbursed to the original charterer up to the amount already paid on account. 

Each case will be different so you'll need to check your contract with your yacht charter broker to ensure you are happy with the terms set out.

For more information speak with your yacht charter broker , who will be happy to answer any queries you may have on chartering a luxury yacht.

Please visit our advice pages  covering a wide range of useful information and helpful advice on booking a private luxury yacht charter. We have listed some you may find useful for getting started when planning your luxury yacht charter vacation.

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The most frequently Yacht Charter Contract adopted

The most frequently used Yacht Charter Contract is the MYBA , created by the Mediterranean Yacht Brokers Association , that certifies yacht standards and data throughout.

Myba contract provides standard rules of responsibility for both shipowners and client together with a section called wmt (western mediterranean terms), which specify yacht costs included in the final price., the final price includes: – yacht renting and insurance – crew duties and their food – on board laundry, costs not included: – fuel for yacht, generators, tenders, water games where applicable. – guest foods and beverages – docking and port taxes – piloting – dock water and energy – personal effects laundry, in order to meet extra costs, an advance payment called a.p.a. is required; this sums up to a 30% of the total price of the rent., alternatively, instead of the myba contract , it is possible to stipulate the contract provided by the local chamber of commerce that normally does not include crew foods. different contract terms are used in the west mediterranean; they are known as semt or emt (standard eastern mediterranean terms), generally applied in greece and turkey., such conditions provide that the charter price includes: – yacht and related gear renting – crew service and foods – insurance – fuel for 4/5 hours navigation daily – port expenses and taxes – dock water and energy (not in all cases), the price does not include:, – fuel for the navigation time over 4/5 hours daily – fuel for generators, tenders and water games where applicable – guests food and beverages – port expenses for ports outside usual routes – personal communication needs – personal effects laundry, in the caribbean, the terms applied are the standard caribbean terms (sct)., the renting price includes: – yacht and related gear renting – insurance – guest foods – fuel (variable depending on hours and yacht type), the price does not include: – beverages – personal communication needs – personal effects laundry – port expenses and taxes, like it share it, related posts.

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