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SHIPBUILDING CONTRACT, 조선계약, 배 만드는 계약, 영문계약서 본문
SHIPBUILDING CONTRACT
[Type of the Vessel]
(Oil Tanker In this Contract)
BETWEEN
[Name of the Buyer]
As Buyer
AND
[Name of the Builder]
As Builder
Dated [•], 20[•]
I N D E X
PAGE
PREAMBLE .........……..........................................................................… 1
ARTICLE I - DESCRIPTION AND CLASS
1. Description ............................................................................….. 1
2. Dimensions and Characteristics ............................................….. 1
3. Classification, Rules and Regulations ..................................…… 2
4. Subcontracting .............................................................……....… 2
5. Registration ............................................................................…. 2
6. Principal Design and Construction Schedule…………………… 2
ARTICLE II - CONTRACT PRICE AND TERMS OF PAYMENT
1. Contract Price .......................................................................…. 3
2. Adjustment of Contract Price ................................................…. 3
3. Currency .................................................................................… 3
4. Terms of Payment .................................................................…. 3
5. Method of Payment .................................................................… 4
6. Notice of Payment before Delivery ........................................... 4
7. Expenses .................................................................................… 4
8. Prepayment .............................................................................… 4
9. Performance Guarantee ……………………………………….. 5
ARTICLE III - ADJUSTMENT OF CONTRACT PRICE
1. Delivery ................................................................................... 6
2. Speed ....................................................................................... 6
3. Fuel Consumption .................................................................... 7
4. Deadweight .............................................................................. 7
5. Cargo Tank Capacity including Slop tanks................................ 8
6. Effect of Rescission .................................................................. 8
7. Adjustment of the Basic Dimensions and/or Principal Particulars
pursuant to ARTICLE V ........................…………………….. 8
8. Cumulative Effect of Liquidated Damages ................................ 8
ARTICLE IV - APPROVAL OF PLANS AND DRAWINGS AND INSPECTIONS
DURING CONSTRUCTION
1. Approval of Plans and Drawings ............................................... 9
2. Appointment of BUYER's Supervisor ....................................... 9
3. Inspection by the Supervisors.................................................... 9
4. Facilities ................................................................................... 10
5. Liability of BUILDER .............................................................. 10
6. Responsibility of BUYER ......................................................... 10
ARTICLE V - MODIFICATIONS, CHANGES AND EXTRAS
1. How Effected ........................................................................... 11
2. Change in Rules of Classification Society, Regulations etc. ....... 11
3. Substitution of Materials ........................................................... 12
ARTICLE VI - TRIALS AND ACCEPTANCE
1. Notice ...................................................................................... 13
2. Weather Condition ................................................................... 13
3. How Conducted ....................................................................... 13
4. Acceptance or Rejection .......................................................... 13
5. Effect of Acceptance ............................................................... 14
6. Disposition of Surplus Consumable Stores ............................... 14
ARTICLE VII - DELIVERY
1. Time and Place ........................................................................ 16
2. When and How Effected .......................................................... 16
3. Documents to be Delivered to BUYER .................................... 16
4. Tender of VESSEL .................................................................. 17
5. Title and Risk ........................................................................... 17
6. Removal of VESSEL ............................................................... 17
ARTICLE VIII - DELAYS AND EXTENSION OF TIME FOR DELIVERY
(FORCE MAJEURE)
1. Causes of Delay ...................................................................... 19
2. Notice of Delay ....................................................................... 19
3. Definition of Permissible Delay ................................................ 19
4. Right to Rescind for Excessive Delay ...................................... 20
ARTICLE IX - WARRANTY OF QUALITY
1. Guarantee .............................................................................. 21
2. Notice of Defects ................................................................... 21
3. Remedy of Defects ................................................................. 21
4. Extent of the BUILDER's Responsibility ................................ 22
5. Guarantee Engineer ................................................................ 22
6. Assignment of Supplier’s Guarantees....................................... 23
ARTICLE X - RESCISSION BY BUYER
1. Notice ................................................................................... 24
2. Refundment by BUILDER .................................................... 24
3. Discharge of Obligations ....................................................... 25
ARTICLE XI - BUYER'S DEFAULT
1. Definition of Default ............................................................. 26
2. Effect of Default on or before Delivery of VESSEL .............. 26
3. Disposal of VESSEL ............................................................ 27
ARTICLE XII - ARBITRATION
1. Decision by Classification Society ......................................… 28
2. Proceedings of Arbitration .................................................… 28
3. Notice of Award ................................................................… 28
4. Expenses ...........................................................................… 28
5. Entry in Court .................................................................….. 29
6. Alteration of Delivery Date ...............................................…. 29
ARTICLE XIII - SUCCESSOR AND ASSIGNS ..............................…. 30
ARTICLE XIV - TAXES AND DUTIES
1. Taxes and Duties Incurred in
2. Taxes and Duties Incurred outside
ARTICLE XV - PATENTS, TRADEMARKS, COPYRIGHTS, ETC.
1. Patents, Trademarks and Copyrights ................................…... 32
2. General Plans, Specifications and Working Drawings .......…... 32
3. Access to information…………………………………………. 32
ARTICLE XVI - BUYER'S SUPPLIES
1. Responsibility of BUYER ................................................…… 33
2. Responsibility of BUILDER ............................................…… 33
ARTICLE XVII - INSURANCE
1. Extent of Insurance Coverage .........................................…… 34
2. Application of the Recovered Amounts ...........................…… 34
3. Termination of BUILDER's Obligation to Insure .............…… 34
ARTICLE XVIII - NOTICE
1. Address ..........................................................................…… 36
2. Language .......................................................................…… 36
3. Effective Date of Notice .................................................…… 36
ARTICLE XIX - EFFECTIVE DATE OF CONTRACT .................…… 37
ARTICLE XX - BUILDER’S DEFAULT ....................................……. 37
ARTICLE XXI - INTERPRETATION
1. Laws Applicable .............................................................…… 38
2. Discrepancies .................................................................…… 38
3. Entire Agreement ...........................................................…… 38
4. Amendments and supplements ........................................…… 38
END OF CONTRACT
EXHIBIT "A" LETTER OF REFUNDMENT GUARANTEE .......…… 39
EXHIBIT "B" PERFORMANCE GUARANTEE ...........................…… 41
EXHIBIT "C" RELEASE LETTER ...............................................…… 42
SHIP BUILDING CONTRACT
THIS CONTRACT, made and entered into on this [•] day of [•], 20[•] by and between [•], a corporation incorporated and existing under the laws of [Name of the Country] having its registered office at [•] (hereinafter called the "BUYER"), on the one part and [•], a corporation incorporated and existing under the laws of [Name of the Country], having its registered office at [•](hereinafter called the ”BUILDER”), on the other part.
WITNESSETH:
In consideration of the mutual covenants herein contained, the BUILDER agrees to design, construct, launch, equip and complete one (1) single [Type of the Vessel] (hereinafter called the "VESSEL") at the BUILDER's shipyard located in [•] (hereinafter called the "Shipyard") and to deliver and sell the same to the BUYER, and the BUYER hereby agrees to purchase and accept delivery of the VESSEL from the BUILDER and to pay for the same upon the terms and conditions hereinafter set forth.
ARTICLE I - DESCRIPTION AND CLASS
1. Description :
The VESSEL shall have the BUILDER's Hull No.[•] and shall be designed, constructed, equipped, launched and completed in accordance with the provisions of this Contract, and the Specifications (hereinafter referred to as the Specifications) and the General Arrangement Plan attached to the Specifications (hereinafter referred to as the “Plan” and together with “Specifications" collectively referred to as the “Specifications and Plans”) and all signed by both parties, which Specifications and Plans are attached hereto and constitute an integral part of this Contract.
2. Dimensions and Characteristics :
Length, overall [•]
Length, between perpendiculars [•]
Breadth, moulded [•]
Depth, moulded [•]
Designed loaded draught, moulded [•]
Scantling draught, moulded [•]
Main Engine :,[•]
[•]
Deadweight, guaranteed : [•]
[•]
Speed, guaranteed : [•]
[•]
Fuel Consumption, guaranteed : [•]
[•]
Cargo Cubic (including slop tanks) : [•]
The details of the aforementioned particulars as well as the definitions and method of measurements and calculations are as provided for in the Specifications and Plans.
3. Classification, Rules and Regulations :
The VESSEL, including its machinery, equipment and outfittings shall be constructed in accordance with the rules and regulations (the edition and amendments thereto being in force as of the date of this Contract) of and under special survey of [•] (hereinafter called the "Classification Society") and shall be distinguished in the register by the symbol of [•], In Water Survey shall be applied without certificate but sea chest blanking devices shall not be provided.
Decisions of the Classification Society as to compliance or non-compliance with the classification shall be final and binding upon both parties hereto. Details of its notation shall be in accordance with the Specifications and Plans. The VESSEL shall also comply with the rules, regulations and requirements of the regulatory bodies as described in the Specifications and Plans in effect as of the signing date of this Contract.
All the fees and charges incidental to the classification and with respect to compliance with the above referred rules, regulations and requirements shall be for account of the BUILDER except otherwise agreed
4. Subcontracting :
The BUILDER may at its sole discretion and responsibility, subcontract any part of the construction work of the VESSEL within the vicinity of [•], provided however, that the construction and assembly of the VESSEL and its hull shall be carried out at the Shipyard save that an amount of up to [•] % of the VESSEL’s hull construction (which hull construction may include the for and aft parts) shall be assembled in the BUILDER’s plant in [•] in accordance with the BUILDER’s normal practice and provided further that the BUILDER shall be totally responsible to the BUYER for any construction work carried out by such subcontractors (and the BUILDER’s plant in [•]) and for the avoidance of doubt the provisions of ARTICLE IX hereof shall apply to any work carried out by such subcontractors (or the BUILDER’s plant in [•]). It has been mutually agreed that any additional costs and expenses incurred by the BUYER in relation to the inspection of the construction of the steel blocks at the BUILDER’s plant in [•] to be for BUILDER’s account.
5. Registration :
The VESSEL, at the time of its delivery and acceptance, shall be registered in the [•] registry by the BUYER at the BUYER's expenses.
6. Principal Design and Construction Schedule
Within [•] days after the date of execution of this Contract, the BUILDER shall send to the BUYER by air courier a principal Design and Construction Schedule prepared in the usual form and in accordance with usual practice of the BUILDER.
(End of Article)
ARTICLE II - CONTRACT PRICE AND TERMS OF PAYMENT
1. Contract Price :
The Contract Price of the VESSEL, which shall be payable in accordance with paragraphs 4 and 5 of this Article II (exclusive of the BUYER’s Supplies as provided in Paragraph 1 of Article XVI) hereof is [•] United States Dollars (US$ [•] ) (hereinafter called the "Contract Price"), which shall be subject to upward or downward adjustment, if any, as hereinafter set forth in this Contract.
2. Adjustment of Contract Price:
Increase or decrease of the Contract Price, if any, due to adjustments thereof made in accordance with the provisions of this Contract, shall be adjusted by way of addition to or subtraction from the Contract Price upon delivery of the VESSEL in the manner as hereinafter provided.
3. Currency :
Any and all payments which are due under this Contract shall be made in United States Dollars.
4. Terms of Payment :
The Contract Price shall be due and payable by the BUYER to the BUILDER in the instalments as follows:
(a) First instalment:
The First instalment amounting to [•] United States Dollars (US$ [•]) shall be due and payable within [•] New York banking days after the latest of (i) the date of signing of this Contract by all parties thereto or (ii) the date of receipt by the BUYER of the original of the letter of guarantee issued by KEXIM (the Export – Import Bank of Korea) in such form and terms and conditions as mentioned in Exhibit A in accordance with Article X, Paragraph 2.
(b) Second instalment:
The Second instalment amounting to [•] United States Dollars (US$ [•]) shall be due and payable on keel laying of the VESSEL, but not earlier than [•] months prior to the “Delivery Date” defined in the Article VII-1.
(c) Third instalment:
The Third Instalment amounting to [•] United States Dollars (US$ [•]) plus any increase or minus any decrease due to adjustment of the Contract, shall be due and payable upon delivery and acceptance of the VESSEL.
5. Method of Payment :
(a) Installments Payable before Delivery :
The BUYER shall, at its own cost and expense, remit each of the respective installments payable before delivery of the VESSEL as provided in Article II-4 by telegraphic transfer to the account (Account No. [•] ) of The Export-Import Bank of
(b) Installment Payable on Delivery :
At least [•]
Simultaneously with each of all such payments, the BUYER shall cause the Buyer's Bank to advise the BUILDER’s BANK and the BUILDER of the details of such payments by authenticated bank cable or telex.
Subject to the provisions of Article X, Paragraph 2, of this Contract, none of the first two instalments under this Contract shall be delayed, suspended or withheld by the BUYER on account of any dispute or disagreement between the parties hereto. The same shall apply to the Third instalment, unless such dispute or disagreement has been referred to arbitration in accordance with the terms of this Contract. Any claim which the BUYER may have against the BUILDER hereunder shall be settled and liquidated separately from any payment by the BUYER to the BUILDER hereunder.
6. Notice of Payment on or before Delivery :
With the exception of the first instalment, the BUILDER shall give the BUYER [•]
7. Expenses:
Expenses and bank charges for remitting payments and any taxes, duties, expenses and fees connected with such payment shall be for account of the BUYER as referred to in paragraph 2 of Article XIV of this Contract.
8. Prepayment :
Prepayment of any instalment due on or before delivery of the VESSEL shall be subject to mutual agreement between the parties hereto.
9. Performance Guarantee
Upon signing this Contract, the BUYER shall provide the BUILDER with a Corporate Guarantee issued by [•] in order to secure the due and faithful performance of this Contract by the BUYER, in the same form and substance as Exhibit “B” annexed hereto.
(End of Article)
ARTICLE III - ADJUSTMENT OF CONTRACT PRICE
The Contract Price shall be subject to adjustment, as hereinafter set forth, in the event of the following contingencies (it being understood by both parties that any reduction of the Contract Price is by way of liquidated damages and not by way of penalty) :
1. Delivery :
(a) No adjustment shall be made and the Contract Price shall remain unchanged for the first [•] days of delay in delivery of the VESSEL beyond the Delivery Date as defined in Article VII hereof (ending as of
(b) If the delivery of the VESSEL is delayed more than [•] days after the Delivery Date, the Contract Price shall be reduced by the sum of [•] United States Dollars (US$ [•]) for each full day thereafter for which delivery is delayed.
However, the total reduction in the Contract Price shall not be more than as would be the case for a delay of [•] days counting from the
(c) However, if the delay in delivery of the VESSEL should continue for a period of [•] days from the Delivery Date in Paragraph 1 of Article VII, then in such event, and after such period has expired, the BUYER may, at its option, rescind this Contract in accordance with the provisions of Article X hereof.
The BUILDER may, at any time after the expiration of the afore-mentioned [•] days of delay in delivery, if the BUYER has not served notice of rescission as provided in Article X hereof, demand in writing that the BUYER shall make an election, in which case the BUYER shall, within [•] days after such demand is received by the BUYER, notify the BUILDER of its intention either to rescind this Contract or to consent to the acceptance of the VESSEL at an agreed future date. If the BUYER shall not make an election within [•] days as provided hereinabove, the BUYER shall be deemed to have accepted such extension of the delivery date to the future delivery date indicated by the BUILDER and it being understood by the parties hereto that if the VESSEL is not delivered by such future date, the BUYER shall have the right to rescind this contract forthwith. For the avoidance of doubt, if the BUYER elects to accept the new Delivery Date, the BUYER shall remain entitled to the full adjustment of the Contract Price which the BUYER would have been entitled had it elected to rescind this Contract in accordance with the provisions of this sub-paragraph.
(d) If the delivery of the VESSEL is made in response to a request of the BUYER more than [•] days earlier than the Delivery Date, then, in such event, beginning with [•] day prior to the Delivery Date, the Contract Price of the VESSEL shall be increased by adding thereto [•] United States Dollars (US$ [•]) for each full day.
(e) For the purpose of this Article, the delivery of the VESSEL shall be deemed to be delayed when and if the VESSEL, after taking into account all postponements of the Delivery Date by reason of permissible delay as defined in Article VIII and/or any other reason under this Contract, is not delivered by the date upon which delivery is required under the terms of this Contract.
2. Speed :
(a) The Contract Price shall not be affected or changed by reason of the trial speed (as determined according to the Specifications) being more or less than the guaranteed speed, if in case of speed deficiency such variation is not more than [•] of a knot.
(b) However, if such variation is more than [•] knot, then, the Contract Price shall be decreased by [•] United States Dollars (US$ [•]) for each successive whole [•]of a knot in excess of a deficiency of [•] of a knot in the VESSEL’s guaranteed speed (smaller fractions being disregarded).
(c) If the deficiency in the speed upon final sea trial is more than [•]of a knot below the guaranteed speed of the VESSEL, then the BUYER may, at its option, reject the VESSEL and rescind this Contract in accordance with the provisions of Article X hereof, or may accept the VESSEL at a reduction in the Contract Price as above provided for [•] of a knot only, that is, at a total reduction of [•] United States Dollars (US$ [•]).
3. Fuel Consumption :
(a) The Contract Price shall not be affected or changed in case the actual fuel consumption, as determined by the shop trial as specified in the Specifications, is not more than [•] percent ( [•] %) in excess of the guaranteed fuel consumption specified in Paragraph 2 of Article I.
(b) If the actual fuel consumption exceeds by [•] percent ( [•] %) the guaranteed fuel consumption, the BUILDER shall immediately investigate and use its best endeavours to correct the deficiency in fuel consumption and as soon as practicable thereafter carry out further shop trials. However, if the BUILDER is unable to correct the fuel consumption deficiency following such further shop trials then, in the event that the actual fuel consumption at the shop trial is in excess of [•] percent ( [•] %) of the guaranteed fuel consumption, the Contract Price shall be reduced by the sum of [•] United States Dollars (US$ [•] ) for each full gram per metric BHP per hour in excess of the [•] percent ( [•] %) (but disregarding fractions of One (1) gram) of the guaranteed fuel consumption.
(c) If the fuel consumption is more than [•] percent ( [•] %) over the guaranteed fuel consumption as aforesaid, the BUYER may reject the main engine or require rectification thereof to the BUYER’s complete satisfaction. If the BUILDER is unable to fully comply with the BUYER’s request as aforesaid, then in such event the BUYER may reject the VESSEL and rescind the Contract in accordance with the provisions of Article X hereof or may accept the VESSEL with a reduction in the Contract Price for the excessive fuel consumption as provided in sub-paragraph (b) above.
4. Deadweight :
(a) In the event that the deadweight of the VESSEL as determined in accordance with the Specifications is less than or in excess of the guaranteed deadweight as specified in Paragraph 2 of Article I, the Contract Price shall be either reduced by the sum of [•] United States Dollars (US$ [•]) for each full metric ton of such deficiency being more than [•] metric tons, up to a maximum reduction of [•] United States Dollars (US$ [•]), or increased by the sum of [•] United states Dollars (US$ [•]) for each full metric ton of such excess being more than [•] metric tons, as the case may be (in both cases disregarding the fractions of One (1) metric ton).
(b) In the event of such deficiency in the deadweight of the VESSEL being [•] metric tons or more, then, the BUYER may, at its option, reject the VESSEL and rescind this Contract in accordance with the provisions of Article X hereof or accept the VESSEL at a reduction in the Contract Price as above provided for [•] metric tons only, that is, at a total reduction of [•] United States Dollars (US$ [•]).
5. Cargo Tank Capacity including Slop tanks:
The Contract Price of the VESSEL shall not be affected or changed if the cargo tank capacity including slop tanks of the VESSEL, as determined in accordance with the Specifications and Plans is less than the guaranteed cargo tank capacity including slop tanks of the VESSEL, as adjusted according to the provisions of ARTICLE V, provided that such deficiency is not more than [•] cubic meters below the guaranteed cargo tank capacity including slop tanks.
In the event, however, that the deficiency in cargo tank capacity including slop tanks is more than [•] cubic meters below the guaranteed cargo tank capacity including slop tanks, the Contract Price shall be reduced by [•] United States Dollars (US$ [•] ), as liquidated damages, for the deficiency of each full cubic meter below such [•] cubic meters.
If the deficiency in the cubic capacity exceeds [•] cubic meters below the said [•] cubic meters, the BUYER at its option may accept the VESSEL at a reduction in the Contract Price as above specified for deficiency of [•] cubic meters, below the allowable [•] cubic meters, that is a total reduction of [•] United States Dollars (US$ [•] ) or subject to the provisions of Article VI may reject the VESSEL and rescind this Contract, in which case the provisions of paragraph 6 of this Article II regarding BUYER’s cancellation of this Contract shall be applied.
6 Effect of Rescission :
It is expressly understood and agreed by the parties that in any case, if the BUYER rescinds this Contract under this Article III, the BUYER shall not be entitled to any liquidated damages or any other recourse unless by means of the provisions of Article X hereof.
Any cancellation of this Contract by the BUYER pursuant to this Article shall be effected by the BUYER by serving upon the BUILDER a written notice of cancellation. The BUILDER shall [•] days of receipt of such notice refund to the BUYER the full amount of all sums paid to the BUILDER on account of the VESSEL. Such refund together with interest as provided in Article X, shall forthwith discharge all obligations, duties and liabilities of each of the parties hereto to the other under this Contract.
7. Adjustment of the Basic Dimensions and/or Principal Particulars pursuant to ARTICLE V :
In the event that any of the basic dimensions or principal particulars guaranteed by the Builder under ARTICLE I hereof are modified pursuant to ARTICLE V hereof, the liquidated damages payable hereunder in relation to such guaranteed dimension and/or particular shall be calculated by mutual agreement and by reference to the adjusted guaranteed dimension or particular.
8. Cumulative Effect of Liquidated Damages :
The liquidated damages payable under this ARTICLE are cumulative and not exclusive.
(End of Article)
ARTICLE IV - APPROVAL OF PLANS AND DRAWINGS AND
INSPECTION DURING CONSTRUCTION
1. Approval of Plans and Drawings :
The BUILDER shall obtain the BUYER’s approval for the plans and drawings in accordance with the Specifications.
2. Appointment of BUYER's Supervisors :
The BUYER may send to and maintain at the Shipyard, at the BUYER's own cost and expense, up to [•] supervisors (herein called the “Supervisors”) who shall be duly authorized in writing by the BUYER to act on behalf of the BUYER in connection with the modifications of the Specifications and Plans, adjustments of the Contract Price and Delivery Date, approval of the plans and drawings, attendance to the tests and inspections relating to the VESSEL, its machinery, equipment and outfittings, and any other matters for which they are specifically authorized by the BUYER. The Supervisor may appoint assistant(s) to attend at the Shipyard for the purposes as aforesaid.
3. Inspection by the Supervisors :
The necessary inspections of the VESSEL, its machinery, equipment and outfittings shall be carried out by the Classification Society, other regulatory bodies and/or an inspection team of the BUILDER throughout the entire period of construction in order to ensure that the construction of the VESSEL is duly performed in accordance with this Contract and the Specifications and Plans. The Supervisors shall have the right to attend all tests and inspections performed at the BUILDER’s and/or any sub-contractor’s, manufacturer’s, supplier’s or vendor’s facility (including, for the avoidance of doubt, at the BUILDER’s plant at [•]). The BUILDER shall notify the BUYER reasonably in advance in writing of the time and place of such inspections and tests. Such inspections and tests shall be executed throughout the entire period of construction until acceptance of the VESSEL in order that the VESSEL is in compliance with this Contract and Specifications and Plans. All inspections and tests shall be performed at the BUILDER’s cost and expense. Detailed procedures of the inspection and the tests thereof shall be in accordance with the Specifications and Plans.
The BUILDER, its employees, agents and subcontractors shall give the BUYER, the Supervisors and their assistants, if any, their full co-operation and such information concerning the construction of the VESSEL and its delivery, as the BUYER and/or the Supervisors may require at all times until acceptance of the VESSEL by the BUYER, including free and ready access to (i) the VESSEL and the materials which will from time to time be processed or stored in connection with the construction of the VESSEL and to (ii) all yards, workshops, stores and offices of the BUILDER and premises of subcontractors of the BUILDER who are doing work or storing materials in connection with the construction of the VESSEL.
Any defects or omission notified in writing to the BUILDER by the Supervisors, the Classification Society or regulatory bodies’ representatives shall be rectified by the BUILDER, at the BUILDER’s expense, if necessary to ensure that the VESSEL, its machinery and equipment are properly constructed in accordance with this Contract and the Specifications and Plans. For the avoidance of doubt, the BUILDER shall be solely responsible for all aspects of design, construction and completion of the VESSEL in accordance with this Contract and the Specifications and Plans.
4. Facilities :
The BUILDER shall furnish the Supervisors and their assistant(s) with adequate office space which offices will, inter alia, be equipped with telephone, facsimile and such other reasonable facilities according to the BUILDER's practice (but adequate in the opinion of the Supervisors) at or in the immediate vicinity of the Shipyard as may be necessary to enable them to effectively carry out their duties. The BUYER shall pay for all such facilities other than office space at the BUILDER's normal rate of charge.
5. Liability of BUILDER :
The Supervisors and their assistant(s) shall at all times be deemed to be the employees of the BUYER and not of the BUILDER. The BUILDER shall be under no liability whatsoever to the BUYER, the Supervisors or their assistant(s) for personal injuries, including death, suffered during the time when he or they are on the VESSEL, or within the premises of either the BUILDER or its subcontractors, or are otherwise engaged in and about the construction of the VESSEL. However, where such personal injuries, including death, are caused by a gross negligence of the BUILDER, or of any of its employees or agents or subcontractors, the BUILDER shall be liable for and shall hold harmless and indemnify the BUYER, the Supervisors or their assistants in relation thereto. Nor shall the BUILDER be under any liability whatsoever to the BUYER, the Supervisors or their assistant(s) for damage to, or loss or destruction of property in
6. Responsibility of BUYER :
The BUYER shall undertake and assure that the Supervisors shall carry out their duties hereunder in accordance with the normal shipbuilding practice of the BUILDER and in such a way so as to avoid any unnecessary increase in building cost, delay in the construction of the VESSEL, and/or any disturbance in the construction schedule of the BUILDER.
The BUILDER has the right to request the BUYER to replace any of the Supervisors who are deemed unsuitable and unsatisfactory for the proper progress of the VESSEL's construction. The BUYER shall investigate the situation by sending its representative(s) to the Shipyard if necessary, and if the BUYER considers that such BUILDER's request is justified, the BUYER shall effect such replacement as soon as conveniently arrangeable.
(End of Article)
ARTICLE V - MODIFICATIONS, CHANGES AND EXTRAS
1. How Effected :
The BUYER may at any time after the date hereof request the BUILDER to make modifications and/or changes to the Specifications and Plans.
Any modifications and/or changes in the Specifications and Plans shall be made by written agreement of the parties hereto provided, however, that any modifications and/or changes requested by the BUYER or an accumulation of such modifications and/or changes will not adversely affect the BUILDER's planning or programme in relation to the BUILDER's other commitments and if the BUYER shall assent to adjustment of the Contract Price, time for delivery of the VESSEL and other terms and conditions of this Contract as hereinafter provided. The BUILDER hereby agrees to exert its best efforts to accommodate such reasonable request by the BUYER so that the said changes and/or modifications may be made at a reasonable cost and within the shortest period of time which is reasonably possible.
Any such agreement for modifications and/or changes shall include an agreement as to the increase or decrease, if any, in the Contract Price of the VESSEL together with an agreement as to any extension or reduction in the time of delivery, or any other alterations in this Contract or the Specifications and Plans occasioned by such modifications and/or changes. The aforementioned agreement to modify and/or change the Specifications and Plans may be effected by an exchange of letters signed by the authorized representatives of the parties hereto, or telex confirmed in writing, manifesting such agreement. Such letters and confirmed message exchanged by the parties hereto pursuant to the foregoing shall constitute an amendment of the Specifications and Plans, and such letters and message shall be incorporated into this Contract and made a part hereof.
The BUILDER may make minor changes to the Specifications and Plans, if found necessary for introduction of improved production methods, provided that the BUILDER shall first obtain the BUYER's approval which shall not be unreasonably withheld.
2. Changes in Rules of Classification Society, Regulations, etc.:
If, after the date of signing this Contract, any requirements as to classification, or as to the rules and regulations to which the construction of the VESSEL her engines, equipment and accessories is required to conform, are altered or changed by the Classification Society or regulatory bodies authorized to make such alterations or changes, either of the parties hereto upon receipt of information thereof, shall transmit such information in full to the other party in writing, thereupon within [•] days after receipt of the said notice from the other party, the BUYER shall instruct the BUILDER in writing if such alterations or changes shall be made in the VESSEL or not, in the BUYER's sole discretion.
The BUILDER shall, subject to the provision of foregoing Paragraph 1, promptly comply with such alterations or changes, if any, in the construction of the VESSEL her engines, equipment and accessories, provided that the BUYER shall first agree :
(a) To any increase or decrease in the Contract Price of the VESSEL that is reasonably
occasioned by the cost of such compliance:
(b) To any reasonable extension in the time of delivery of the VESSEL that is necessary due to such compliance:
(c) To any reasonable decrease or increase in the contractual deadweight of the VESSEL, if compliance results in reduced or increased deadweight, or any other reasonable alterations in the terms of this Contract or of the Specifications and Plans or both, if compliance makes such alterations of terms necessary.
Such agreement by the BUYER shall be effected in the same manner as provided in Paragraph 1 of this Article for modifications and/or changes of the Specifications.
3. Substitution of Materials :
In the event that any of the materials required by the Specifications and Plans or otherwise under this Contract for the construction of the VESSEL can not notwithstanding the BUILDER’s best efforts to procure the same be procured in time to effect delivery of the VESSEL, the BUILDER may, provided the BUYER in its free and absolute discretion so agrees in writing, supply other materials and equipment of the best equivalent standard and quality, capable of meeting the requirements of the Classification Society and of the rules, regulations, requirements and recommendations with which the construction of the VESSEL must comply. Any agreement as to such substitution of materials shall be effected in the manner as provided in Paragraph 1 of this Article, and shall, likewise, include decrease or increase in the Contract Price and any variation of other terms and conditions of this Contract affected by such substitution.
(End of Article)
ARTICLE VI - TRIALS AND ACCEPTANCE
1. Notice :
The sea trial shall start when the VESSEL is reasonably completed according to the Specifications and Plans.
The BUILDER shall give the BUYER at least [•] days estimated prior notice and [•] days confirming prior notice by telefax of the time and place of the trial run of the VESSEL, and the BUYER shall promptly acknowledge receipt of such notice. The BUYER shall have its representatives on board the VESSEL to witness such trial run. Failure of the BUYER’s representatives to attend at the trial run of the VESSEL shall be deemed to be a waiver by the BUYER of its right to have its representatives on board the VESSEL at the trial run, and the BUILDER may conduct the trial run with the presence of the representative(s) of the Classification Society without attendance of the BUYER’s representatives, and in such case the BUYER shall be obligated to accept the VESSEL on the basis of a certificate of the BUILDER also signed by the representative(s) of the Classification Society providing that the VESSEL, upon trial run, is found to conform to this Contract and the Specifications and Plans.
2. Weather Condition :
The trial run shall be carried out under the weather conditions which are deemed favourable enough in the reasonable judgement of the BUILDER. In the event of unfavourable weather on the date specified for the trial run, the same shall take place on the first available day thereafter that the weather conditions permit. It is agreed that, if during the trial run of the VESSEL, the weather should suddenly become so unfavourable that orderly conduct of the trial run can no longer be continued, the trial run shall be discontinued and postponed until the first favourable day next following, unless the BUYER shall assent in writing to acceptance of the VESSEL on the basis of the trial run already made before such discontinuance has occurred.
Any delay of trial run caused by such unfavourable weather conditions shall operate to postpone the Delivery Date by the period of the delay involved and such delay shall be deemed as permissible delay in the delivery of the VESSEL.
3. How Conducted :
(a) The VESSEL shall run the official trial trip in the manner as specified in the Specifications and Plans.
(b) All expenses in connection with the trial run are to be for account of the BUILDER and the BUILDER shall provide, at its own expense, the necessary materials and the necessary crew to comply with conditions of safe navigation.
4. Acceptance or Rejection :
(a) The BUILDER shall as soon as possible following the completion of the trials of the VESSEL deliver to the BUYER a detailed report setting out the results of the trials and an analysis of such results. The BUYER shall within [•] days after receipt of such report, notify the BUILDER in writing of its acceptance of the VESSEL or of the details in respect of which the VESSEL does not conform to the Specifications and Plans or this Contract.
(b) During any sea trials, if any breakdown occurs entailing interruption or irregular performance which can be repaired on board, the sea trials shall be continued after such repairs and shall be valid in all respects.
(c) If during or after the trial run, it becomes apparent that the VESSEL or any part of her machinery and/or equipment does not conform to the requirements of this Contract and/or the Specifications and Plans the BUILDER shall correct such non-conformity and perform such tests and/or trials as may be deemed necessary until the BUILDER is able to prove conformity of the same in accordance with the requirements of this Contract and/or the Specifications and Plans. The BUYER upon receipt from the BUILDER of notice of completion of such alterations or corrections shall attend such further trials or tests as necessary and within [•] days shall notify the BUILDER in writing or by facsimile confirmed in writing of whether or not the BUYER deems such non-conformity to have been corrected and proved to meet the requirements of this Contract and/or the Specifications and Plans.
(d) If the BUILDER is in agreement with the BUYER’s determination as to non-conformity, the BUILDER shall make such alterations or changes as may be necessary to correct such non-conformity and shall prove that it has fulfilled the terms of this Contract and satisfied the requirements of the Specifications and Plans by such tests or trials as may be necessary.
The BUYER shall within [•] days after attending such tests and/or trials, notify the BUILDER in writing or by facsimile confirmed in writing of its acceptance or rejection of the VESSEL.
(e) If the BUILDER does not agree with the BUYER as to non-conformity or any of the reasons for such non-conformity, the BUILDER shall so notify the BUYER stating its reasons. At any time thereafter either the BUILDER or the BUYER may submit the matter for resolution in accordance with Article XII hereof.
5. Effect of Acceptance :
Acceptance of the VESSEL as above provided shall be final and binding so far as conformity of the VESSEL to this Contract and the Specifications and Plans is concerned and shall preclude the BUYER from refusing formal delivery of the VESSEL as hereinafter provided, if the BUILDER complies with all other procedural requirements for delivery as provided in Article VII hereof. However, the BUYER's acceptance of the VESSEL shall not affect the BUYER's right under Article IX hereof.
6. Disposition of Surplus Consumable Stores :
Any fuel oil, fresh water or other consumable stores furnished and paid for by the BUILDER for trial runs remaining on board the VESSEL, at the time of acceptance of the VESSEL by the BUYER, shall be bought by the BUYER from the BUILDER at the BUILDER's purchase price for such supply in Korea and the payment by the BUYER thereof shall be made at the time of delivery of the VESSEL.
The BUILDER shall pay the BUYER at the time of delivery of the VESSEL an amount for the consumed quantity during trial run of any lubricating oil and greases which were furnished and paid for by the BUYER at the BUYER's purchase price thereof.
(End of Article)
ARTICLE VII - DELIVERY
1. Time and Place :
The VESSEL shall be delivered by the BUILDER to the BUYER at the Shipyard afloat and alongside on or before [•], except that, in the event of delays in the construction of the VESSEL or any performance required under this Contract due to causes which under the terms of this Contract permit postponement of the date for delivery, the aforementioned date for delivery of the VESSEL shall be postponed accordingly.
The aforesaid date, or such date which may be mutually agreed between the BUYER and the BUILDER or to which delivery of the VESSEL may be postponed pursuant to the terms of this Contract, is herein referred to as the “Delivery Date”, provided however, that if Delivery Date is not a banking day in Korea and New York, delivery will be postponed to the next following day which is a banking day in Korea and New York, unless the parties hereto agree in writing otherwise.
The BUILDER hereby agrees to give the VESSEL the same priority as every other vessel under construction as the Shipyard from the date of this Contract until delivery of the VESSEL.
If the period between launching and delivery and acceptance of the VESSEL exceeds [•] days and if it is requested by the BUYER in its sole discretion, the BUILDER shall carry out a full divers inspection of the VESSEL’s hull and all underwater parts. If following such inspection it is agreed by the BUYER and the BUILDER, (or failing such agreement, it is determined by the Classification Society) that any work has to be carried out to the VESSEL, including, cleaning (other than caused by slime), repainting and/or in general repairing underwater parts of the VESSEL’s hull, the cost of such diving inspection and the necessary work shall be borne solely by the BUILDER. If following such inspection it is agreed by the BUYER and the BUILDER, (or failing such agreement, it is determined by the Classification Society) that no work needs to be carried out to the VESSEL, the cost of such diving inspection shall be borne by the BUYER.
2. When and How Effected :
Provided that the BUILDER and the BUYER shall have fulfilled all of their obligations stipulated under this Contract, the delivery of the VESSEL shall be effected forthwith by the concurrent delivery by each of the parties hereto to the other of the PROTOCOL OF DELIVERY AND ACCEPTANCE, acknowledging delivery of the VESSEL by the BUILDER and acceptance thereof by the BUYER which PROTOCOL OF DELIVERY AND ACCEPTANCE shall be prepared in duplicate and signed by each of the parties hereto.
3. Documents to be delivered to BUYER :
Acceptance of the VESSEL shall take place when the BUILDER at its own cost and expense delivers to the BUYER the following duly authenticated documents (and if so required by the BUYER) duly notarized and/or legalized which shall accompany the aforementioned PROTOCOL OF DELIVERY AND ACCEPTANCE:
(a) PROTOCOL OF TRIALS of the VESSEL made pursuant to the Specifications and Plans.
(b) PROTOCOL OF INVENTORY of the equipment of the VESSEL, including spare parts tools and deck outfit and the like, as specified in the Specifications and Plans.
(c) PROTOCOL OF STORES OF CONSUMABLE NATURE referred to under Paragraph 6 of Article VI hereof.
(d) ALL CERTIFICATES including the BUILDER's CERTIFICATE required to be furnished upon delivery of the VESSEL pursuant to this Contract and the Specifications and Plans.
It is agreed that if, through no fault on the part of the BUILDER, the Classification certificates and/or other certificates are not available at the time of delivery of the VESSEL, provisional certificates shall be accepted by the BUYER, provided that the BUILDER shall furnish the BUYER with the formal certificates as promptly as possible after such formal certificates have been issued.
Application and certificate for statutory inspections for the registry of the VESSEL shall be arranged by the BUYER at its expense.
(e) DECLARATION OF WARRANTY of the BUILDER that the VESSEL is delivered to the BUYER free and clear of any liens, charges, claims, mortgages, or other encumbrances upon the VESSEL and the BUYER's title thereto, and in particular that the VESSEL is absolutely free of all burdens in the nature of imposts, taxes or charges imposed by any City and/or any Korean Governmental Authorities, as well as of all liabilities of the BUILDER to its subcontractors, employees and crew, and of the liabilities arising from the construction and/or the operation of the VESSEL in trial runs, or otherwise, prior to delivery and acceptance.
(f) DRAWING AND PLANS pertaining to the VESSEL as stipulated in the Specifications and Plans.
(g) COMMERCIAL INVOICE.
(h) Such other documents as the BUYER may request of the BUILDER to assist the BUYER in registering the VESSEL at its port of registry.
4. Tender of VESSEL :
If the BUYER fails to take delivery of the VESSEL after completion thereof according to this Contract and the Specifications and Plans without any justifiable reason, the BUILDER shall have the right to tender delivery of the VESSEL after compliance with all procedural requirements as above provided.
5. Title and Risk :
Title to and risk of loss of the VESSEL shall pass to the BUYER only upon the delivery and acceptance thereof having been completed as stated above; it being expressly understood that, until such delivery is effected, title to and risk of loss of the VESSEL and her equipment shall be in the BUILDER.
6. Removal of VESSEL :
The BUYER shall take possession of the VESSEL immediately upon delivery and acceptance thereof and shall remove the VESSEL from the premises of the Shipyard within [•] days after delivery and acceptance thereof is effected.
If the BUYER shall not remove the VESSEL from the premises of the Shipyard within the aforesaid [•] days, in such event, the BUYER shall pay to the BUILDER the reasonable mooring charges of the VESSEL.
Any tug assistance required by the VESSEL for departing and/or leaving from the Shipyard shall be at the BUILDER’s sole cost.
(End of Article)
ARTICLE VIII - DELAYS AND EXTENSION OF TIME FOR DELIVERY
(FORCE MAJEURE)
1. Causes of Delay (Force Majeure) :
If at any time after signing this Contract, either the construction or delivery of the VESSEL is delayed due to war, revolution, insurrection, mobilization, civil commotion, riots, strikes, sabotage, lock-outs, acts of God or the public enemy, plague or other epidemics, quarantines, shortage or prolonged failure of electric current provided from outside the Shipyard, freight embargoes, or delays or defects in the BUYER’s Supplies as stipulated in ARTICLE XVI, if any, or inability to obtain or delays in delivery of substitute materials, machinery or equipment, provided that at the time of ordering the same could reasonably be expected by the BUILDER to be delivered in time or defects in materials, machinery or equipment which defects could not have been detected by the BUILDER using reasonable care or earthquakes, tidal waves, typhoons, hurricanes, unusually severe weather conditions or destruction of the premises or works of the BUILDER or its subcontractors, or of the VESSEL, or any part thereof, by fire, landslides, flood, lightning, explosion or delays in the BUILDER’s other commitments existing at the time of signing this Contract resulting from any such causes as described in this ARTICLE which in turn delay the construction of the VESSEL, and which causes could not have been reasonably foreseen and eliminated by the BUILDER, or for any other causes which, under the terms of this Contract, permit the postponement of the Delivery Date, then the Delivery Date under this Contract shall, subject always to the provisions of paragraph 4 of this Article, be postponed by the actual number of days the construction or delivery of the VESSEL is delayed due to such causes, provided always, that no postponement shall be granted under this Article, if the event causing such a delay has resulted from any act or omission of the BUILDER.
2. Notice of Delay :
Within [•] days after the date of occurrence of any cause of delay, on account of which the BUILDER claims that it is entitled under this Contract to a postponement of the Delivery Date, the BUILDER shall notify the BUYER in writing or by telefax confirmed in writing of the date when such cause of delay occurred the reasons thereof, the action being taken or being contemplated to minimize the delay, the estimated duration thereof and any evidence available for justifying the delay claimed. Likewise, [•] days after the date of ending of such cause of delay, the BUILDER shall notify the BUYER in writing or by telefax confirmed in writing of the date when such cause of delay ended.
The BUILDER shall also notify the BUYER of the period, by which the Delivery Date is postponed by reason of such cause of delay, with all reasonable despatch after it has been determined. If the BUILDER does not give the timely advice as above, the BUILDER shall lose the right to claim such delays as permissible delay.
Failure of the BUYER to acknowledge to the BUILDER's claim for postponement of the Delivery Date within [•] days after receipt by the BUYER of such notice of claim shall be deemed to be a waiver by the BUYER of its right to object to such postponement of the Delivery Date.
3. Definition of Permissible Delay :
Delays on account of such causes as specified in Paragraph 1 of this Article and any other delay of a nature which under the terms of this Contract permits postponement of the Delivery Date shall be understood to be permissible delays and are to be distinguished from unauthorized delays on account of which the Contract Price is subject to adjustment as provided for in Article III hereof.
4. Right to Rescind for Excessive Delay :
If the total accumulated time of all permissible and non-permissible delays, excluding delays (i) awarded by arbitration under Article XII hereof or (ii) resulting from any request of the BUYER or caused by the BUYER’s default under Article XI hereof or the BUYER’s failure to provide the BUYER’s supplies in accordance with Article XVI or (iii) any delay due to unfavorable weather conditions during sea trials pursuant to Article VI paragraph 2, amounts to [•] days or more, then, in such event, the BUYER may rescind this Contract in accordance with Article X hereof.
If the BUYER has not served the notice of cancellation as provided in Article X of this Contract, the BUILDER may at any time after expiration of the accumulated time of the delay in delivery demand in writing that the BUYER shall make an election, in which case the BUYER shall, within [•] days after such demand is received by the BUYER, either notify the BUILDER of its intention to rescind this Contract, or consent to a postponement of the Delivery Date to an agreed specific future date; it being understood and agreed by the parties hereto that, if the BUYER elects to consent to the delivery of the VESSEL at such future date (or other future date as the parties may agree) such future date shall become the contractual delivery date and (a) notwithstanding the BUYER’s agreement to postpone the Delivery Date, the BUYER shall be entitled to the full adjustment of the Contract Price which the BUYER would have been entitled in accordance with Article III, Paragraph 1 hereof had it instead elected to rescind this Contract in accordance with the provisions of this Article and (b), if the VESSEL is not delivered by such revised contractual delivery date, the BUYER shall have the right to forthwith rescind this Contract.
(End of Article)
ARTICLE IX - WARRANTY OF QUALITY
1. Guarantee :
The BUILDER, for the period of [•] months after delivery and acceptance of the VESSEL (hereinafter called "Guarantee Period"), guarantees the VESSEL her paints and coating and her engine, including all parts and equipment manufactured, furnished or installed under this Contract, (but excluding any item which is supplied or designated by the BUYER or by any other bodies on behalf of the BUYER, except, as regards defects in materials, workmanship or design caused thereto in connection with the installation thereof), against all defects discovered within the Guarantee Period whether or not attributable to materials, workmanship, construction, design or negligent or other improper acts or omissions on the part of the BUILDER or its subcontractors (hereinafter called the "Defect" or "Defects") and are not a result of accident, ordinary wear and tear, misuse, mismanagement, negligent or other improper acts or omissions or neglect on the part of the BUYER, its employees or agents.
The BUILDER guarantees repairs or replacements to the VESSEL made under this guarantee for a further period of [•] months from the date of such repairs or replacements (the “Extended Guarantee Period”) provided that the maximum period of guarantee shall not exceed [•] months in total from the date of delivery and acceptance of the VESSEL by the BUYER.
2. Notice of Defects :
The BUYER shall notify the BUILDER in writing, or by telefax of any defect for which claim is made under this guarantee, as promptly as possible after discovery thereof. The BUYER's notice shall describe in detail the nature, cause and extent of the Defects.
The BUILDER shall have no obligation for any Defect discovered prior to the expiry date of the Guarantee Period or, in relation to replacements or repairs covered by the Extended Guarantee Period, of the Extended Guarantee Period, unless notice of such Defect is received by the BUILDER not later than [•] days after such expiry date.
3. Remedy of Defects :
(a) The BUILDER shall remedy, at its expense, any Defect against which the VESSEL is guaranteed under this Article, by making all necessary repairs or replacements at the Shipyard.
(b) However, if it is for any reason impracticable to bring the VESSEL to the Shipyard, the BUYER may cause the necessary repairs or replacements to be made elsewhere which is deemed suitable for the purpose, provided that in such event, the BUILDER may at its own expense forward or supply replacement parts or materials to the VESSEL, unless forwarding or supplying thereof to the VESSEL would impair or delay the operation of working schedule of the VESSEL. In the event that the BUYER proposes to cause the necessary repairs or replacements for the VESSEL to be made at a shipyard or works other than the Shipyard, the BUYER shall first, but in all events as soon as possible, give the BUILDER a notice in writing or by telefax confirmed in writing of the time and place when and where such repairs will be made, and if the VESSEL is not thereby delayed, or her operation or working schedule is not thereby impaired, the BUILDER shall have the right to verify by its own representative(s) the nature, cause and extent of the Defects complained of. Such inspection shall be at the Builder’s expense. The BUILDER shall, in such case, promptly advise the BUYER by telefax, after such examination has been completed, of its acceptance or rejection of the Defects as ones that are covered by the guarantee herein provided. If the BUILDER does not wish to, or because of the VESSEL’s operation or working schedule, is not possible to, verify by its own representative(s) the nature, cause and/or extent of the notified Defect, the BUILDER shall be deemed to have accepted such Defects as been covered by, and justifying remedy under, the provisions of this Article. Upon the BUILDER's acceptance of the Defects as justifying remedy under this Article, or upon an arbitration award so determining, the BUILDER shall pay to the BUYER for such repairs or replacements a sum equal to the actual direct cost of the repairs or replacements, as such costs shall be evidenced by the final invoices of the relevant shipyard/shiprepairer or supplier. The BUYER shall at all times, prior to and during such repairs discuss with the BUILDER the said repairs and keep the BUILDER fully updated upon their progress. The Guarantee liabilities agreed between the parties hereto in accordance with the provisions of this Article, shall be reimbursed by the BUILDER to the BUYER during the Guarantee Period or, for items covered by the Extended Guarantee Period, the Extended Guarantee Period, within [•] days after the same have been paid by the BUYER. Any liabilities outstanding at the expiry of the Guarantee Period or, as the case may be, the Extended Guarantee Period, shall be reimbursed to the BUYER by the BUILDER within [•] days after the expiry of the Guarantee Period or, as the case may be, the Extended Guarantee Period.
(c) In any case, the VESSEL shall be taken, at the BUYER's cost and responsibility, to the place elected, ready in all respects for such repairs or replacement.
(d) Any dispute under this Article shall be referred to arbitration in accordance with the provisions of Article XII hereof.
4. Extent of BUILDER's Responsibility :
(a) The BUILDER shall have no responsibility or liability for any other defect whatsoever in the VESSEL than the Defects specified in Paragraph 1 of this Article, unless such defect was caused or occasioned by the gross negligence of the BUILDER, its subcontractors or their respective employees. Neither shall the BUILDER in any circumstance be responsible or liable for any consequential or special loss, damage or expense including but not limited to loss of time, loss of profit of earning or demurrage directly or indirectly occasioned to the BUYER by reason of the Defects specified in Paragraph 1 of this Article or due to repairs or other works done to the VESSEL to remedy such Defects.
(b) The BUILDER shall not be responsible for any defect in any part of the VESSEL which may, subsequently to delivery of the VESSEL, have been replaced or repaired in any way by any other contractor, or for any Defect which has been caused or aggravated by omission or improper use and maintenance of the VESSEL on the part of the BUYER, its servants or agents or by ordinary wear and tear or by any other factor beyond control of the BUILDER.
(c) The guarantee contained as hereinabove in this Article replaces and excludes any other liability, guarantee, warranty and/or condition imposed or implied by the law, customary, statutory or otherwise, by reason of the construction and sale of the VESSEL by the BUILDER for and to the BUYER.
5. Guarantee Engineer :
Upon request of the BUYER The BUILDER shall have the right to appoint a Guarantee Engineer (who must speak English) to serve on the VESSEL as its representative for a period of [•] months from the date the VESSEL is delivered. However, if the BUYER and the BUILDER shall deem it necessary to keep the Guarantee Engineer on the VESSEL for a longer period, then he shall remain on board the VESSEL after the said [•] months, but not longer than [•] months from the delivery of the VESSEL.
The BUYER, and its employees, shall give such Guarantee Engineer full cooperation in carrying out his duties as the representative of the BUILDER on board the VESSEL.
The BUYER shall accord the Guarantee Engineer treatment comparable to the VESSEL's Chief Engineer, and shall provide board and lodging at no cost to the BUILDER and/or the Guarantee Engineer.
While the Guarantee Engineer is on board the VESSEL, the BUYER shall pay to the BUILDER the sum of US$ [•] per month as compensation and also shall pay the expenses of his repatriation to Seoul, Korea by air upon termination of his service, the expenses of his communication with the BUILDER incurred in performing his duties and expenses, if any, of his medical and hospital care in the VESSEL's hospital.
Pertaining to the detailed particulars of this Paragraph, an agreement will be made to this effect between the parties hereto upon delivery of the VESSEL.
6. Assignment of Supplier’s Guarantees
The BUYER and the BUILDER shall cooperate to obtain the longest possible guarantee from the BUILDER’s suppliers. The BUILDER agrees that upon the expiry of the Guarantee Period or, as the case may be, of the Extended Guarantee Period it shall assign (to the extent to which it may validly do so) to the BUYER, all rights, title and interest that the BUILDER may have in and to all guarantees or warranties given by the supplier of any of the appurtenances and materials used in the construction and/or operation of the VESSEL. The BUILDER agrees to render to the BUYER all reasonable assistance in making any claim or taking any action against any such Supplier, which claim or action shall be made and/or taken at the BUYER’s sole expense. The BUYER shall meet all reasonable expenses incurred by the BUILDER in rendering any assistance requested by the BUYER pursuant to this paragraph 6.
(End of Article)
ARTICLE X - RESCISSION BY BUYER
1. Notice :
The payments made by the BUYER prior to delivery of the VESSEL shall be in the nature of advances to the BUILDER, and in the event that the VESSEL is rejected by the BUYER or this Contract is frustrated or lawfully canceled, terminated or rescinded by the BUYER whether pursuant to any of the terms of this Contract specifically permitting the BUYER to do so or otherwise specifically permitting the BUYER to do so, then the BUYER shall notify the BUILDER in writing or by telefax confirmed in writing, and such rejection, frustration, cancellation, termination or rescission shall be effective as of the date when notice thereof is received by the BUILDER.
2. Refundment by BUILDER :
In case the BUILDER receives the notice stipulated in Paragraph 1 of this Article, the BUILDER shall promptly refund to the BUYER the full amount of all sums paid by the BUYER to the BUILDER on account of the VESSEL together with the interest thereon, unless the BUILDER proceeds to the arbitration under the provisions of Article XII hereof.
In such event, the BUILDER shall within [•] days from receipt of such notice, pay the BUYER interest at the rate of [•] percent ( [•] %) per annum on the amount required herein to be refunded to the BUYER, computed from the following dates on which such sums were paid by the BUYER to the BUILDER to the date of remittance by transfer of such refund to the BUYER by the BUILDER, provided, however, that if the said rescission by the BUYER is made under the provisions of Paragraph 4 of Article VIII hereof, then in such event the BUILDER shall not be required to pay any interest.
As security for refund of instalments prior to delivery of the VESSEL, the BUILDER shall furnish the BUYER before receipt of by the BUILDER of the First instalment with a letter of guarantee covering the aggregate amount of the First and Second instalments and issued by KEXIM (the Export – Import Bank of Korea) (the “Refund Bank”) in favour of the BUYER. Such letter of guarantee shall have substantially the same form and substance as Exhibit "A" annexed hereto.
The BUILDER shall procure that the letter of guarantee to be delivered to the BUYER under this Article shall remain in full force and effect throughout the duration of this Contract and until the VESSEL is delivered to and accepted by the BUYER. If for whatsoever reason, other than the BUYER’s default under Article XI hereof, such letter of guarantee either ceases to be in full force and effect, the BUILDER shall have the obligation to deliver to the BUYER forthwith upon the same day as the letter of guarantee ceased to be in full force and effect the original of a substitute letter of guarantee issued by a bank or an insurance company acceptable to the BUYER in a form and substance acceptable to the BUYER. In the event that the BUILDER fails to deliver to the BUYER such substitute letter of guarantee as aforesaid, the BUYER shall be entitled to rescind the Contract in accordance with the provisions of this Article or to refrain from paying any outstanding instalments due and payable under Article II of this Contract until the original of such substitute letter of guarantee has been delivered by the BUILDER to the BUYER.
All expenses for issuing and maintaining the letter of guarantee described in this paragraph shall be borne by the BUILDER.
3 Discharge of Obligations :
Upon such refund by the BUILDER to the BUYER, all obligations, duties and liabilities of each of the parties hereto to the other under this Contract shall be forthwith completely discharged.
(End of Article)
ARTICLE XI - BUYER'S DEFAULT
1. Definition of Default :
The BUYER shall be deemed to be in default of its performance of obligations under this Contract in the following cases :
(a) If any instalment other than the final instalment is not paid by the BUYER to the
BUILDER within [•]
(b) If the final instalment is not paid by the BUYER to the BUILDER concurrently with the
delivery and acceptance of the VESSEL as provided in Article II Article VII hereof; or
(c) If the BUYER, when the VESSEL is duly tendered for delivery by the BUILDER in accordance with the provisions of this Contract, fails to accept the VESSEL within [•] days from the tendered date without any specific and valid ground thereof under this Contract; or
(d) Upon the filing of a petition or the making of an order or the passing of an effective resolution for the winding-up of the BUYER (other than for the purpose of a reconstruction or amalgamation which has been previously approved in writing by the BUILDER) or the appointment of a receiver of the undertaking or property of the BUYER or the insolvency of or a suspension of payment by the BUYER or the making by the BUYER of any special arrangement or composition with creditors of the BUYER or the placement of the BUYER under court or other administration or the placement of the BUYER under court protection or the imposition by any relevant State or Government of a moratorium or protection in relation to the debts or other obligations of the BUYER or, finally, the BUYER becomes subject to the operation of any law relating to insolvency, bankruptcy, liquidation or imposed reorganization and the BUYER fails to remedy such breach within [•] days of receipt by the BUYER of written notice from the BUILDER.
2. Effect of Default on or before Delivery of VESSEL :
(a) Should the BUYER make default in payment of any instalment of the Contract Price on or before delivery of the VESSEL, the BUYER shall pay the instalment(s) in default plus accrued interest thereon at the rate of [•] percent ( [•] %) per annum computed from the due date of such instalment to the date when the BUILDER receives the payment, and, for the purpose of Paragraph 1 of Article VII hereof the Delivery Date of the VESSEL shall be automatically extended by the period of continuance of such default by the BUYER. In any event of default by the BUYER, the BUYER shall also pay all charges and expenses incurred by the BUILDER in consequence of such default.
(b) If any default by the BUYER continues for a period of [•] days (or in the case of paragraph 1 (d) above [•] days), the BUILDER may, at its option, rescind this Contract by giving notice of such effect to the BUYER by telefax confirmed in writing.
Upon receipt by the BUYER of such notice of rescission, this Contract shall be forthwith rescinded and terminated. In the event of such rescission of this Contract, the BUILDER shall be entitled to retain any instalment or instalments already paid by the BUYER to the BUILDER on account of this Contract and the BUYER's Supplies, if any.
3. Disposal of VESSEL :
(a) In the event that this Contract is rescinded by the BUILDER under the provisions of Paragraph 2 (b) of this Article, the BUILDER may, at its sole discretion, either complete the VESSEL and sell the same, or sell the VESSEL in its incomplete state, free of any right or claim of the BUYER. Such sale of the VESSEL by the BUILDER shall be either by public auction or private contract at the BUILDER's sole discretion and on such terms and conditions as the BUILDER shall deem fit, but at the best price reasonably obtainable in the prevailing market conditions.
(b) In the event of such sale of the VESSEL, the amount of the sale received by the BUILDER shall be applied firstly to all expenses attending such sale or otherwise incurred by the BUILDER as a result of the BUYER's default, secondly to the payment of all costs and expenses of construction of the VESSEL incurred by the BUILDER less BUYER's Supplies and the instalments already paid by the BUYER and finally to the repayment to the BUYER with interest of [•] % per annum of any remaining balance.
(c) If the proceeds of sale are insufficient to pay such total costs as aforesaid, the BUYER shall promptly pay the deficiency to the BUILDER upon request.
(End of Article)
ARTICLE XII - ARBITRATION
1. Decision by the Classification Society :
If any dispute arises between the parties hereto in regard to the design and/or construction of the VESSEL, its machinery and equipment, and/or in respect of the materials and/or workmanship thereof and/or thereon, and/or in respect of interpretations of this Contract or the Specifications and Plans, the parties may by mutual agreement refer the dispute to the Classification Society or to such other expert as may be mutually agreed between the parties hereto, and whose decision shall be final, conclusive and binding upon the parties hereto.
2. Proceedings of Arbitration :
In the event that the parties hereto do not agree to settle a dispute according to Paragraph 1 of this Article and/or in the event of any other dispute of any kind whatsoever between the parties and relating to this Contract or its rescission or any stipulation herein, such dispute shall be submitted to arbitration in London. Each party shall appoint an arbitrator and in the event that they cannot agree, the two arbitrators so appointed shall appoint an Umpire.
If the two arbitrators are unable to agree upon an Umpire within [•] days after appointment of the second arbitrator, either of the said two arbitrators may apply to the President for the time being of the London Maritime Arbitrators Association to appoint the third arbitrator, and the three arbitrators shall constitute the Arbitration Board.
Such arbitration shall be in accordance with and subject to the provisions of the English Arbitration Act 1996 or any statutory modification or re-enactment thereof for the time being in force.
Either party may demand arbitration of any such dispute by giving notice to the other party. Any demand for arbitration by either of the parties hereto shall state the name of the arbitrator appointed by such party and shall also state specifically the question or questions as to which such party is demanding arbitration.
Within [•] days after receipt of notice of such demand for arbitration, the other party shall in turn appoint a second arbitrator and give notice in writing of such appointment to the party demanding arbitration. If a party fails to appoint an arbitrator as aforementioned within [•] days following receipt of notice of demand for arbitration by the other party, the party failing to appoint an arbitrator shall be deemed to have accepted and appointed, as its own arbitrator, the arbitrator appointed by the party demanding arbitration and the arbitration shall proceed before this sole arbitrator who alone in such event shall constitute the Arbitration Board.
The award of the arbitrators and/or Umpire shall be final and binding on both parties.
3. Notice of Award :
The award shall immediately be given to the BUYER and the BUILDER by telefax or telex.
4. Expenses :
The Arbitration Board shall determine which party shall bear the expenses of the arbitration or the portion of such expenses which each party shall bear.
5. Entry in Court :
In case of failure by either party to respect the award of the arbitration, the judgment may be entered in any proper court having jurisdiction thereof.
6. Alteration of Delivery Date :
In the event of reference to arbitration of any dispute arising out of matters occurring prior to delivery of the VESSEL, the award may include any postponement of the Delivery Date which the Arbitration Board may deem appropriate.
(End of Article)
ARTICLE XIII - SUCCESSOR AND ASSIGNS
Neither of the parties hereto shall assign or transfer this Contract to any other individual or company unless prior consent of the other party is given in writing (such consent shall not be unreasonably withheld or delayed by either party) unless for company(ies) which are part of [•]
The BUILDER further agrees that the BUYER may assign this Contract and/or any Refund Guarantee provided pursuant to ARTICLE X hereof to any financing bank advised by the BUYER to the BUILDER without the prior written consent of the BUILDER provided that written notice of such assignment shall subsequently be given by the BUYER to the BUILDER.
The BUYER shall have the right on or after delivery and acceptance of the VESSEL to assign its rights under Article IX to any purchaser or bareboat charterer without the prior consent of the BUILDER and following such assignment the BUYER shall have no further rights under this Article XIII. Notice of any such assignment shall be given promptly by the BUYER to the BUILDER.
In the event of any assignment pursuant to the terms of this Contract, the assignee/transferee shall succeed to all of the rights and obligations of the assignor/transferor under this Contract and the assignor/transferor shall remain responsible for the fulfillment of this Contract.
The BUILDER shall be entitled to request a Performance Guarantee from a company acceptable to it, having the same form and contents as Exhibit "C" annexed hereto.
It is understood that any expenses or charges incurred due to the assignment or transfer of this Contract, shall be for account of the party hereto requested such assignment or transfer.
(End of Article)
ARTICLE XIV - TAXES AND DUTIES
1. Taxes and Duties Incurred in
The BUILDER shall bear and pay all taxes, duties, stamps and fees incurred in
2. Taxes and Duties Incurred outside
The BUYER shall bear and pay all taxes, duties, stamps and fees incurred outside
(End of Article)
ARTICLE XV - PATENTS, TRADEMARKS, COPYRIGHTS, ETC.
1. Patents, Trademarks and Copyrights :
Machinery and equipment of the VESSEL may bear the patent number trademarks or trade names of the manufacturers. The BUILDER shall defend and hold harmless the BUYER from patent liability or claims of patent infringement of any nature or kind, including costs and expenses for, or on account of any patented or patentable invention made or used in the performance of this Contract and also including costs and expenses of litigation, if any.
Nothing contained herein shall be construed as transferring any patent or trademark rights or copyrights in equipment covered by this Contract, and all such rights are hereby expressly reserved to the true and lawful owners thereof.
The BUILDER's covenant and undertaking hereunder does not extend to the BUYER's Supplies.
2. General Plans, Specifications and Working Drawings :
The BUILDER retains all rights with respect to the Specifications, and plans and working drawings, technical descriptions, calculations, test results and other data, information and documents concerning the design and construction of the VESSEL and the BUYER undertakes therefore not to disclose the same or divulge any information contained therein to any third parties, without the prior written consent of the BUILDER (such consent not to be unreasonably withheld or delayed), except where it is necessary for usual operation, repair and maintenance of the VESSEL.
3. Access to information
The BUYER shall have the right of access through the BUILDER to any information pertaining to any materials or design used for or in the construction of the VESSEL which the BUYER may reasonably require for plan or equipment approvals, modifications, normal operation, repair or maintenance of the VESSEL.
(End of Article)
ARTICLE XVI - BUYER'S SUPPLIES
1. Responsibility of BUYER :
(a) The BUYER shall, at its own risk, cost and expense, supply and deliver to the BUILDER all of the items to be furnished by the BUYER as specified in the Specifications (herein called the BUYER's Supplies) at warehouse or other storage of the Shipyard in the proper condition ready for installation in or on the VESSEL, in accordance with the time schedule designated and advised by the BUILDER to the BUYER, provided however, that the BUILDER shall have furnished the BUYER with a time schedule referred to above at least [•] months prior to the installation of the relevant item from the BUYER’s Supplies.
(b) In order to facilitate installation by the BUILDER of the BUYER's Supplies in or on the VESSEL, the BUYER shall furnish the BUILDER with necessary specifications, plans, drawings, instruction books, manuals, test reports and certificates required by the rules and regulations of the Specifications. If so requested by the BUILDER, the BUYER shall, without any charge to the BUILDER, cause the representatives of the manufacturers of the BUYER's Supplies to assist the BUILDER in installation thereof in or on the VESSEL and/or to carry out installation thereof by themselves or to make necessary adjustments at the Shipyard.
(c) Any and all of the BUYER's Supplies shall be subject to the BUILDER's reasonable right of rejection, as and if they are found to be unsuitable or in improper condition for installation.
(d) Should the BUYER fail to deliver any of the BUYER's Supplies within the time designated, the Delivery Date shall be automatically extended for a period of time equal to the actual time the delivery of the VESSEL was delayed.
(e) If delay in delivery of any of the BUYER's Supplies exceeds [•] days, then, the BUILDER shall be entitled to proceed with construction of the VESSEL without installation thereof in or on the VESSEL as hereinabove provided, and the BUYER shall accept and take delivery of the VESSEL so constructed, unless such delay is caused by any of the causes described in ARTICLE VIII of this Contract in which case the provisions of Paragraph 1(d) of this Article shall not apply.
2. Responsibility of BUILDER :
The BUILDER shall be responsible for storing safekeeping, insuring and handling with reasonable skill and care all of the BUYER's Supplies after delivery thereof at the Shipyard, and shall, at its own cost and expense, install them in or on the VESSEL, unless otherwise provided herein or agreed by the parties hereto, provided, always, that the BUILDER shall not be responsible for quality, efficiency and/or performance of any of the BUYER's Supplies.
(End of Article)
ARTICLE XVII - INSURANCE
1. Extent of Insurance Coverage
From the time of launching until delivery of the VESSEL, the BUILDER shall, at its own cost and expense, insure the VESSEL and all materials, parts machinery and equipment, appurtenances and outfits, including the BUYER's Supplies (whether or not installed), built into or installed in or upon the VESSEL, against all risks under the "Institute Clauses for BUILDER's Risk", with first class insurance company or underwriters in Korea.
The amount of such insurance coverage shall, up to the date of delivery of the VESSEL, not be less than the aggregate amount of all instalments paid by the BUYER to the BUILDER, plus the value of the BUYER's Supplies in the custody of the Shipyard.
2. Application of the Recovered Amounts
In the event that the VESSEL shall be damaged from any insured cause at any time before delivery of the VESSEL, and in the further event that such damage shall not constitute an actual, constructive, compromised or arranged total loss of the VESSEL, the amount received in respect of the insurance shall be applied by the BUILDER in repair of such damage, in a manner satisfactory to the Classification Society and so as that the Classification Society shall issue its Certificates without containing any notations or recommendations, and the BUYER shall accept the VESSEL under this Contract as if completed in accordance with this Contract and the Specifications and Plans, however, subject to the extension of delivery time under Article VIII hereof (except in case of negligence of the BUILDER).
Should the VESSEL from any cause become an actual, constructive, compromised or arranged total loss, the BUILDER shall proceed according to the mutual agreement of the parties hereto either :
(a) to build another vessel in place of the VESSEL so lost in accordance with the terms of this Contract, in which case the amount received in respect of the insurance shall be applied to the construction, of such vessel provided the parties hereto shall have first agreed thereto in writing such reasonable extension of delivery time as may be necessary for the completion of such vessel; or
(b) to refund promptly to the BUYER the full amount of all sums paid by the BUYER to the BUILDER as instalments, under the provisions of ARTICLE II hereof, with interest thereon at the rate of [•] % per annum from the date following the receipt by the BUILDER of such instalment(s) to the date of such refund and deliver to the BUYER all BUYER's Supplies (or the insurance proceeds paid with respect thereto), in which case this Contract shall be deemed to be automatically terminated and all rights, duties, liabilities and obligations of each of the parties to the other shall forthwith cease and terminate.
If the parties hereto fail to reach agreement in accordance with this paragraph within [•] months after the VESSEL is determined to be an actual, constructive, compromised or arranged total loss, the BUYER elect in its sole discretion within a further [•] month that the provisions of paragraph (b) above shall apply.
3. Termination of BUILDER's Obligation to Insure
The BUILDER shall be under no obligation to insure the VESSEL hereunder after delivery and acceptance of the VESSEL.
(End of Article)
ARTICLE XVIII - NOTICE
1. Address :
Any and all notices and communications in connection with this Contract shall be addressed as follows :
To the BUYER :
C/O : [•]
Telefax No. : [•]
And copy to their managers at:
[•].
Telefax No. [•]
To the BUILDER:
Telefax No. : [•]
Or preferably to its [•] Yard
Telefax No. : [•] ([•] Department)
[•] ([•] Department)
2. Language :
Any and all notices and communications in connection with this Contract shall be written in the English language.
3. Effective Date of Notice :
Every notice, request, demand or other written form of communication under this Contract shall be by letter, telex, or telefax and shall be deemed to have been received in the case of a letter, at the earliest of (i) when received by the addressee or (ii) [•] days after such letter was posted, in the case of a telefax at the time of despatch provided however a confirmation receipt confirming that the facsimile message has been successfully transmitted, is also available (provided that if the date of despatch is not a business day at the company of the addressee it shall be deemed to have been received at the opening of business on the next business day).
(End of Article)
ARTICLE XIX - EFFECTIVE DATE OF CONTRACT
This Contract shall become effective upon signing by the parties hereto.
(End of Article)
ARTICLE XX - BUILDER’S DEFAULT
1. (a) Should the BUILDER default in payment of any amount due under this Contract
including, without limitation, payment of liquidated damages (it being understood that liquidated damages are payable by adjustment to the final Instalment of the Contract Price), then the BUILDER shall pay to the BUYER interest thereon at the rate of [•] percent ( [•] %) per annum from the date when the amount became due to the BUYER up to the payment thereof.
(b) The BUYER shall give the BUILDER notice promptly on the occurrence of any such default mentioned in 1 (a) above coming to its notice.
2. The BUYER shall be entitled to terminate this Contract forthwith by the giving of notice to the BUILDER upon the filing of a petition or the making of an order or the passing of an effective resolution for the winding-up of the BUILDER (other than for the purpose of a reconstruction or amalgamation which has been previously approved in writing by the BUYER) or the appointment of a receiver of the undertaking or property of the BUILDER or the insolvency of or a suspension of payment by the BUILDER or the making by the BUILDER of any special arrangement or composition with creditors of the BUILDER or the placement of the BUILDER under court or other administration or the placement of the BUILDER under court protection or the imposition by the Korean State or Government of a moratorium or protection in relation to the debts or other obligations of the BUILDER or, finally, the BUILDER becomes subject to the operation of any law relating to insolvency, bankruptcy, liquidation or imposed re-organization and the BUILDER fails to remedy such breach within [•] days of receipt by the BUILDER of written notice from the BUYER.
3. If, in accordance with any of the provisions of this Contract, the Buyer exercises its right to terminate this Contract then the provisions of Article X hereof shall apply.
(End of Article)
ARTICLE XXI - INTERPRETATION
1. Laws Applicable :
The parties hereto agree that the validity and interpretation of this Contract and of each Article and part thereof shall be governed by the laws of [Name of the Country].
2. Discrepancies :
All general language or requirements embodied in the Specifications are intended to amplify, explain and implement the requirements of this Contract. However, in the event that any language or requirements so embodied permit of an interpretation inconsistent with any provisions of this Contract, then, in each and every such event, the applicable provisions of this Contract shall prevail and govern. In the event of conflict between the Specifications and Plans, the Specifications shall prevail and govern.
3. Entire Agreement :
This Contract contains the entire agreement and understanding between the parties hereto and supersedes all prior negotiations, representations, undertaking and agreements on any subject matter of this Contract.
4. Amendments and Supplements :
Any supplement, memorandum of understanding or amendment, in whatsoever form relating to this Contract, to be made and signed among parties hereof after signing this Contract, shall be the integral part of this Contract and shall be predominant over the respective corresponding Article and/or Paragraph of this Contract.
(End of Article)
IN WITNESS WHEREOF, the parties hereto have caused this Contract to be duly executed on the day and year when the conditions specified in Article XIX are fulfilled.
[BUYER] : [BUILDER] :
....................................................... ...........................................................
By : By :
Title : [•] Title : [•]
EXHIBIT "A"
LETTER OF REFUNDMENT GUARANTEE NO. : [•]
Gentlemen :
In consideration of the sum of US$ [•] and other good and valuable consideration the receipt and adequacy of which we hereby acknowledge, we hereby issue our irrevocable letter of guarantee No.[•].in favour of [•] hereinafter called the "BUYER") for account of [•] (hereinafter called the "BUILDER") as follows pursuant to the shipbuilding contract dated [•] 20[•] (hereinafter called the "Contract") made by and between the BUYER and the BUILDER for the construction of one (1) single [•] having BUILDER's Hull No. [•] (hereinafter called the "VESSEL").
If the BUYER confirms that pursuant to the terms of the Contract the BUYER has become entitled to a refund of the advance payment(s) made to the BUILDER prior to the delivery of the VESSEL, we hereby irrevocably guarantee the repayment of the same to the BUYER immediately on demand being initially US$ [•] (Say [•] U.S. Dollars only) together with interest thereon at the rate of [•] per cent per annum from the respective dates on which such sums were paid by the BUYER to the BUILDER to the date of remittance by telegraphic transfer of such refund. Provided, however, that if rescission by the BUYER is made under the provisions of Article VIII, Paragraph 4 of the Contract, then in such event no interest shall be paid.
The amount of this guarantee will be automatically increased not more than One (1) time. The first time will be upon BUILDER’s receipt of the second instalment, by the amount of the second instalment, being US$ [•] (Say [•] U.S. Dollars only), plus in each case interest thereon as provided in the Contract, but in any eventuality the amount of this guarantee shall not exceed the total sum of US$ [•] (Say [•]U.S. Dollars only) plus interest thereon at the rate of [•] percent ( [•] %) per annum from the respective dates on which such sums were paid by the BUYER to the BUILDER to the date of remittance by telegraphic transfer of the refund. Provided, however, that if rescission by the BUYER is made under the provisions of Article VIII, Paragraph 4 of the Contract, then in such event no interest shall be paid.
In the event that any refund is made to you by the BUILDER under the Contract or by us under this guarantee, our liability hereunder shall be automatically reduced by the amount of such refund.
This letter of guarantee is available against BUYER's simple written and signed statement confirming that BUYER's demand for refund has been made in conformity with Article X of the Contract and the BUILDER has failed to make the refund within [•] days after BUYER’s demand to the BUILDER. Payment shall be made to BUYER by telegraphic transfer in United States Dollars to the account designated in your written statement.
This letter of guarantee shall expire and become null and void upon receipt by the BUYER of the total sum guaranteed hereby or upon acceptance by the BUYER of the delivery of the VESSEL in accordance with the terms of the Contract and, in either case, this letter of guarantee shall be returned to us. This guarantee is valid from the date of this letter of guarantee until such time as the VESSEL is delivered by the BUILDER and accepted by the BUYER in accordance with the terms of the Contract.
Notwithstanding the provisions hereinabove, in case we have received prior written notification from you or the BUILDER confirmed in writing by an Arbitrator stating that your claim to cancel the Contract or your claim for refundment thereunder has been disputed and referred to Arbitration in accordance with the provisions of the Contract, the period of validity of this guarantee shall be extended until [•] days after the final award shall be rendered in the Arbitration and a copy thereof acknowledged by the Arbitrators.
We shall under this Guarantee refund to you the sum adjudged to be due to you by the BUILDER pursuant to the award made under such Arbitration immediately upon receipt from you of a demand for the sums so adjudged and a copy of the award.
This Guarantee shall be governed by and construed in accordance with the laws of [Name of the Country].
We hereby agree that the [•] Court shall have exclusive jurisdiction to hear and determine any claims or disputes which may arise out of or in connection with this letter of guarantee (but not any disputes arising under the Contract which shall be determined by arbitration in accordance with the terms of the Contract and as referenced in this letter of guarantee) and we irrevocably appoint [•] as our agent to receive and accept service on our behalf of any such proceedings in England.
All demands, statements or notices in connection with this letter of guarantee shall be validly given if sent to us by letter or fax to our office at [•] as follows :
_____________________
_____________________
_____________________
_____________________
and such demand, statement or notice shall be deemed as being received in the case of a letter upon the earliest of (i) actual receipt or (ii) [•] days after such letter is posted, or in the case of a fax, upon dispatch thereof, provided however a confirmation receipt confirming that the facsimile message has been successfully transmitted, is also available (provided that if the date of dispatch is not a business day at the company of the addressee, it shall be deemed to have been received at the opening of business on the next such business day).
The benefit of this letter of guarantee may, by giving us not less than [•] days’ prior notice, be assigned to any party in favour of whom an assignment has been made by you, pursuant to the provisions of Article XIII of the Contract, and the assignor/transferor shall remain responsible for the fulfillment of the Contract.
In the event that any withholding or deduction is imposed by any law, the undersigned will pay such additional amount as maybe necessary in order that the actual amount received after deduction or withholding should be equal to the amount that would have been received if such deducting or withholding were not required.
This Letter of Refundment Guarantee shall automatically become effective and in full force and effect upon receipt by the Builder of the first instalment.
IN WITNESS WHEREOF, we have hereunder set our hand and seal by our duly authorized representative this [•] day of [•], 20[•].
For and on behalf of The Export - Import Bank of
By :
Name : [•]
Title : [•]
EXHIBIT "B"
PERFORMANCE GUARANTEE
In consideration of you entering into a certain shipbuilding contract dated (hereinafter called the “Contract”) and made between [•] (hereinafter called the “BUYER”) and yourselves (as the “BUILDER”) for the construction of one(1) single [Type of the Vessel] having your Hull No.[•] (hereinafter called the "VESSEL") providing among other things for payment of the Contract Price amounting to [•] United States Dollars (US$ [•]), we, the undersigned, hereby irrevocably and unconditionally guarantee to you, your successors, and assignees the due and faithful performance by the BUYER of all its liabilities and responsibilities under the Contract and any supplement, amendment, change or modification hereafter made thereto, including but not limited to, due and prompt payment of the Contract Price by the BUYER to you, your successors, and assignees under the Contract and any supplement, amendment, change or modification as may be agreed to by the BUYER and confirming that this guarantee shall be fully applicable to the Contract as so supplemented, amended, changed or modified).
This Performance Guarantee shall be governed by the laws of
[GUARANTOR]
BY :
Name : [•]
Title : [•]
EXHIBIT “C”
RELEASE LETTER
TO : [Name and Address of the Builder’s Bank]
Delivery of
We confirm that we have today remitted to you the sum of US$ [•] representing the final instalment of the Contract Price payable by the BUYER to the BUILDER pursuant to the Shipbuilding Contract dated [•] , 20[•] and made between the BUYER and the BUILDER (the “CONTRACT”).
The said sum of US$ [•] is to be held strictly to our order until such time as there is delivered to our representative being ( [•] ) or ( [•] ) or ( [•] ) with passport No. ( [•] ) or ( [•] ) or ( [•] ) respectively (at the BUILDER’s yard at [•] duly executed and dated PROTOCOL OF DELIVERY AND ACCEPTANCE relating to the VESSEL and our representative has countersigned a copy of this Letter acknowledging such receipt. Upon our representative’s countersigning this Letter, you may forthwith transfer the said sum of US$ [•] to the BUILDER’s account (with you) being Account No.[•] with your ( [•] ) branch.
We hereby further confirm that we will not withdraw the said sum of US$ [•] which we have deposited with you until [•] being the date falling [•] business days after the scheduled delivery date of the VESSEL under the CONTRACT. If by the [•] you shall not have received a copy of this Letter countersigned by our representative, you shall forthwith transfer the said sum of US$ [•]to our account at [•].
Signed
For and on behalf of
[Bank]
3_1 Shipbuilding Contract.doc
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