Shipbuilding Law Blog

During the construction process the vessel and its appurtenances will be subjected to a series of ongoing tests, trials and inspections. After the construction and fitting out of the vessel have been completed, the shipbuilder will be required to test and commission the vessel and its appurtenances to demonstrate compliance with the specifications, prove the vessel’s proper functioning and fulfilment of performance requirements. Dockside trials: This is to ensure correct performance of the specified equipment and the satisfactory operation of main propulsion alternators, main azimuthing propellers and electric motors, forward thruster units and prime movers, engine room auxiliary machinery, deck machinery, control systems etc. After satisfactory completion of the commissioning programme, inclining test and dock trials, the vessel will be required to undergo shipbuilder's trial and acceptance sea trials. Shipbuilder's trial: During this technical trial, the following will be

A sample clause: The Buyer shall, at its own risk, cost and expense, supply and deliver to the shipbuilder all of the items to be furnished by the Buyer as specified in the Specifications (herein called the ‘Buyer’s Supplies’) at a warehouse or other storage of the Shipyard in the proper condition ready for installation in or on the Vessel, in accordance with the time schedule designated by the shipbuilder. ...the Buyer shall furnish the shipbuilder with necessary specifications, plans, drawings, instruction books, manuals, test reports and certificates required by the rules and regulations. The Buyer, if so requested by the shipbuilder, shall, without any charge to the shipbuilder, cause the representatives of the manufacturers of the Buyer’s Supplies to assist the shipbuilder in installation thereof in or on the Vessel and/or to carry out installation thereof by themselves... ...the Buyer’s Supplies shall be subject to the shipbuilder’s reasonable right of rejection, as and if the

Updated 12 April 2022 A letter of intent (LOI), also called term sheet, expression or indication of interest in the commercial sectors is an informal offer or recap of the parties’ position on how they would proceed on a business proposal or venture. In the shipbuilding and offshore industry, where discussions on technical, commercial and legal matters leading up to a formal contract are complex and lengthy, letters of intent (LOIs) will often be used as prelude to the formation of a formal contract. Thus, LOIs will be used:   ·        Where the scope of work has been identified, but there are still outstanding items like selection of main engine suppliers, financing, guarantees, and board approvals that need to be finalised.   ·        At other times, LOI may be signed on condition that the parties will enter into a shipbuilding contract after the buyer’s bid for a shipbuilding project is successful, or where the parties intend to bid for a project jointly. (The intent of such

A clause in letter of intent for proposed construction of an oil rig read as follows: "Shipyard and Buyer shall each maintain their own insurance based on the principle that the parties will insure their own people and equipment (except that the Builder's risk shall apply as set out in contract). Each party shall provide the appropriate documentation of its insurance to the other party." Once negotiation for the contract proceed, this will form the basis for discussion and incorporation of a detailed indemnity provision, commonly referred to as a 'knock for knock' clause into the definitive contract. Such clauses are used particularly in the construction, shipbuilding and oil/gas industries to manage and allocate risk. Essentially, respective parties undertake responsibility for loss or damage to their own property or for injury or death to their own employees and identified parties (usually regardless of fault). Ironically it is also one of the least negotiated