Phil Friedman

7 years ago · 2 min. reading time · ~10 ·

Blogging
>
Phil blog
>
Non-Legal Fine Points of Yacht New-Build and Refit Contracts - III

Non-Legal Fine Points of Yacht New-Build and Refit Contracts - III

Non-Legal Fine Points of Yacht New-Build and Refit Contracts - IIIMarine Industry

NEW-BUILD AND MAJOR REFIT CONTRACTS CAN BE LEGALLY BULLET-PROOF, YET STILL FAIL TO RESULT IN SUCCESSFUL PROJECT COMPLETION…

The “SOW” is the foundation upon which all other aspects of a new build or refit contract are built...

The “scope of work” defines what work and materials are, and what work and materials are not included for the agreed contract price.

“Duh, sounds pretty simple to me,” you may say. However, it is significantly more complex than might appear at first glance. For example, the SOW referenced in a refit contract might explicitly include engine replacement, but overlook tasks related to engine beds, mounts, shafting, and couplings.

Rarely, if ever does a new build or major refit contract spell out every detail of the included work. That is because to do so would require weeks, if not months of costly effort, just to get to a contract. Consequently,  many yards and yacht owners rely on the concept of “customary industry practice.”

Unfortunately, in many cases, relying on "customary practice" is little more than an invitation to eventual arbitration or litigation...

From a shipyard’s perspective, it is significantly better to include an omnibus exclusionary clause that says, “Whatever is not specifically included, is excluded.” In other words, if it’s not on the list, it’s not included in the SOW. And if a customer later wants it done, the customer needs to pay extra for it.

However, from an owner’s perspective, the preferred move is to include an omnibus inclusionary clause that says, “Whatever is customarily prerequisite to accomplishing the listed work, and not specifically excluded, is included.” Which means, for example, if the engine replacement requires modification to the engine mounts and/or bearers, and these tasks are not specifically excluded in the SOW, they are included for the agreed price.

Attention to the issue of an omnibus clause forces all involved to think carefully about the SOW...

Naturally, yard and vessel owner may disagree about what form of omnibus clause is to be made part of the contract. But attention to this issue forces all involved to think carefully about the SOW before the deal is finalized, and thereby works to avoid later disputes over charges that accrue to tasks not specifically listed in the contract.

Next installment of this series will deal with setting projectschedules Phil Friedman


Author's Notes:  The information, opinions, tips and comments here are based on my 30 some years in the yachting industry, including my several year stint as president and CEO of a major, world-class megayacht builder.

If you find yachts and yacht building of interest, you may want to read some of my other marine industry related articles:

"Sizing Generators to Run Greener and Cleaner"

"Ten Insider Tips on Yacht Build Contracts"

"App or Not, Garbage In Means Garbage Out"

And if you'd  like to receive further installments of this ongoing series, or regular noticiations of my other writings on a regular basis, click the [FOLLOW] button on my beBee profile.  As a writer-friend of mine says, you can always change your mind later.

Feel free to "like" and "share" this post and my other LinkedIn articles — whether on LinkedIn, Twitter, Facebook, or Google+. I ask only that you credit me properly as the author, and include a live link to the original work.

f you are interested in yachts, are allied with the yacht building industry,  or operating a small business in another sector, you should consider joining my beBee Hive, 

THE PORT ROYAL GROUP for Yacht Builders, Buyers and Owners,

where you will find experienced industry professionals discussing a wide range of topics. The ongoing conversation is always interesting, informative, and 100% industry insider.


About me, Phil Friedman:  With 30 some years background in the marine industry, I've worn numerous hats — as a yacht designer, boat builder, marine operations and business manager, marine industry consultant, marine marketing and communications specialist, yachting magazine writer and editor, yacht surveyor, and marine industry educator. I am also trained and experienced in interest-based negotiation and mediation. I am currently supervising, as owner's representative, a new yacht build in Taiwan. In a previous life, I taught logic and philosophy at university.


Non-Legal Fine Points of Yacht New-Build and Refit Contracts - IIIMarine Industry
The (optional-to-read) pitch: As a professional writer, editor, university educator, and speaker, with more than 1,000 print and digital publications, I've recently launched an online program for enhancing your expository writing: learn2engage — With Confidence. My mission is to help writers and would-be writers improve the clarity of their thought and writing, master the logic of discussion, and deal with criticism and disagreement.

To schedule an appointment for a free 1/2-hour consult email:   info@learn2engage.org


Text Copyright © 2016 by Phil Friedman — All Rights Reserved
Images:  Courtesy of Port Royal Group LLC and Phil Friedman


Non-Legal Fine Points of Yacht New-Build and Refit Contracts - IIIMarine Industry

"
Comments

Lisa Gallagher

7 years ago #1

And what a beautiful yacht! Interesting article Phil Friedman

Articles from Phil Friedman

View blog
5 years ago · 5 min. reading time

IMPROVE CAPTURE OF BILLABLE HOURS TO BOOST GROSS PROFIT WITHOUT ADDED OVERHEADS... · Preface: · This ...

6 years ago · 4 min. reading time

TODAY'S POPULAR DISCUSSIONS ABOUT ARTIFICIAL INTELLIGENCE AND Ai ARE RIFE WITH SCIENCE FANTASY AND L ...

6 years ago · 1 min. reading time

IF YOU'RE NOT PAYING, THEN YOU'RE THE PRODUCT... · Over the years, one of my long-term clients was A ...

Related professionals

You may be interested in these jobs

  • KPMG-UnitedStates

    Associate General Counsel-Litigation

    Found in: Talent US C2 - 1 week ago


    KPMG-UnitedStates Alexandria, United States

    Business Title:Associate General Counsel-LitigationRequisition Number: Function:Business Support Services · Area of Interest:State:CA · City:San Diego · Description: · Known for being a great place to work and build a career, KPMG provides audit, tax and advisory services for org ...

  • Michael Baker International

    Senior Counsel

    Found in: Lensa US Remote C2 - 4 days ago


    Michael Baker International United States Remote job

    Under general supervision of the Chief Legal Officer, Deputy General Counsel (if applicable) and Assistant General Counsel, responsible for drafting, reviewing, and negotiating contracts and other legal agreements, interpreting federal and state regu Architectural, Senior, Legal, ...

  • move2usajobs LLC

    Training for IT non IT professionals in the USA

    Found in: beBee S2 US - 4 weeks ago


    move2usajobs LLC Los-Angeles, United States

    A governmental J-1 Partner with 20 years of experience and 500k+ people placed in USA training and internships is looking for candidates with different backgrounds who intend to spend one year in the USA for paid training Requirements A document proving a student39s status or a b ...