New BMF contract

[Gary Peacock]

The BMF legal team has revised all of their standard boat purchase contracts. (I haven't looked to see exactly what the changes are but they Will probably be technicalities.)

 

However they have chosen this time to make them only available to members and not for public release.

 

It's a bit petty, but I think this is down to a number of recent occasions where the contract was used by builders claiming to be BMF members who turned out not to be when problems arose.

[Dave-Shrop]

BMF should make the new contract available so you can check BMF members are using the correct contract and the correct wording.

Our contract signed in 2006 with a BMF member was only found to be either, a prior to 2002 contract or the wording had been altered. When we contacted BMF about the Dispute we were having with the builder they told us that it was not the correct and all members were sent the new contract in 2002. Just to give an example of difference: ours states under termination "the Builder may...." the contract issued by BMF in 2002 stated "" both parties may..... .

 

BMF should arrange to inspect contracts being issued by their members and a numbering system would stop non members using them. It is quite easy to check if a builder is a BMF member.

 

What we really need is a contract for Boat Purchasers issued by someone not associated with the builders, because even the new contract is more advatages for the builder than the purchaser. Just to give example - 2nd stage payment when engine or sustantial fitout, substantial fitout in not defined and is interpeted differently by builder than puchaser. You could also end up with just shell and engine which if being asked to pay second payment on a boat costing over £65,000 then if the builder went bust you would not have much for your money.

[Gary Peacock]

BMF should make the new contract available so you can check BMF members are using the correct contract and the correct wording.

Our contract signed in 2006 with a BMF member was only found to be either, a prior to 2002 contract or the wording had been altered. When we contacted BMF about the Dispute we were having with the builder they told us that it was not the correct and all members were sent the new contract in 2002. Just to give an example of difference: ours states under termination "the Builder may...." the contract issued by BMF in 2002 stated "" both parties may..... .

 

BMF should arrange to inspect contracts being issued by their members and a numbering system would stop non members using them. It is quite easy to check if a builder is a BMF member.

 

What we really need is a contract for Boat Purchasers issued by someone not associated with the builders, because even the new contract is more advatages for the builder than the purchaser. Just to give example - 2nd stage payment when engine or sustantial fitout, substantial fitout in not defined and is interpeted differently by builder than puchaser. You could also end up with just shell and engine which if being asked to pay second payment on a boat costing over £65,000 then if the builder went bust you would not have much for your money.

 

I personally would insist on a revised payment schedule with amounts payable at realistically defined points, we take £2K deposit and 6 stage payments to reflect the value of the boat at each stage. (If this is acceptable to both parties then the rest of the contract isn't that bad.)

 

It would be interesting to know how you went on with the dispute mediation procedure (If you got that far?) because I get the feeling we will shortly be going down that route with a customer from the builders side for breach of contract. (This relates to non payment rather than the boat being in dispute, so doesn't involve survey costs etc.)

 

The BMF's Code of Practise might be worth a quick nosey.

 

If I get time I will try and work out what they have changed in the 2007 contract.

[Gary Peacock]

I have had a quick look through it and don't see any major changes, although it does look like a lot of the legal details and wording have been updated.

 

The guidance notes just about some up the contracts purposes and I feel sure if you contacted the BMF or RYA on the addresses at the bottom you will be able to get a copy to view.

 

NOTES TO THE TEMPLATE FOR AN AGREEMENT FOR THE CONSTRUCTION OF A NEW BOAT FOR A FIXED PRICE (June 2007)

 

These are explanatory notes only and, although important, do not form part of the agreement itself.

 

1. This form is published by the British Marine Federation (BMF) and approved by the Royal Yachting Association (RYA).

 

 

2. It is a template for a simple form of agreement designed for the leisure marine market and cannot be expected to cater for every circumstance arising between the parties. It is considered by the RYA and the BMF to strike a reasonably fair balance between the interests of the Purchaser and the builders. Certain aspects of this agreement can be used for transactions between commercial parties.

 

 

3. The Agreement based on the template should be completed in duplicate, taking care to insert the appropriate details on pages 1 (details of the parties) and in Schedules:

 

• Schedule 1 (Specification). A copy of the agreed Specification for the Boat, together with any agreed plans and drawings should be signed by both parties and be firmly attached to the Agreement.

 

• Schedule 2 (Price and Stage Payments) should be completed in full; it may be appropriate to amend the descriptions of the stages at which stage payments become due, depending on the type of Boat and method of construction.

 

• Schedule 3 (Delivery) should be completed with the contractual date for delivery and the place of delivery. If it is of great importance to the Purchaser that the Boat should be delivered by the specified date (and provided that the Builders agree) this should be recorded in writing. Schedule 5 (Documents to be provided to the Purchaser by the Builders on Delivery) should be completed or amended with details of all the documentation which are agreed to be provided by the Builders on Delivery of the Boat.

 

4. Both parties should sign the Agreement (in the presence of a witness in Scotland).

 

 

5. The Certificate of Delivery and Acceptance (in the form provided in Schedule 4) must be signed by the Purchaser or his agent on delivery and acceptance of the completed boat. This should be done in duplicate with a copy for each of the Purchaser and the Builders.

 

 

6. It is recommended that the Craft Identification Number and/or Builder's yard number should be marked on all materials and equipment intended for incorporation in the boat.

 

 

7. If the Purchaser leaves or arranges for others to leave any item on the Builders’ premises or on the boat, he should insure the item himself unless the Builders expressly agree in writing to do so. Builders should in any event carry adequate insurance cover against claims arising from their negligence which result in damage to any property on their premises.

 

 

8. Advice on whether the Purchaser is “a consumer” or otherwise protected by some or all of the consumer protection legislation in force in the United Kingdom may be obtained from any local Trading Standards Office, the Citizens Advice Bureau, the Office of Fair Trading or any firm of Solicitors (who may charge). Online guidance may be obtained at the Government’s Consumer Gateway website at http://www.consumerdirect.gov.uk/

9. Where the Purchaser is also a consumer he has certain minimum statutory rights regarding the return of defective goods and claims for losses. These rights are not affected by the terms of this Agreement.

 

 

10. The Rules of the Dispute Resolution Scheme promoted by the British Marine Federation are available from the Company Secretary of the British Marine Federation. General notes and information about the mediation process can be found at www.britishmarine.co.uk/mediation .

 

 

11. Additional copies of this agreement may be obtained from

 

 

British Marine Federation,

Marine House,

Thorpe Lea Road,

Egham, Surrey TW20 8BF.

 

or

 

Royal Yachting Association,

RYA House,

Ensign Way,

Hamble, Southampton,

Hampshire, SO31 4YA

[Dave-Shrop]

I personally would insist on a revised payment schedule with amounts payable at realistically defined points, we take £2K deposit and 6 stage payments to reflect the value of the boat at each stage. (If this is acceptable to both parties then the rest of the contract isn't that bad.)

 

It would be interesting to know how you went on with the dispute mediation procedure (If you got that far?) because I get the feeling we will shortly be going down that route with a customer from the builders side for breach of contract. (This relates to non payment rather than the boat being in dispute, so doesn't involve survey costs etc.)

 

The BMF's Code of Practise might be worth a quick nosey.

 

If I get time I will try and work out what they have changed in the 2007 contract.

Hi gary,

We never got that far with the dispute procdure as he apologised when we went to the crick show to make a fuss, he started work on our boat again and stated the generator had been ordered and would arrive the next week. We still have no generator, although told several times he has it, some more work has been done following threating him. This build has been going on since Dec 06 there have been lots of things done wrong some have been rectified others it was to late to alter. Yes I have looked at the code of practise and I think on the lies he told us about having the generator when he did not, using untrained staff to install LPG, and misleading the public with his adverts would get him suspended immediatly. We would cancel tody if I thought we would get our money back quickly.

[Gary Peacock]

Hi gary,

We never got that far with the dispute procdure as he apologised when we went to the crick show to make a fuss, he started work on our boat again and stated the generator had been ordered and would arrive the next week. We still have no generator, although told several times he has it, some more work has been done following threating him. This build has been going on since Dec 06 there have been lots of things done wrong some have been rectified others it was to late to alter. Yes I have looked at the code of practise and I think on the lies he told us about having the generator when he did not, using untrained staff to install LPG, and misleading the public with his adverts would get him suspended immediatly. We would cancel tody if I thought we would get our money back quickly.

 

Sounds a very unsatisfactory state of affairs and reading between the lines you are trying to make the best of a bad situation and at least get your boat. When you have the boat I would definitely document the whole story and let the BMF have a look at it.

 

The BMF so they claim have taken action against builders in the past over this sort of thing and it is after all in the interests of the BMF/CBA to prove their credibility.

Otherwise they can create all the new websites and run all the promotional adverts in the waterways press they please, but if there is no credible reason for the public to deal with their members then from a builders point of view membership becomes somewhat pointless?

 

They at least the CBA are aware of the negative image that UK boat building in the inland waterways world is developing, (I don't know about the blue water world.) but if they don't get their own house in order at least there is no point in pointing the finger at others.

 

You might gather that this kind of thing p***es me off rather a lot.

[Gary Peacock]

If you would like to see the new contract I have uploaded it in PDF HERE

 

I have sort of turned into a specimen version!

 

But I will probably still get into trouble if they find out.

[bargeeboy]

At Narrowcraft only 10% deposit by way of the clients commitment is required. Balance being due prior to signwritting.

All business is conducted in accordance with BMF terms and conditions otherwise.

[Dave-Shrop]

At Narrowcraft only 10% deposit by way of the clients commitment is required. Balance being due prior to signwritting.

All business is conducted in accordance with BMF terms and conditions otherwise.

 

This is only for standard specification not bespoke.

 

David

[Gary Peacock]

It would be great for the customer if we could all work that way but I don't see too many builders fancying being stuck with a cancelled boat, twice this year we have been stitched up by "Walter Mitty" customers fortunately in both cases only loosing relatively small amounts. (Which we will recover from these characters eventually.)

 

We would probably need to find about £500K to operate without stage payments comfortably and realistically that won't happen.

 

Even if we were building stock boats in the present market it's not good business sense to have them hanging around. For "Show boat" often you should be reading "Boat we can't sell".

[AllanW]

If you would like to see the new contract I have uploaded it in PDF HERE

 

I have sort of turned into a specimen version!

 

But I will probably still get into trouble if they find out.

Thanks for posting that Gary... I hadn't actually READ this through before. It made interesting reading

 

I appreciate that you will have a different perspective on this, but it seems to me that the contract is heavily weighted in favour of the builder?

 

For example there is the possibility of penalties being applied to the purchaser for late payment of a stage - but no such penalties for late delivery (which seems to be a widespread problem from some of the posts here)

 

I'm also interested in knowing how the "materials and equipment purchased for construction" are identified? Apparently they become the property of the purchaser even before the second and subsequent stage payments are made? (Section 11.1) So do the builders place an order (for example) for an engine stating "engine purchased for NB xxx"?

 

And how would this work in cases of the builder going insolvent? Would the administrators (again for example) say - "that engine has been purhased for that particular NB"?

 

Just wondering...

 

Allan

[Gary Peacock]

I'm also interested in knowing how the "materials and equipment purchased for construction" are identified? Apparently they become the property of the purchaser even before the second and subsequent stage payments are made? (Section 11.1) So do the builders place an order (for example) for an engine stating "engine purchased for NB xxx"?

 

That's the theory and was what saved most of the Heron customers a lot more expense.

 

I don't like the 3 payments because the stages are too hard to define and open to various interpretation.

 

We modify the payment schedule to 6 payments for work completed at set points without any prepayment for the next stage. (Obviously this can't be an exact science but we try and keep it realistic!)

 

Not coming from a boat building background I don't see any issues with penalty payments for overrun on completion dates.

 

However knowing how most of these arise it might not be that workable for instance-

 

The steel suppliers often don't supply steel on time for the starts and you can scream about it all you want but the suppliers consider your business so insignificant they couldn't care less if you go elsewhere.

 

The engine suppliers are equally appalling. (And that's all the big ones from experience!)

 

Most of the window suppliers are fairly "Micky Mouse" setups and deliver when they fancy.

 

These are the main culprits in my view for a lot of overrun builders and customers have to suffer.

 

Many of these result in late starts or early delays, this time is never made up and dominoes onto the next builds.

 

The supply system for the parts and services required to build a boat in the UK is truly appalling nothing ever comes when ordered. (Any body seen the man with my canvas wheelhouse roof that was being fitted last Thursday?)

 

The easy attitude is to say that's all the builders problem and in truth it is. But a lot of the delays wipe out the profit already in the resulting overrun before you even talk about penalties.

 

We now issue invoices to supplies for costs we directly attribute to their failings and do actually occasionally receive payment. (If more builders did the same things might change!)

 

For once we have a boat that is nearly bang on schedule but pound to a penny without among other things the canvas roof and a few bits it will overrun before we can claim it's 100% finished.

 

I can make one observation from a previous life working with the building industry for a big PLC who demanded very large overrun penalties to get things done on schedule. They still overran but during the overrun total panic broke out and the standard of work reduced dramatically and corners were cut to reduce the penalties incurred to a minimum.

 

I suppose it takes a bit of give and take between the builder and customer but maybe if customers start demanding penalty payments for overrun it could well actually help sort a lot of the underlying problems.

 

 

Oh I suppose stating the obvious unavoidable delays are one thing, lack of cash flow preventing the build progressing is another.

[Gary Peacock]

From experience the worst delays are the ones with a web camera that was getting 200 plus hits a day watching it get later and later!

[AllanW]

Once again thanks to Gary for an informative reply...

 

I know where you are coming from on the implications of penalty clauses:

 

I can make one observation from a previous life working with the building industry for a big PLC who demanded very large overrun penalties to get things done on schedule. They still overran but during the overrun total panic broke out and the standard of work reduced dramatically and corners were cut to reduce the penalties incurred to a minimum.

 

Unfortunately that's so very true!

 

The question therefore is what can be done? Maybe a name and shame list of poor suppliers? After all that's what many of our retail customers have. In fact, one retaillier we supply to has a traffic light system of Red, Amber and Green performance/quality status which updated and circulated to all it's suppliers monthly!

 

If for example (and no implication of bad service from this particular company) Isuzu found themselves being discussed here with comments like "don't buy one of their engines - it takes 2 months to get it delivered" would they take any notice?

 

One other point - have the boat building industry considered forming a buying consortium for such things as steel supplies? One small boatyard may not make a difference, but if a supplier was in the position where they might loose a contract to supply a consortium of say 50 boat yards, that would be a completely different matter...

 

Just my two-pennyworth

 

Thanks again Gary

 

Allan

[bargeeboy]

This is only for standard specification not bespoke.David

Only addition to 10% deposit is bow thruster or 240v generator costs up front.and all our boats are bespoke. Everybody wants something different

It would be great for the customer if we could all work that way but I don't see too many builders fancying being stuck with a cancelled boat, twice this year we have been stitched up by "Walter Mitty" customers fortunately in both cases only loosing relatively small amounts. (Which we will recover from these characters eventually.)We would probably need to find about £500K to operate without stage payments comfortably and realistically that won't happen.Even if we were building stock boats in the present market it's not good business sense to have them hanging around. For "Show boat" often you should be reading "Boat we can't sell".

Correct we have about £500 k invested in the project. It does however give comfort to clients when they are not able to oversee production regularly. I have been trying to build a stock/show boat for 12 months but all are sold before the 12mm base plate goes down ! I've now started to renovate one of my own boats (FMC Stafford) which will act as a 'show' boat. Edited July 29, 2007 by bargeeboy

[Dave-Shrop]

Only addition to 10% deposit is bow thruster or 240v generator costs up front.and all our boats are bespoke. Everybody wants something different

 

From Narrowcraft Website

 

"Full plans and specification click on the link above or visit us at Alvecote Marina which is at the Heart of the Canal system. Six months free moorings at Alvecote for all new Narrowboats sold. We are not in the business of securing stage payments prior to building. Standard Specification boats are reserved for 10% deposit with balance payable on delivery. We try to keep boats at Alvecote for immediate delivery but they don’t stay long. Our standard specification excludes curtains and soft furnishings. This will enable you to personalise your boat yourself or our furnishers will meet you on site. Ours is a policy of continuous improvement and progression therefore stock boats might vary from current build specification. "