What can go wrong in Shipbuilding Contracts?
Contractual risks in shipbuilding projects begin when the parties first make contact. Things that could go wrong at this stage could include disputes on whether a contract or letter of intent is binding. [1]. Also, issues could arise involving breach of confidentiality [2] and intellectual property rights. [3] Upon the effective date of the contract, the parties may exchange refund and payment guarantees, which could be unenforceable [4], or there may be issues with the option agreement for additional vessels [5]. Throughout the production phase, arguments concerning the approval of plans and drawings could involve the buyer’s delays during the approval process and their comments on the plans and drawings [6]. Other disputes could concern variations, [7] delays [8], quality of workmanship, late inspection [9], over-inspection and interference. All this inevitably could lead to delays, and this will be compounded further if, to win the project, the shipbuilder had created an ...