Originally Posted by cruisingkrol
This one should be a doozey. We're pretty new to this business.
If you were going to contract to buy Hull#2 of a cat for which only conceptual drawings exist: 1) Would you have yourself committed? 2) What conditions would you put in the contract?
Actually in my business we actually do sell contracts for products that are concept
, for delivery
up to 5-7 years in advance. We call them paper airplanes.
Some of the considerations -
The parameters of the design must be fixed - in boating
terms this would be things like length, weight, rigging
configurations - basically all the specifications.
There should be redress for missing parameters at completion - especially weight
There should be clear performance expectations - a polar prediction if you will and penalties for missing the performance. The performance should be absolutely linked to weight - no project
ever gets lighter once transferred from paper.
There should be clear specifications on the quality of the equipment
- engines, mast
sections, winches and deck hardware
. The interior
fit out and criteria must be clearly specified
There will be building delays. It must clearly specify what redress is available for delivery
It must be clearly specified what the payment schedule is. In our world we call them progress payments. i.e. 20% down, 40% at 25% complete, 60% at 50% complete etc. You need a definition of what "complete" means. Hulls completed? Hulls joined? Decks laid? Mechanical equipment
fitted? Systems Installed?
It must be clear what happens if anything fails or if the boat never gets completed.
There are big discounts for the first few buyers of new planes in recognition of the commitment and the risks of delay. Of course the discounts consider order size.
If this builder hasn't thought about this stuff and already have a contract template, that would be a red flag. If he has a contract template I would be seeking a good lawyer where all the things above can be laid on him.
The contract is nothing but risk management. You need to ascertain whether the builder has any credibility in the business at all and whether the contract will be worth the paper it is written on.
Someone said you are a partner of the builder - it's not quite that bad because if he fails you aren't on the hook to pay everyone else he is in debt to. You are just the last creditor who will "never" get paid back.
I think it goes without saying that if this builder has never built before - you really are betting the lottery.