What Are The Advantages And Disadvantages Of A Shipbuilding Market

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Because of their nature as being protracted contracts of an excessive cost, shipbuilding contracts may entail a number of serious risks for both their counterparts, that may result to great damage in their financial standing.

While at the past years the shipbuilding market witnessed a period of economic boom, with a great number of shipowners ordering ships from the shipyards of China, Korea and Japan (the dominants of the newbuilding sector) and signing the relevant shipbuilding contracts, the economic crisis of 2008, affecting the world/global/worldwide market as well as the shipbuilding market, came to cause great pressure and anxiety to the Buyers in the above mentioned shipbuilding contracts, who felt now more than ever
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These two types of guarantees differ on the following points:
-An on demand guarantee, which is the most straightforward of guarantees, will be paid upon demand of the Buyer, and will not be dependent a) upon the shipbuilder’s liability (original debtor) and b) upon the outcome of the arbitration/trial between the Builder and Buyer. In that type of guarantee the liability will be triggered by a written demand of the Buyer for the payment of the pre-instalments that have been already made, which has to be made in good faith. Without any other prerequisite the guarantor will be bound to pay the amount of that guarantee.

-On the other hand, a suretyship guarantee will not give the right to the Buyer to demand the guarantee immediately and independently of the Builder’s liability, as well as the guarantor will not be obliged to pay the amount of the guarantee prior to the establishment (by the tribunal or after the Buyer’s admission and consent) of a breach of the contractual rights of the
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An other challenge for the draftsmen of a shipbuilding contact is to manage to illustrate clearly and undoubtedly the true willing of the counterparts and more importantly the terms of the contract that are of such importance to the parties that without their inclusion in the contract they would not have contracted at the first place or a breach of whom makes the contract substantially different from that the parties intended.

In a breach of such a term the parties do no longer have an interest on continuing the contract, since that term is vital for the whole agreement.

Such a term is considered to be a condition that usually refers to the main points and aspects of the contract, in the root of the deal/agreement, rather than in details of little

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