Shipbuilding - Effective Date of Contract and Contingent Conditions
In shipbuilding contracts, the parties may occasionally agree that the contact will only become effective after signing and provided certain contingent conditions are fulfilled. Common contingent conditions include payment of the first instalment and provision of refund or payment guarantees. Such contingent conditions may be classified into condition precedent or condition subsequent. Condition Precedent - A condition is precedent if it provides that the contract is not effective until some specified undertakings are fulfilled. See Article 16 of AWES. Where a party is required to do something before the commencement of a contract, there will be no contract until that condition is met. Thus in Haugland Tankers v RMK Marine [2005] EWHC 321 (Comm), the term of an Option Agreement provided that Buyer could exercise the Option by the service of notice together with payment of a commitment fee to Seller. The Buyer served notice to declare the Option but did not pay the com