Buying at Monaco: The critical role of Letters of Intent
The 2025 Monaco Yacht Show will feature more than 120 superyachts.
As the yachting world converges on the Monaco Yacht Show, buyers are presented with an extraordinary opportunity: the chance to step aboard, compare and potentially secure some of the most coveted vessels on the market. Yet, in the fast-paced and highly competitive environment of these shows, the difference between walking away with your ideal yacht – or watching it be acquired by someone else – often comes down to one essential document: the Letter of Intent (LOI).
Here, Ezio dal Maso, a partner at law firm Stephenson Harwood explains why the LOI is such a vital tool, how it works, and why expert legal guidance is indispensable for protecting your interests and maximising your options.
What is a Letter of Intent?
A Letter of Intent is a preliminary agreement between a prospective buyer and a yacht builder or owner. While generally non-binding, it sets out the principal commercial terms and demonstrates serious intent to move forward with negotiations. In the context of a busy boat show, an LOI can be the difference between securing a period of exclusivity for your chosen yacht and losing it to a faster-moving buyer.
Key features of an LOI:
- Outlines the main terms (price, payment structure, delivery date)
- Reserves the yacht for a specified period (exclusivity)
- Sets a framework for due diligence and further negotiation
- Allows for assignment to another entity or individual
Why use an LOI during boat shows?
The atmosphere at Monaco is electric — and competitive. The most desirable yachts often attract multiple offers within hours. If you identify a vessel that fits your requirements, an LOI enables you to:
- Secure your interest before others can act
- Establish a formal basis for negotiation
- Reserve time for technical surveys, sea trials and legal due diligence
- Demonstrate to the seller that you are a credible, committed buyer
What should a well-drafted LOI include?
While LOIs are often described as “simple,” the reality is that the details matter. A well-drafted LOI should cover:
- Yacht Identification:
Clear details such as make, model, year, hull number and any unique features.
- Purchase Price and Payment Terms:
The proposed price or price range, deposit amount and payment schedule.
- Commercial Terms:
Delivery date and location, included equipment and any specific conditions.
- Conditions Precedent:
Requirements such as satisfactory survey results, clear title and regulatory compliance.
- Exclusivity Period:
A defined timeframe during which the seller agrees not to negotiate with other parties.
- Assignment Rights:
Flexibility to assign the LOI to another entity – essential for structuring ownership, tax planning, or financing.
- Confidentiality:
Protection of sensitive commercial information.
- Binding and Non-Binding Clauses:
Clarity on which provisions are binding (such as confidentiality and exclusivity) and which are not.
The Assignment Advantage
A key benefit of a well-drafted LOI is the ability to assign your rights to another party. For many buyers, this is crucial: you may initially sign as an individual but later decide to complete the purchase through a company, partnership, or trust for privacy, liability, or tax reasons. Including assignment provisions from the outset ensures flexibility and a smoother transaction.
The LOI process: From showroom to ownership
- Identify the yacht:
You discover a vessel at the show that meets your needs.
- Negotiate key terms:
You and the seller discuss your intentions and proposed terms. Legal counsel can help articulate your position and anticipate potential issues.
- Draft and sign the LOI:
Your lawyer prepares or reviews the LOI to ensure your interests are protected. Both parties sign, and the exclusivity period begins.
- Conduct due diligence:
Arrange for technical surveys, sea trials and a thorough legal review of the yacht’s documentation (title, registration, VAT status, etc). Your lawyer coordinates with surveyors, flag registries, and financial institutions as needed.
- Assignment (If needed):
If you wish to assign your rights under the LOI to another entity, your lawyer ensures this is done in accordance with the LOI’s terms.
- Negotiate and sign the final contract:
Upon satisfactory due diligence, your lawyer negotiates the full sale and purchase agreement, addressing all technical, financial and legal aspects.
- Completion and delivery:
Your legal team oversees the closing process, ensuring funds are transferred, title is conveyed and all regulatory requirements are met.
Why legal guidance matters
While an LOI may seem straightforward, its implications can be significant. Ambiguities or omissions can lead to misunderstandings, disputes, or even the loss of your desired yacht. Legal advice is especially important for:
- Ensuring the LOI accurately reflects your intentions and protects your interests
- Structuring assignment provisions for future flexibility
- Navigating cross-border legal, tax, and regulatory issues
- Coordinating due diligence and closing with all relevant parties
Conclusion: Take the first step with confidence
If you are attending the Monaco boat shows and are considering a yacht purchase, a well-structured Letter of Intent is your essential first step. It secures your opportunity, provides a clear path forward and positions you for a successful acquisition. To maximise your advantage and avoid costly pitfalls, consult with experienced legal advisors who understand both the law and the unique dynamics of yacht transactions.
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