The guide to Superyacht law - Fourth edition

BUILD CONTRACT There is no standard ‘form’ superyacht construction contract. Each builder will have their own standard which reflects how they work. A good contract will appear fairly balanced, while a poor contract will limit the buyer’s rights as much as possible. A superyacht construction contract will usually be made up of the main contract, the technical specification, the general arrangement plan, and any other elements such as a construction schedule, the form of delivery documents and a makers list. Never sign a contract without seeking legal advice. There are some basics you should expect to see in a build contract: • Payment terms: Stage payments linked to milestones, on a cost plus basis, monthly stage payments or on a percentage of completion basis. Careful consideration should be given to timings, exact triggers of payments and the value of the superyacht as constructed • Specification: A marine surveyor can help to negotiate this. The specification will include details of the flag and classification notation. When choosing a flag, a number of factors should be considered including tax, intended use (ie chartering or not), flag reputation and the builder’s knowledge/ experience building with such flag Advice should be sought on your choice of class on whether it will add or detract from the value of the superyacht and who will have access to the discussions between the builder and the classification society • Regulations: Language confirming the regulations the superyacht will be built under and, in particular, whether she will be built as a commercial superyacht. If so, will she be, for example, Large Yacht Code (LY3), Passenger Yacht Code (PYC), SOLAS compliant or regulations issued by United States Coast Guard? Consider at this stage whether a helicopter will be used on board the superyacht so that compliance with the relevant regulations can be incorporated into the build contract

12

Made with FlippingBook Online newsletter