Checklist for Supply and Installation Contract (Marine)

This was first developed and utilized by the writer as a structured tool to ensure comprehensive coverage of relevant issues and for guiding shipyard’s purchasing personnel. Besides specialized legal expertise and commercially savvy disposition, best practice will include coordination with relevant purchase, finance and project managers, bankers and shipping agents, forwarders or customs consultants (and of course, not forgetting those hardworking support staff and the tea lady).

Preamble
Date of Contract
Name of Parties
Authorized signatories
Type of entity - Partnership, Private Company etc
Nationality and registered Address

Scope of Supply
Description and quality of the equipment
Quantity of the equipment
Tolerance percentage
Spare parts and optional items
Services to be provided
Deliverables, documents, certificates, manuals to be supplied
All items that are excluded from the scope of supply

Contract Price
State the Contract Price
State the currency
State the items included in the Contract Price
State whether it is lump sum, per unit or other measures

Payment Terms
State the mode of payment
Is it by installment?
Is it by Letter of Credit?
What are the terms of the Letter of Credit?
Application of UCP?
If advance payment is required, what is the security?
Is interest chargeable for late payment?
What is the rate of interest for late payment?
Any right to suspension of work for non-payment?

Contract Schedule
Shipment from Port of X
Date of shipment
Date of Installation
Date of commissioning

Shipping Terms
Specify the shipping terms (e.g. CIF, FOB DDU etc)
Port of shipment and destination
Mode of shipment
Issues on transshipment and partial shipment
Allocate liability for charges

List of Shipping Documents
Commercial Invoice
Certificate of Origin
Insurance document
Inspection certificate
Certificate of weight and quantity
Fumigation certificate (if applicable)

Packaging
Are there any special packaging requirements?
What are the licenses or certificates required?
Where are the equipments to be stored - in a container, below or above deck?

Inspection
When will the equipment be inspected, prior to shipment?
Where will it be inspected?
Is Factory Acceptance Test applicable?

Project Documentation
What are all the documents required?
Specification, drawings, class certificates, licenses, permits etc
Who is to provide which documents?
Who will prepare the List of Documents?
What is the acceptable format: soft and hard copies?
When and where will the respective documents be tendered?

Installation and Commissioning
Installation Supervision
Pre-commissioning procedure
Commissioning
Issues on travel expenses, food and lodging
Rate in excess of agreed man-hours
Rate for extras
Authority of site engineers

Acceptance Tests
Test Protocol
Notification
Number of test
Acceptance procedure
Materials and supplies for test: for whose account?

Force Majeure
Agreed definition of force majeure events
Notification procedure
Limitations and disclaimers (if any)
Limit and duration of relief
Termination Rights

Warranty
Scope and terms
Commencement and expiry date
Notification procedure
Allocation of responsibility for associated costs
Limitations and disclaimers

Insurance
List the insurances each party are required to provide
Allocation of costs of the various insurances
Does it cover the agreed terms and usual terms?
Any waiver of subrogation rights?
Is it assignable?

Indemnities (if applicable)
Who is required to provide an indemnity?
What is the scope of the indemnity?
Is it insurable?

Taxes and Duties
List all the taxes and duties to be paid
Allocate responsibility for payment of the respective taxes and duties

Intellectual Property Rights
Set out Parties’ rights and liabilities for the infringement of intellectual property rights
Are there any provisions for indemnity?

Liquidated Damages
What is the rate?
Is it expressed in terms of monetary sums or by percentage?
Is it computed on a daily or weekly basis?
Is there any grace period?
What are the limits?
Is it the sole remedy for delays within the stipulated period?

Contract Variations
Is there a right to vary the Contract?
What is the procedure?
How is the rate determined?
Is it on a lump sum or time and material basis?
What is the limit on the extent of variation?

Assignment
Is the Contract assignable by notice in writing?
Are there any conditions attached?

Retention of Title
When does title pass?
Is it a charge?
Consider its enforceability

Compliance with Applicable laws
Which are the bylaws, codes, regulations and standards to which the equipment must comply?
What are the permits, approvals and certificates required by governmental authorities in the Buyer’s country?

Limitation of Liability
Is there a limitation of liability for consequential loss etc?
Is there disclaimer of implied terms and others?

Termination
What are the specific grounds for termination?
What agreed damages (if any) are recoverable upon termination?

Governing Law and Jurisdiction
What is the Governing law of the contract?
Where is the forum?
Is the jurisdiction of the chosen forum exclusive?
Will the CISG (international convention) apply?

Dispute Dissolution
Set out the procedure for resolution of disputes
Arbitration or Court proceeding?
For technical disputes, should it be resolved by third party experts?
If so, should their decision be final and conclusive?

Notice
Address and name of person to serve and to receive notice
Notice must be in writing
Can notice be served via email or fax?
State language to be used for notification

Boilerplate
To clarify any ambiguity

For sample of industry standard form: see Orgalime
© David Seah 2007

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