New Boat

I actually like the BM contract. It seems fair and reasonable. It's a shame it isn't made available to Buyer's directly and it's a bigger shame that BM members aren't expected to use it.

That said what I am actually after is a boat not a court case and I hope that the contract turns out to be unused and stays safely in my draw.

My only purpose in taking part in this discussion was to let the OP know that other people are going through the process and that what they are being asked for is not an unknown or unique thing, and neither is it a comfortable thing for the buyer.

So I find I agree with Tranona and pvb. It's not the best arrangement but it's not without precedent.
 
Tranona said:
That is simply not true. The whole idea of the type of contract that I have described is that it means exactly what it says. If the contract gives the buyer title to the goods in line with the payments made then if the builder goes bust it means the boat in its current state does not form part of the assets of the builder. I tried to explain - but seemingly it did not register, the whole point of such a contract is to avoid losing the boat so that the owner has an opportunity to arrange completion. This is sometimes done by the administrator and sometimes done by the entity that takes over.
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Sounds great...

Except in practice, unless the partially completed boat is nearly finished, it will be difficult and expensive to complete on one's own.., compared with completing it in a functioning boat yard, that has built those boats previously, that employs craftsmen experienced with those boats.., that has access to molds, jigs, and other needed equipment.

What if your hull has been built but not the deck - who owns the deck mold? You will have to try to buy it at auction, ship it to a yard that will mold the deck for you, ship your boat there... Now, how about making the cabinetry? who owns the jigs and whatever is needed to build that? at a new yard that has not built one of your boats before , it will be an expensive "custom" project.

In practice it can be so difficult, time consuming and expensive to complete a partially built boat on one's own that it's less expensive to just buy a different new boat.

I mentioned the bankruptcy of Gunboat above - it was a mess, and quite a lot of money was lost by owners with builds in process who owned their partially complete boats. Some of the hulls were sold for pennies on the dollar.

Even without the issues i just outlined - the buyer has no good way of making sure that the all money given to the builder goes to his boat. if the builder is using his money to complete other builds - as is likely - then value of the boat owned by the buyer will not even reflect the money he has paid!
 
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LadyInBed said:
For 160 grand there must be several boats already on the water and ready to sail away.
What makes this one stand out and special?
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Something I already mentioned earlier and whilst we all dream of owning a brand new boat, possibly one customised to our requirements, the risks are too high.
Stop dreaming and find a nearly new one - you'll probably either save money or be able to buy a better specc'd or larger boat.
 
Large yachts are a different matter, as one can employ a builders representative to keep track of the build and ensure that as money is paid to the builder, it gets spent on the right boat.

I spent a week at the Nautor"s Swan yard in Finland for the commissioning of a new boat belonging to a friend.

They have a whole building dedicated to office space for owners representatives. The owner of each yacht under construction has an office assigned. Some of the smaller builds aren't using them for full time representatives, but the guys building, say, a Swan 105 sure are. There were two being built when I was there.
 
If the OP revisits and sees the answers here, he has IMHO been very fortunate to get the advice he has from very experienced, respected forumites.

My view is this, it is all very well having rights, it another (i) defending them and (ii) enforcing them.

Liquidators are the worst people to deal with - scaffolders with a suit - and in my view exist only to grab everything they can regardless of others' rights and then to extract their own ridiculous fees. Good luck dealing with them and it is likely you will need very good and very determined lawyers on your side.

Client accounts:
(a) having your money remaining in the client account depends on the correct operation of the now-defunct company; you might have sent it there but it doesn't mean it will remain there. Assuming the company has been operated correctly at least in relation to the client account, when you ask the bank for your money they won't deal with you as you are not the account holder and, indeed, they have never heard of you. The account should have lots of people's money in it and it is all mixed up and so you need the account holder to deal with it, which is now the Liquidator (see above). Good luck getting that back quickly. They have no incentive at all in getting that back to you quickly and, in all likelihood, you will have to fight for it (as to which see above).
(b) the correct operation of the client account and the proper oversight of repayments to clients are not guaranteed by anyone. Solicitors' clients account are guaranteed by professional rules (which can of course be broken), by a disciplinary regime (to bring real professional consequences to those who breach them) and financially backed by the SRA. So when a solicitor's client account is misused or a firm goes down generally, another solicitor intervenes to sort it out and if the money has been nicked, the SRA pay you back. So do not mistake the use of the word 'client account' to think of something equivalent to a solicitor's client account.


Bank guarantee
To have easy enforceability of your rights, you need your name on the document and a bank guarantee will do that. Because you are a party to the contract/guarantee, you can sue the bank on that guarantee and thereby enforce your rights. Because you can readily enforce them, you won't need to do the forcing bit in as, in all likelihood, the bank will behave responsibly.

If you want to eliminate the risk as far as possible, bank guarantee has to be the way to go. You are reliant on a contract (not the operation of law), to which you are a party, with another party (the Bank) that has not changed and will behave responsibly and your contract was designed specifically for the purpose.
 
Escrow accounts can be used. Just write the agreements such that it Is crystal clear how the money is released, say at a fixed event or time and that it is always refunded in the event of any form of insolvency. Another additional option, which I took once, is to obtain title in full to the part built specified assets at each stage. Hull, engine etc.

Those two options may be all you can practically do where a company can’t or won‘t get a bank guarantee.
 
Zing said:
Escrow accounts can be used. Just write the agreements such that it Is crystal clear how the money is released, say at a fixed event or time and that it is always refunded in the event of any form of insolvency. Another additional option, which I took once, is to obtain title in full to the part built specified assets at each stage. Hull, engine etc.

Those two options may be all you can practically do where a company can’t or won‘t get a bank guarantee.
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An escrow account doesn't adequately remove the risk. And if a company can't or won't get a bank guarantee, they're probably best avoided!
 
pvb said:
An escrow account doesn't adequately remove the risk. And if a company can't or won't get a bank guarantee, they're probably best avoided!
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Why? If the rules are crystal clear and exactly in the way I suggested I can't see the problem.
 
pvb said:
Because stage payments would be released from an escrow account. If the dealer or builder then goes bust, the money has gone.
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But not if you do as I suggested, where you retain title to the specified work done. If they go bust then you will be able to remove the work and get the job done elsewhere. Not without additional cost probably, but it's all about risk mitigation, not avoidance, which is impossible to achieve completely.
 
Zing said:
But not if you do as I suggested, where you retain title to the specified work done. If they go bust then you will be able to remove the work and get the job done elsewhere. Not without additional cost probably, but it's all about risk mitigation, not avoidance, which is impossible to achieve completely.
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Did you read post 42? That explains some of the problems of getting landed with a part-completed boat.

As for risk mitigation, a bank guarantee totally removes any risk.
 
If you pay the first lot by credit card, you are covered for up to £30K. Get then to take a £30K deposit, and that reduces the risk somewhat (during the long wait between deposit and stating build) at least.
 
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mobeydick said:
If you pay the first lot by credit card, you are covered for up to £30K. Get then to take a £30K deposit, and that reduces the risk somewhat (during the long wait between deposit and stating build) at least.
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I don't think a boat purchase would qualify for Section 75 protection. Section 75 covers goods costing £100 to £30,000 - the value of the boat will be much more than £30K so Section 75 wouldn't apply.
 
pvb said:
Did you read post 42? That explains some of the problems of getting landed with a part-completed boat.

As for risk mitigation, a bank guarantee totally removes any risk.
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Yes, I understand the problems of a part completed boat. I outlined some of them in my post. There are many indeed.

A bank guarantee is the best, but it does not totally remove risk as you say, mostly due to time and the time value of money. Time waiting for the bank guarantee, legal costs, time in getting another boat contract, years lost maybe in starting afresh. The design and consultancy costs to be spent all over, the extra prices likely to be paid in a replacement contract, the personal time lost and frustration and stress etc etc.
 
There just are not many good options right now...

The brokerage market is very thin - at least for the sort of boats I am interested in.

So that might drive someone to look at a new build, but I think the delivery dates are pretty far in the future now.

One might think that all the orders, and all the cash pouring into the builders accounts would make them more secure, but this isn't necessarily so. Boat building is a strange business, and some smaller yards barely make money on the boats they build, so paradoxically more orders can mean more trouble. Add in warranty claims on older boats, and you have no idea what's going on.

I would probably feel okay placing an order with Swan, or X-Yachts,or J Composites, and probably with some of the really big builders like Beneteau.., but It's still a risk.
 
Resolution said:
When demand is strong, as now, not much. Just a hit to cash flow projections. But finding another buyer is not always either quick or easy. Sod’s Law says that the defaulting buyer had ordered the least popular specification.
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Didn't that happen to Hardy when they built that battleship grey 60 footer. The specifying buyer dropped out leaving Hardy with a very difficult boat to sell.
 
Just noticed that superyacht builder Nobiskrug has gone bust. The yard has been building outstanding vessels for 115 years, notably in recent years the "Sailing Yacht A".
 
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