Liquidated Damages
I heard some rumblings at last week’s charter show in Newport about the phrase “liquidated damages.” After a bit of sleuthing, I can tell you it’s a phrase that you should definitely know–and that you should look for before signing any charter vacation contract.
When you book a charter yacht, you sign a contract with that particular yacht’s owner. There are many different kinds of charter contracts, as yachts must follow different international rules depending on where they are flagged, where they are chartering, and what kind of services they are providing.
The Newport show docks were buzzing about the contractual phrase “liquidated damages” because of a new contract being put forward by members of the American Yacht Brokers Association, one of the four worldwide professional associations that we here at CharterWave recommend for finding a reputable charter broker. It seems that after years of trying to negotiate the term “liquidated damages” into contracts on behalf of their clients who are booking charters, the AYCA’s members have decided to try to make the term a standard contract clause.
This is a good thing if you’re a person booking a charter. Liquidated damages means that if a yacht owner cancels your charter at the last minute, he not only has to refund your charter fee, but also has to pay penalties depending on how close to the actual charter date the cancellation occurs.
As an example, if your charter starts on Friday the 16th and the owner pulls his yacht out from under you on Thursday the 14th–with no time for you to find another yacht–then he will have to pay not only for your loss of his yacht, but also a penalty for the potential loss of your entire charter vacation.
Like I said, this is a good thing if you’re the person booking the charter–and it’s yet another reason I always suggest booking through a reputable charter broker. Obviously, every yacht’s owner is better served by taking “liquidated damages” out of the contract completely. Your goal should be to make sure the clause is in there, a goal you can best achieve by having a professional negotiating on your behalf.