Shipbuilding Law Blog

Force majeure clauses are frequently seen in shipbuilding [1] and other contracts. Recent attempts by parties to invoke economic crisis as a force majeure events excusing performance has met with little success. In Tandrin Aviation Holdings Limited v Aero Toy Store LLC and others [2], the court held at paragraph  40   “…under English law that a change in economic / market circumstances, affecting the profitability of a contract or the ease with which the parties’ obligations can be performed, is not regarded as being a force majeure event.  Thus a failure of performance due to the provision of insufficient financial resources has been held not to amount to force majeure - see The Concadoro [1916] AC 2 AC 199; and likewise a rise in cost or expense - see Brauer & Co. (GB) Ltd. v. James Clark (Brush Materials) Ltd. [1952] 2 All ER 497 and generally the discussion in Chitty on Contract, 30 th Ed., para 14-148.” Adams on Contract Drafting [3] states inter alia: “Thus far,

Shipbuilding contracts comprise the Agreement, the Specifications, Drawings, Plans and other attachments. Frequently, there may be conflict between the respective documents. To address such conflict, a clause (usually a boilerplate) ensures that in the event of a conflict or ambiguities between the documents, the Agreement will prevail over the Specifications and so on in that order. Parties in shipbuilding contract transaction take comfort in the erroneous belief that this clause is the solution to such conflict. This is far from reality. One can either choose to work towards clarity with a competent front-end team or leave uncertainties to the litigation lawyers later. Experience has shown that while such a provision may be useful in providing clarity to minor discrepancies, failure to provide clarity in the various contract documents prior to the contract execution can often lead to unwelcome disputes, acrimony and loss of future business. Salient example: Owner gave