Shipbuilding contract, which is the contract for the complete construction of a ship, concerns the sales of future goods, so the property could not pass title at the time when the contract is concluded. The aim of shipbuilding contract is to regulate a substantial and complex project which the builders and buyers assume long-term obligations to other and bear significant commercial risks.
Shipbuilding contract is a non-maritime contract and not within the Admiralty jurisdiction because it is insufficiently related to any rights and duties pertaining to sea commerce and/or navigation. The property passes to the buyer when the ship has been completed. To avoid difficulties, provision can be made for the property to pass in stage in the process of development and construction. It is different from most hire-purchase agreements where the seller has ownership of the property until the payment of the final installment.
Under the Sale of Goods Act 1979, this kind of agreement to sell ‘future’ goods may be a sale either by description or by sample. The sale of new building ship, which is large manufacturing project, is obviously undertaken by description. It is a condition to comply with the agreed description when performing the contract.
Read more about Shipbuilding Contract: Standard Forms of Contract, Formation of Contract, Duties of A Builder, Passing of Risk, What Are The Builder’s Remedies?, What Are The Buyer’s Remedies?, Summary
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