Complex systems, complex materials and complex processes give rise to defects. But, do the various factions involved in a new build project adequately protect themselves from the liabilities that arise from these defects? Ordinarily disputes occur when one or more parties make mistakes during the build and fail to prepare adequately for contention.
Time and time again legal professionals have come to me and expressed utter dismay at how readily and often contracts are left to gather dust once the arduous initial negotiation period has been completed. For engineers, naval architects and others, who are agents in the completion of a project, it is dangerous to charge head on into construction without frequently consulting the contract – the builders’ bible.
When problems occur, it is human nature to seek a common-sense solution; people will discuss, negotiate and attempt to resolve issues without consulting a contract and, in a great many instances, this works. However, in the instances where this doesn’t work, the contract is the primary source in identifying who or what is at fault. More often than not, there has been an oversight on the part of one or more stakeholders. Yet, if you fail to consult a contract frequently you may find that your position during arbitration has grown significantly weaker as a result.
Never make assumptions about the contents of a new build contracts; they are esoteric animals. Use the contract as your ally - it need not be confrontational and clear guidelines are more likely to ensure an agreeable outcome.
Broadly speaking, a yacht building contract can be split into three key areas: design, specification and warranties. Understand where the various interfaces lie and who is responsible for what. The cornerstone of the superyacht build is the specification, and for all intents and purposes it defines the owner’s dream. Failing to create a sufficiently precise specification and failure to define its parameters provides a plethora of opportunities for litigation further down the line.
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