The sale and purchase of a yacht is often perceived as a glamorous transaction. Behind the scenes, however, it is a sophisticated legal and commercial process involving brokers, stakeholders, surveyors, financiers and lawyers across multiple jurisdictions. While attention is usually focused on whether the sale will complete, disputes over brokers’ commission can quickly overshadow the transaction and expose all parties to unexpected litigation.
Having recently advised on a complex international commission dispute arising from the sale of a luxury yacht, one recurring theme became clear: many of these disputes are avoidable with careful drafting and a proper understanding of how brokerage arrangements interact with the MYBA Memorandum of Agreement (MYBA MOA).
The facts discussed below have been anonymised to preserve client confidentiality.
A familiar scenario
A seller appointed two brokers under a MYBA Memorandum of Agreement for the sale of a luxury motor yacht. An earlier sale had been negotiated several months before with a different brokerage structure but ultimately collapsed after the buyer exercised contractual rights to reject the yacht following a condition survey.
Several months later, the same buyer returned to the market and successfully purchased the yacht through a different brokerage company established by one of the brokers involved in the earlier negotiations.
Just days before completion, a former business partner asserted that it—not the broker named in the current MYBA MOA—was entitled to the buyer’s brokerage commission. Letters were sent to the seller and the stakeholder demanding that commission be withheld and threatening London arbitration if payment was made.
Although the underlying yacht sale remained capable of completing, the commission dispute created considerable uncertainty for everyone involved.
Why do commission disputes arise?
Brokerage disputes frequently arise because commercial relationships evolve more quickly than contractual documentation.
Common examples include brokers leaving established firms, brokerage businesses being sold or restructured, partnerships being terminated, buyers returning months after an earlier failed transaction, disputes over who was the effective cause of the eventual sale, and unsigned commission agreements. The larger the transaction value, the larger the commission—and the greater the incentive to litigate.
The importance of the MYBA MOA
The MYBA Memorandum of Agreement distinguishes between the sale contract and the separate arrangements governing brokerage remuneration. Clause 37 recognises the brokers entitled to remuneration while also providing that the amount and terms of remuneration are governed by a separate agreement. That distinction often becomes critical because a dispute between rival brokers does not necessarily alter the seller’s obligations under the executed MYBA MOA.
Does introducing the buyer guarantee a commission?
Not necessarily. Different brokerage agreements adopt different approaches, including introduction of the buyer, effective cause of the transaction, exclusive brokerage rights, continuing protection periods, post-termination restrictions and commission-sharing arrangements. The fact that one broker first introduced a buyer several months earlier does not automatically mean that broker remains entitled to commission if the original transaction terminated and a later sale arose under a different contractual structure.
When an earlier sale falls through
Where an earlier MYBA agreement genuinely comes to an end following a buyer’s rejection after survey or sea trial, a subsequent transaction negotiated months later may represent an entirely new sale rather than the continuation of the original one. Whether a former broker retains any entitlement depends on the wording of the relevant agreements and the surrounding facts.
Unsigned agreements can create uncertainty
Unsigned commission agreements or draft partnership arrangements frequently become central issues once commercial relationships deteriorate. Even where an unsigned agreement may still have legal significance depending upon the governing law and the parties’ conduct, it inevitably creates additional uncertainty and expense.
What should the stakeholder do?
The stakeholder occupies a particularly sensitive position. A separate dispute between rival brokers regarding commission does not automatically provide a contractual basis for withholding funds that are otherwise payable under the transaction documents. Stakeholders should therefore obtain legal advice before deviating from the agreed payment mechanism.
Confidentiality matters
Previous partnership agreements and brokerage arrangements frequently contain continuing confidentiality obligations. Those obligations may limit what can safely be disclosed to sellers, buyers or third parties when defending a commission claim.
Practical steps to reduce the risk of commission disputes
- Clearly identify Broker 1 and Broker 2 in the MYBA MOA.
• Ensure commission agreements are signed before completion.
• Include clear post-termination provisions.
• Define whether commission depends upon introduction, effective cause or completion.
• Record when previous negotiations have terminated.
• Keep written records showing how later negotiations commenced.
• Obtain legal advice immediately if competing commission claims arise shortly before completion.
Final thoughts
Brokerage disputes rarely concern only commission. They often involve contractual interpretation, agency, partnership law, confidentiality obligations and international arbitration. Early legal advice and carefully drafted brokerage documentation can often prevent a commercial disagreement from escalating into costly litigation.
