There are quite a few bankruptcies in the boating world. They usually mean that you as a customer lose your down payment for your dream boat or are left with a half-finished boat. Usually the bankruptcy estate offers no recourse. (Very) sometimes it goes differently, as the story of mister Terpstra shows.
Terpstra ordered a sailing yacht of German make from the importer/dealer for the amount of about 380.000 euro. In the purchase agreement it was agreed that payment would be made in four instalments, 10 per cent after signing the contract, 70,000 Euros upon confirmation of the order, 250,000 Euros upon completion of the yacht at the yard in Germany with simultaneous transfer of ownership to the buyer and the remainder before delivery in France. Terpstra dutifully paid the first 108,000 Euros and more than six months later the third instalment of 250,000 Euros at the request of the dealer, who informed him by letter that the yacht was ready at the yard and could be transported.
Just two weeks after Terpstra had transferred the third instalment the bankruptcy of the dealer was pronounced. It then appeared that the dealer had not used the money Terpstra had received to pay for the ship but for other things, so that the ship had not been delivered as property to Terpstra and had not left the yard either. Afterwards the German shipyard declared to be willing to deliver the ship after all, but still had to pay an additional 250.000 euro.
Terpstra felt badly taken by the yacht dealer and held the director personally liable. By way of explanation: the dealer was a private limited company with one managing director/shareholder. When a private limited company goes bankrupt this does not mean that the director also goes bankrupt, since in normal business practice a director is not personally liable for the debts of the private limited company. Therefore, the director of a private limited company can sometimes still drive a fat car while there are tons of creditors, which often causes grim faces.
In this case Terpstra found the director’s actions so seriously culpable that he could be held personally liable for the damage he suffered, consisting of the paid 250,000 Euros and the first down payment of 108,000 Euros.
The court agreed with Terpstra. They found that the director’s actions were so seriously culpable that he should not only be held liable for the unpaid third instalment, but also for the earlier down payment of €108,000, because this damage was a direct consequence of that. The specific consideration was that the director had allowed the company he was managing to default on its contract and, as a result, had calculated damages to its counterparty: a wrongful act. The director was severely blamed for the fact that he had explicitly asked for payment of the aforementioned 250,000 Euros, the amount against which the transfer of ownership of the ship was to be offset. By not paying that amount the yacht was not delivered and the down payment made more than six months earlier was also lost. Despite the fact that there were no payment problems at that time, this was also counted as damage resulting from the unlawful actions of the director.
So you see, not in all cases bankruptcy means loss of everything. In some cases, something can still be done about it. Advice: make down payments only to administratively separate accounts – the “third-party money account” – at a dealership. Or better yet: pay directly to the yard that has to build/deliver the ship, then you can be sure that the money is used for its intended purpose. Finally: stipulate that you will be kept informed of the progress of the construction and that as soon as it is technically possible (hull is ready) the ship will be registered in the shipping register and also delivered to you constitutum. This means that the ship is legally delivered to you, but physically it still remains at the yard to be finished. If the yard subsequently goes bankrupt then the ship remains there.
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