The guide to Superyacht law - Fourth edition

• Insurance: Should there be an accident during the build process, make sure you have the details of the builder’s insurance. Elements to consider are insurance levels, coverage of owner-supplied items, and whether the buyer is co-assured etc • Protecting the buyer’s pre-delivery instalments: Progressive title transfer (getting ownership in the superyacht as she is built), bank refund guarantees - either or a combination of both. Where the title is being transferred, check with the relevant jurisdiction what requirements may impact title registration to ensure that this is validly transferred to the buyer. How best to protect your pre-delivery instalments and how effective is that bank refund guarantee? • Protecting the builder’s interests: Does the contract provide any mechanism to guarantee the buyer’s payment obligations during the build process? What if the buyer fails to pay the pre-delivery instalments when they fall due or if the buyer unlawfully terminates the contract or illegitimately refuses to take delivery of the superyacht? Will the builder be able to recover any of its losses from the buyer? In addition, or as an alternative to retaining title and ownership of the superyacht, some builders, upon payment of each pre-delivery instalment, request performance bonds from a buyer guaranteeing the payment obligation of (at least) the next pre-delivery instalment. This gives some comfort to the builder in securing (a minimum) cash flow to continue the build if the buyer steps out of the contract during the construction period when the builder has already invested its funds in the construction Alternatively, where the contract is entered into by a single purpose vehicle company it is not unheard of for the builder to request a personal guarantee from the beneficial owner or a corporate guarantee from a parent company guaranteeing the buyer’s obligation under the contract • Project management: Depending on the complexities of the project, during the build you may have an on-site project manager to supervise the build, or a project manager overseeing the process. The build contract should allow access and office space for the project manager • Performance warranties: Depending on the size, the buyer should at least expect to see speed, range, noise and vibration warranties as a minimum. Paint systemwarranties should also be considered. The liquidated damages and levels set will depend on what features are important to your superyacht. English law changed in late 2015 such that whatever the parties agree to be the commercial level of liquidated damages will be enforceable

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