Post Delivery Warranty - Marine Equipment Supply

For equipments supplied to buyer in shipbuilding project, seller will be required to provide a warranty or guarantee that the equipments installed will be free of defects in design, material and workmanship.

The period will normally commence from the date of delivery of the equipment up to a period of between 12 to 18 months, known as the warranty period. Seller will insist that if any defects are discovered during the warranty period, the buyer must serve written notice within the stipulated period. This period must be adhered to strictly. Upon receipt of the notice, the seller will be obliged to repair or replace the faulty items as soon as reasonably possible (unless it is out the scope of the warranty). The will have to to send their repair personnel to the agreed site and bear expenses incurred in respect of transportation, lodging and associated expenses of their repair personnel. In addition, the cost of labor, material and parts required to carry out the repair, will be on the seller’s account.

Furthermore, the costs for shipment, insurance, packing and handling for delivery of new parts and disposal of faulty parts are usually at the seller’s expense. It is usual to agree that repaired or replaced parts will be further guaranteed from the date of such repair or replacement. However, a cap will be imposed, usually 12 months from the date of replacement or 18 months from the commencement of the original warranty, whichever date expires earlier.

Exclusion and Limitation
Understandably Seller will want to exclude from the warranty, any defects due to poor maintenance, neglect, misuse, modification not approved by the Seller, normal wear and tear and damage caused by the Buyer. As the defects may lead to wider exposures, a prudent Seller will expressly limit its liability to the repair and replacement of parts only. They will also exclude and disclaim any liability for consequential, special or indirect loss or damage, implied and customary terms.

Issues for Negotiation
The commencement date of the warranty, duration of the warranty, terms of the warranty, notification procedure, place of repair or replacement, liability for associated expenses, transferability of warranty, extension of warranty, duration of extended warranty, limitations and disclaimers.

In passing, I think it will be a good idea to have seller’s confirmation, attached to the contract that: Their supply will interface seamlessly with other equipments on the vessel, a team of qualified engineers will be maintained throughout the warranty period, they will respond to a warranty claim in a timely manner, adequate spares for replacement will be in store, in the event of dispute on the validity of any warranty claim, they will nevertheless carry out the work pending determination by negotiation or judicial process (subject to adequate provision of security by buyer) and lastly, they will grant an option for extended warranty at a fixed price, to be exercised by buyer within a certain timeframe

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