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Showing posts from March, 2012

Shipbuilding Contract – Advance Payment Bond – Court’s position where there are two possible constructions

Shipbuilder agreed to build and sell one vessel to each of the Buyers. It was a condition precedent to payment by the Buyers of the first instalment that the Shipbuilder would deliver to the Buyers refund guarantees relating to the first and subsequent instalments in a form acceptable to the Buyers’ financiers. Shipbuilder’s bank issued refund guarantees in respect of six shipbuilding contracts. Relevant text of the Bond: [2] Pursuant to the terms of the Contract, you are entitled, upon your rejection of the Vessel in accordance with the terms of the Contract, your termination, cancellation or rescission of the Contract or upon a Total Loss of the Vessel, to repayment of the pre-delivery instalments of the Contract Price paid by you prior to such termination or a Total Loss of the Vessel (as the case may be) and the value of the Buyer's Supplies delivered to the Shipyard (if any) together with interest thereon at the rate of ... (7%) per annum (or ... (10%) per annum in the case