Q: I recently bought a 38-foot sailing yacht through a yacht broker and I have encountered nothing but problems with the boat since I took delivery. I have had to replace or repair everything ranging from electrical wiring to standing rigging. I am contacting you because the broker assured me that the boat was in “sail away condition,” and it’s pretty clear now that it was actually in terrible condition. To make matters worse, the broker shared a marine survey with me that had been performed for a previous buyer and the survey found no significant problems with the boat. And, the broker represented both the seller and me, which seems like a conflict of interest to me. Do I have any recourse against the broker or the surveyor to recover my repair costs?
A: Our reader has a few things going on here so let’s start with the easy one, the marine surveyor.
A claim or a lawsuit against a marine surveyor could arise when a surveyor overlooks a significant area of concern that he should have caught before the buyer signed off on the final acceptance of the boat. A claim such as that would amount to a claim of negligence, which, like all legal claims, requires certain factual elements to be met before a plaintiff can recover from a defendant.
One of the elements that must be met for a negligence claim to prevail is for the defendant to owe some kind of duty to the plaintiff. For example, a marine surveyor has a duty to perform a reasonably competent inspection of the vessel, and he owes that duty to the boat owner or buyer who hired him. All of which is simple enough, until you get to our reader’s case. He did not hire the marine surveyor. That survey was conducted on behalf of a previous prospective buyer of the boat. A claim against the surveyor for negligence will probably fail because the surveyor did not owe a duty to our reader.
Our reader’s possible claims against the yacht broker involve a more complicated analysis, but we can again start with an easy one. The broker’s statement that the boat was in “sail away condition” will probably be deemed to be an example of puffing.
The term “puffing” refers to extravagant claims made by sellers in order to attract buyers. It is the exaggeration of the good points of a product, but it will not be construed to be a guarantee. Furthermore, it cannot be the basis of a lawsuit for fraud or breach of contract unless the exaggeration includes outright lies or has no basis in fact. In our reader’s case, the phrase “sail away condition” is so vague that it cannot be construed to be an outright lie.
Our reader was also concerned the broker represented both parties (buyer and seller) in the transaction, which could give rise to a conflict of interest. He is correct about the possibility of a conflict of interest. However, it does not violate the law in California as long as the broker discloses the “dual agency” to both parties. Nonetheless, brokers in every industry need to walk a very thin line when they represent both parties, because they have a duty to each of their clients and to vigorously protect both clients’ interests.
For example, if the seller had shared some concerns about the boat that evolved into the problems that our reader is seeing now, the broker would have a duty to disclose those problems to the buyer, notwithstanding that it would arguably not be in the best interest of the seller to do so. Conversely, the broker is NOT obligated to disclose the “bottom line” asking and offering amounts to either party during price negotiations. One area where our reader’s broker may be on thin ice is the suggestion that our reader should use a survey that was conducted for a previous buyer, since our reader cannot legally rely on the findings of that report. As I said, the broker is walking a fine line in a dual agency transaction, and the question of whether a duty has been breached will depend on the facts of each case.
Lawsuits that arise from the sale of a boat are rarely successful, for the reasons discussed above and more. Prospective buyers should therefore take a diligent, hands-on approach during the inspection period. In my experience, most disgruntled buyers are the victims of their own shortcuts taken during the inspection period. Work closely with your surveyor. Take your time and really get to know the boat before signing off on the final acceptance of the purchase. If you’re concerned about the ability of a dual-agency broker to represent both buyer and seller, hire an attorney to look out for your interests.
David Weil is licensed to practice law in the state of California and as such, some of the information provided in this column may not be applicable in a jurisdiction outside of California. Please note also that no two legal situations are alike, and it is impossible to provide accurate legal advice without knowing all the facts of a particular situation. Therefore, the information provided in this column should not be regarded as individual legal advice, and readers should not act upon this information without seeking the opinion of an attorney in their home state.
David Weil is the managing attorney at Weil & Associates (weilmaritime.com) in Long Beach. He is an adjunct professor of Admiralty Law at Loyola University Law School, a member of the Maritime Law Association of the United States and is former legal counsel to the California Yacht Brokers Association. If you have a maritime law question for Weil, he can be contacted at 562-438-8149 or at firstname.lastname@example.org.
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