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The Build

Agreement

10 May 2023

Last revised

minutes

10

Reading time

Most builders have their own ‘just sign here’ standard build terms. They vary enormously in length and complexity. Such agreements often miss out important aspects and can be subject to local law and jurisdiction - whose courts may not be impartial and where you may struggle to find competent, specialist lawyers. Don’t sign them. Contact us for guidance. Given the amount of money at stake, such contracts should only be viewed as an opening to contractual negotiations.

minutes

10

Reading time

10 May 2023

Last revised

Most builders have their own ‘just sign here’ standard build terms. They vary enormously in length and complexity. Such agreements often miss out important aspects and can be subject to local law and jurisdiction - whose courts may not be impartial and where you may struggle to find competent, specialist lawyers. Don’t sign them. Contact us for guidance. Given the amount of money at stake, such contracts should only be viewed as an opening to contractual negotiations.

  • Privacy concerns and the need for NDAs should be addressed early on with the engagement of an experienced lawyer.

  • Payments should be made upon completion of build milestones, with independent surveyor signoff, and account for material costs, transport, and exchange rates.

  • Security measures should be in place to protect against builder insolvency, including ownership transfer and guarantees from the builder's bank.

  • Consider local legal requirements for ownership transfer and potential statutory liens by unpaid subcontractors.

  • Clearly define the triggering events and duration of guarantees to ensure protection in case of builder insolvency or yacht issues.

  • Establish clear and rigid procedures for change orders to avoid cost overruns and delays.

  • Subcontractors should be carefully vetted, and the builder should remain liable for their mistakes. Materials should not be subject to title retention.

  • Specify insurance requirements for the part-built project and ensure the wording is adequate and obtained from reputable insurers.

  • Address force majeure events, their effect on the delivery date, and the need for a cap. Clarify buyer-ordered modifications' impact on delays.


  • Ensure all correct legal documents for the yacht's registration are presented before final payment and agree on the place of legal delivery.

  • Allow access for tests, inspections, and reasonable rectification of faults before delivery. Define criteria for acceptance or rejection of the yacht.

  • Formal testing at sea is necessary to verify performance against specifications, and a margin of tolerance with incremental compensation may be agreed upon.

  • Establish the buyer's right to refuse delivery if faults are not rectified, and differentiate between minor non-conformities and deliverable condition requirements.

  • Warranty period should be agreed upon for materials and workmanship, and provisions for rectifying defects and compensation should be addressed.

  • Dispute resolution mechanisms should include independent technical experts for technical matters and arbitration or litigation for non-technical or high-value disputes.

  • Consider enforceability and confidentiality aspects when choosing between arbitration and litigation.

  • Ensure all correct legal documents for the yacht's registration are presented before final payment and agree on the place of legal delivery.

  • Allow access for tests, inspections, and reasonable rectification of faults before delivery. Define criteria for acceptance or rejection of the yacht.

  • Formal testing at sea is necessary to verify performance against specifications, and a margin of tolerance with incremental compensation may be agreed upon.

  • Establish the buyer's right to refuse delivery if faults are not rectified, and differentiate between minor non-conformities and deliverable condition requirements.

  • Warranty period should be agreed upon for materials and workmanship, and provisions for rectifying defects and compensation should be addressed.

  • Dispute resolution mechanisms should include independent technical experts for technical matters and arbitration or litigation for non-technical or high-value disputes.

  • Consider enforceability and confidentiality aspects when choosing between arbitration and litigation.