RISK MANAGEMENT OF SHIPBUILDING CONTRACTS
By D.G. Capaitzis, Member 1 November, 2004
This paper looks into the drafting of Shipbuilding Contracts and the management of risks therein.
It is based on experiences mainly with cargo ships and tankers and covers the subject from the Buyer / Owner / Operator angle.
The choices and decisions on ordering a new ship are essentially entrepreneurial and culminate in the Letter of Intent based on financial and business considerations.
The Contract follows, and covers elements in both the above, that precede it, and others that follow and which have to do with the size, type and quality of the ship to be ordered, her construction and eventually her operation.
Signing the Contract between the Builder and Buyer is a major station in a shipbuilding venture and while this paper mainly covers the time of its negotiation, it relates by necessity to elements before and after its finalisation and signature.