MSc in Shipping Management
Maritime law coursework 2021
Professor: Dr. Miquel Roca
Student: Panagiotis Tampouratzis
MEMORANDUM
TO: Board of Directors of Ταΰγετος Shipping
FROM: Panagiotis Tampouratzis, Head of Legal Affairs of Ταΰγετος Shipping
SUBJECT: Main aspects for negotiation with the Shipyard regarding the build of a new Tanker.
DATE: February 26, 2021
The scope of this Memorandum is to pinpoint the main aspects (key points) of the pre-
contractual agreements, negotiations, and the actual contract.
Some pre-contractual agreements need to be established with the shipyard to maintain the
confidentiality, integrity, and trust of both parties. An NDA will ensure that the yard will not
disclose any relevant information to the market or competitors if the negotiations fail.
Additionally, an MSA document should be signed, for the clarification of the responsibilities
and obligations of each party. Last but not least, a Letter of Intent could be created for the
moral obligations of each party.
DESIGN
There is always a risk when a ship is designed. Every shipyard has its own style and way of
building ships but that does not mean that they meet the requirements of the owner. Usually,
specific requirements and design plans are not covered in a proform contract and they are
just built according to class so, it is crucially important to be mentioned during the negotiation
process.
DESCRIPTION AND CLASS
The Hull number should be stated in the contract, but it is just a definition. If there is any
misunderstanding, the owner cannot reject the vessel. Plans and drawings of the shipyard
should be clear and understood by the shipyard in order to avoid any mistakes on the
building of the vessel. Furthermore, speed, fuel consumption, etc., should be incorporated in
the body of the contract as performance guarantees, otherwise, the owner holds the right to
reject the vessel.
SUBCONTRACTING
In case the yard subcontracts the vessel regarding small daily works, it requires no
permission from the company, whereas if that happens regarding major works, permission
from the company is required.
PRICE
The price and the specifications should be predetermined and written clearly on the contract,
along with the relevant terms and conditions on how the payment will be settled. Inspection
during construction should be done by a superintended at the shipyard during the building
process the whole time. The costs and the selection of this person are up to the buyer.
TRIALS
The trials should be done by the shipyard regarding the functionality of the vessel within the
shipyard waters. Whenever these trials are completed, then the buyer can accept the vessel
and proceed with the payments and the transfer of the risk from builder to buyer upon
delivery.
REJECTION
The buyer has the right to reject the vessel if the yard has not come in terms with the
contract or any defects or even if a breach of contract occurs.
DELIVERY
It is important to specify the time frame of delivery and it should be included in the contract.
Of course, the protocol of delivery should be followed by both parties.
PASSING OF TITLE
The title of ownership of the vessel remains with the yard until the delivery date. If there are
no builder refund guarantees, then the title will gradually pass from the builder to the buyer
which will still hold the right of lien and the right of rejection.
BUILDER’S WARRANTY AND RISK OF LOSS AND DAMAGE
The risk lays on the builder until the delivery date of the vessel when it is transferred to the
buyer. The builder’s warranty exists in case of defects on the ship, in this case, the
shipowner must warn the yard of this incident and then repay or fix it. Then the yard has the
duty to either repair or pays another yard to fix the damage.
Reference:
SHIP SALE & PURCHASE SHIPBUILDING/SHIPREPAIR
Dr. Miquel Roca
Solicitor
Senior Lecturer, Anglia Ruskin University, Cambridge UK
Athens, February 26, 2021
