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Shipbuilding Contracts
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Copyright
Preface
Chapter 0 Introduction – the formation of shipbuilding contracts
0.1 The use of standard-form shipbuilding contracts – historical background for SHIP 2000
0.2 The genesis of a shipbuilding project
0.3 Negotiations – Letter of Intent
0.4 When is the contract final and binding? Precontractual liability
0.5 Conditions precedent or subjects
0.6 The shipbuilding contract – legal characteristics
0.7 Agreements supplementing the shipbuilding contract
0.7.1 Financing agreements
0.7.2 Shipbrokers – Commission agreements
0.7.3 Option Agreements
0.8 The structure of the book
Chapter 1 Preamble and definitions
1.1 Preamble
1.2 The definitions
Chapter 2 The vessel, description and class
2.0 General
2.1 Description and standard
2.1.1 Hull number
2.1.2 The Specification
2.1.3 Design of the Vessel – responsibility
2.1.4 The Quality of the Work
2.2 Main dimensions and characteristics
2.2.1 Dimensions
2.2.2 Cargo capacity – deadweight
2.2.3 Cubic capacity
2.2.4 Propulsion machinery
2.2.5 Speed
2.2.6 Fuel consumption
2.3 Classification, rules and regulations
2.4 Subcontracting
Chapter 3 Price and payment terms
3.1 Original Contract Price
3.1.1 How the price is set – what is included?
3.1.2 Adjustments of the Contract Price
3.1.3 Use of basis prices
3.2 Currency
3.3 Terms and method of payment
3.3.1 Instalments payable during construction
3.3.2 Payment for modification and changes
3.3.3 Method of payment
3.3.4 Due date for payment of instalments
3.3.5 Documentation for Buyer’s ability to pay
3.3.6 Consequences if the Buyer cannot document his ability to pay
3.3.7 Repayment guarantees
3.3.8 The Builder’s right to retention (possessory lien)
3.3.9 Disputes concerning price, and exchange of guarantees at delivery
Chapter 4 Adjustment of contract price – cancellation by the buyer
4.0 Introduction
4.1 Delayed delivery
4.1.1 Anticipatory breach
4.1.2 Bonus for early delivery
4.2 Speed deficiency
4.3 Deficiencies in fuel consumption
4.4 Defects in deadweight and/or cubic capacity
4.5 Other important performance criteria and the consequences of not filling in the clauses
Chapter 5 Approval of plans and drawings and inspection during construction
5.0 General
5.1 Approval of plans and drawings
5.1.1 Detailed building schedule
5.1.2 Approval of Drawings
5.1.3 Comments to drawings
5.2 Appointment of Buyer’s Representative
5.3 Inspection by the Representative
5.3.1 Place of inspection
5.3.2 Extent of inspection
5.3.3 The Buyer’s own testing
5.3.4 Duty to complain
5.3.4.1 Consequences of lack of notice
5.4 Facilities
5.5 Representative – Division of liability
5.6 The Buyer’s responsibility
Chapter 6 Modifications and changes
6.1 Modification of the Specification
6.1.1 The need to be able to make changes
6.1.2 Change orders are to be made in writing
6.1.3 Unit prices and reasonable price
6.1.4 The condition ‘Adversely affect the Builder’s other commitments’
6.2 Changes in rules and regulations
6.3 Substitution of materials
Chapter 7 Tests and Trials
7.0 Introduction
7.1 Notice
7.2 Weather conditions
7.3 How the sea trial is to be conducted
7.4 Method of acceptance or rejection
7.5 Effect of Acceptance
7.6 Surplus consumable stores
Chapter 8 Delivery date and delivery
8.1 Time and Place
8.1.1 Notice for delivery
8.1.2 Place for delivery
8.1.3 The time of delivery
8.2 When and how delivery is to be effected
8.3 Documents to be delivered to the Buyer
8.3.1 Protocol of trials
8.3.2 Protocol of inventory and equipment
8.3.3 Protocol of surplus consumable stores
8.3.4 Drawings and plans
8.3.5 All certificates, including the Builder’s Certificate
8.3.6 Declaration from the Builder that the Vessel is free of encumbrances
8.3.7 Commercial invoice
8.3.8 Bill of Sale or similar title document
8.4 Title and risk
8.5 Removal of the Vessel
Chapter 9 Delays and extension of time for delivery (Force Majeure)
9.0 Introduction – the legal concept of ‘Force Majeure’
9.1 Causation
9.1.1 Extraordinary circumstances or events outside the Builder’s control
9.1.1.1 Extraordinary circumstances or events
9.1.1.2 Outside the Builder’s Control
9.1.1.3 Delay by Subcontractors
9.1.1.4 Force majeure delaying other projects – or knock-on effects
9.1.1.5 Requirement of due diligence in planning and execution
9.1.1.6 Force Majeure events occurring after the Contract Delivery Date
9.1.1.7 The Builder’s obligation to avoid or minimize delay
9.2 Notice regarding Force Majeure
9.3 Permissible Delay
Chapter 10 Warranty of quality
10.1 Extent of Builder’s responsibility
10.2 The warranty obligation
10.2.1 The extent of the warranty
10.2.2 Warranty period
10.2.3 The notification of defects
10.2.4 The form and content of the notice
10.2.5 Extended warranty period
10.3 Rectification of defects
10.3.1 The content of the obligation to rectify
10.3.2 Insufficient or incomplete repair of a defect
10.3.3 Limited liability for consequential damages – part of same equipment
10.3.4 Place of repair
10.3.5 Supplementary costs
10.4 Subcontractors’ guarantees
10.5 Sale of the Vessel during warranty period and assignment of warranty
10.6 The guarantee engineer
10.6.1 The tasks of the guarantee engineer
10.6.2 Responsibility
Chapter 11 Ownership, risk and insurance
11.1 Ownership and registration
11.2 Risk and insurance
Chapter 12 Default provisions
12.0 Default provisions in general
12.1 Builder’s default – Cancellation by Buyer
12.2 Buyer’s default – disputes regarding payment
12.2.1 The Buyer’s liability in case of breach of payment obligation
12.2.1.1 Introduction
12.2.1.2 The starting point – the positive contractual interest
12.2.1.3 The actual calculation of damages
12.2.2 Default interest rate
12.2.3 Set-off
12.3 Insolvency
12.3.1 Introduction
12.3.2 Conditions for cancellation caused by insolvency
12.3.3 Limitations in the right to cancel in case of insolvency
12.3.4 Restitution of contributions at cancellation
12.3.5 Can a mortgagee take over the Contract?
Chapter 13 Assignment
13.1 The need for assignment
13.2 The 1981 Contract and other shipbuilding contracts – background law
13.3 Assignment under SHIP 2000
13.4 Costs for assignment – valid reasons to withhold consent
Chapter 14 Taxes and duties
Chapter 15 Patents, trademarks, copyrights
15.1 Generally about patents, design and other intellectual property rights (IPR)
15.2 Use of patents and design
15.3 Disputes regarding IPR infringement
15.4 Limitation of the Buyer’s rights
15.5 Dispute concerning IPR – jurisdiction
Chapter 16 Buyer’s supplies
16.0 Introduction
16.1 Buyer’s responsibility
16.1.1 Scope and place of delivery
16.1.2 Time of delivery and delay
16.2 The Builder’s responsibility
Chapter 17 Notices
17.1 Why have a specific provision concerning notices?
17.2 Solution in other contracts
17.3 Requirements for notices to be in writing
17.4 Who should send the notice?
17.5 The effect of sending a notice to a recipient other than specified
17.6 Language
Chapter 18 Entire contract
18.1 Background
18.2 Significance for evidence, parties and choice of law
Chapter 19 Governing law, dispute and arbitration
19.1 Choice of law
19.2 Arbitration
19.3 Ad hoc versus institutional Arbitration
19.3.1 The traditional Nordic approach
19.3.2 The Nordic Offshore & Maritime Arbitration Association’s rules and guidelines
19.4 Reasons for choosing arbitration as dispute resolution
19.4.1 Composition of the tribunal
19.4.2 Confidentiality
19.4.3 Flexibility
19.4.4 Neutral ground
19.5 Arbitration as lis pendens
19.6 Arbitrators’ required qualifications, experience and expertise
19.7 Place of arbitration
19.8 Costs of arbitration
19.9 Initiating arbitration
19.10 Alternative dispute resolutions
19.11 Remedies against arbitration awards
Web pages
Literature
Indexes
Appendix 1: Norwegian Standard Shipbuilding Contract – SHIP 2000
Appendix 2: BIMCO Standard Shipbuilding Contract – NEWBUILDCON
Subject Index
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