Brokers beware protect your commission

News /

Speed read

Yacht brokers who invest time and money working towards a potential yacht sale expect to be rewarded for their efforts by receiving a commission when the deal completes. If the sale is not concluded, the brokers will earn no commission and their (often considerable) efforts will have been in vain.  On the other hand, brokers can sometimes earn a substantial commission on sales that may have required less work from them, as in the 2010 case of Berezovsky v. Edmiston (Darius). 

The industry still largely operates with an ethos of mutual trust and respect, and arrangements between brokers and their clients are not always spelt out in written detail; disputes can therefore arise as to whether (and what) commission is due when a sale is concluded. Indeed, in 2014, the English Commercial Court considered such a dispute in connection with the 2012 sale of the superyacht 4YOU. Yacht brokers in particular, or anyone else keen to know when a broker will (or will not) be due a commission, should read on.

The law

In simple terms, unless the broker and seller agree otherwise (e.g. exclusivity), a broker will earn a commission upon completion only when:

1. they have a contractual connection with either the seller or the buyer (i.e. instructions), as the case may be; and

2. the broker is an effective cause of a sale (i.e. it was his actions that really brought about the relationship of buyer and seller).  

Both of these elements were considered in the 2014 case of Moran Yacht & Ship Inc v. Pisarev and Another (4YOU).

The background facts

In May 2010, the eventual buyer of the 4YOU was shown around the yacht (at the Monaco Grand Prix) by brokers. Despite the brokers’ efforts to market 4YOU, and despite a number of offers, 4YOU remained unsold for some time. During a dinner in Moscow in December 2011, the owner mentioned to the eventual buyer (a business associate of his) that 4YOU was for sale. Following negotiations, 4YOU was sold to that business associate on 2 April 2012 (for €19.8 million), and the brokers claimed commission on the sale.

The Commercial Court decision

The brokers argued that, prior to the May 2010 viewing, they had been instructed to market 4YOU “discreetly”. The court ruled that the brokers had, in fact, been first instructed in September 2010 (i.e. subsequent to the May 2010 viewing at Monaco).

The court also decided that, “even if [the broker] had been instructed prior to the May 2010 viewing”, that viewing would not have been the effective cause of the sale, and that the December 2011 dinner had been a “new discussion” because:

1. The May 2010 viewing had been short and “perfunctory” and, at that time, the buyer had been neither looking to purchase a yacht nor in a financial position to purchase 4YOU;

2. 19 months had elapsed between the May 2010 viewing and the December 2011 dinner;

3. The brokers had no relevant contact with the buyer after May 2010;

4. The owner did not know that the buyer had inspected the yacht previously, and did not approach him (during the December 2011 dinner) because of that inspection; and

5. By the time of the December 2011 dinner, the buyer’s financial position had changed (he had sold some business interests) such that, unlike in May 2010, he was by then interested in purchasing 4YOU.


The judge concluded that the May 2010 visit was “part of the history, but no more than that”, and ruled that no commission was due to the brokers.


The 4YOU decision can be contrasted with that in the Darius case, in which the introducing brokers received a US$6 million commission even though their contribution was limited (because the buyer chose to negotiate through the sub-brokers rather than the introducing brokers).

On the other hand, more recently in 2015 and in line with the 4YOU decision, the  English Court of Appeal considered whether a trade union that had given an insurance company access to its members for marketing purposes was entitled to commission where insurance products were sold to its members. It was held that the trade union was only entitled to commission where a product had been sold because of the marketing to its members and not where there was no real connection between the marketing and the ultimate purchase.

It might be tempting to sit back and accept that the brokers will “win some and lose some”.  On the contrary, these recent cases provide useful guidance as to what brokers can and should do to ensure they receive a commission on a successful sale:

1. Clarify instructions. If instructions are oral, brokers should seek to document those instructions accurately or, even better, obtain written confirmation from the seller: this should avoid any misunderstanding, ensure that brokers have a clearer picture as to where they stand before investing their time and/or money in marketing a yacht and minimise the chances of a subsequent dispute as to whether/what instructions were given.

2. Resume contact following instructions. Where potential buyers have been identified prior to brokers being instructed, the brokers should clearly resume the contact with the potential buyers once they have been instructed.

3. Maintain contact. It is not necessarily enough for brokers to show a potential buyeraround a yacht and then sit back and claim a commission if that buyer happens to buy the yacht: prudent brokers should continue to maintain contact with potential buyers, avoid long periods without involvement and re-approach any potential buyers following any change in circumstances.

Ultimately, brokers should ensure that their instructions are clear and, once instructed, maintain their efforts to bring about the sale of the yacht. If they do this, they can expect a commission on a successful sale; if not, they run the risk that they will miss out.

Related sectors:

Related news & insights

News / Ince celebrates one year since Scotland office opening

23-11-2022 / Insurance, Maritime, Real Estate

We are pleased to be celebrating one year since opening our first Scottish office in the city of Glasgow.  Stefanie Johnston, dual-qualified Partner and Head of Scotland, has worked tirelessly over the last year to develop our offering through the opening of an Ince office in what is arguably an established Scottish market. Starting from the ground up, Stefanie and her team have successfully gained an admirable reputation in the region and further afield in the maritime, insurance, real estate and regulatory sectors. 

Ince celebrates one year since Scotland office opening

News / Shipping E-brief November 2022

17-11-2022 / Maritime

The Shipping E-Brief is a publication providing you with key information on legal decisions and developments in shipping and related business areas.

Shipping E-brief November 2022

News / Appeals from arbitration: is reform required?

15-11-2022 / Maritime

In September 2022, the UK Law Commission published a consultation paper with provisional recommendations for updating the Arbitration Act 1996 (the Act 1996). Amongst other things, the Law Commission considered whether any changes need to be made to: (i) s.67 of the Act 1996, which deals with jurisdictional challenges to arbitral awards; and (ii) s.69 of the Act 1996, which deals with appeals on points of law.

Appeals from arbitration: is reform required?

News / Owners not in breach of charter and entitled to claim demurrage

09-11-2022 / Maritime

CM P-MAX III Limited v. Petroleos Del Norte SA (MT Stena Primorsk) [2022] EWHC 2147 (Comm) This recent laytime and demurrage dispute demonstrates that an owner can legitimately refuse orders where such orders may jeopardise the safety of a vessel.

Owners not in breach of charter and entitled to claim demurrage

News / Court of Appeal finds owner should have accepted non-contractual performance

09-11-2022 / Maritime

Mur Shipping BV v. RTI Ltd [2022] EWCA Civ 1406 A majority of the Court of Appeal has held that the Owner under a contract of affreightment (COA) should have accepted payment of freight in Euros, rather than the US dollars provided for in the COA. Its refusal to do so meant that the Owner could not rely on the force majeure clause in the COA, in circumstances where US sanctions might have restricted US dollar transfers from or on behalf of the Charterer.

Court of Appeal finds owner should have accepted non-contractual performance

News / “Due” means due!

03-11-2022 / Maritime

Ceto Shipping Corporation v. Savory Inc (Victor 1) [2022] EWHC 2636 (Comm) The Court in this case had to construe a purchase option clause in a bareboat charter. Specifically, it considered whether the fact that the charterer had not fulfilled certain payment obligations under the charter because it was disputing them in good faith meant that the owner was not obliged to transfer title to the vessel at the end of the charter period.

“Due” means due!