Fiduciary Underwriting Performance Bonds

I wasn't referring to well weighted but to so unfair as to perhaps even invalidate and also between two not even parties in the negotiation. If I'm a huge company for instance dealing with a small contractor, I can't write a totally one sided contract and have them sign it. Again, this is US only.

The other side is practical as well. If I write the contract too extreme then I risk putting the other party in a bad situation which ultimately works against me.

Now with boat manufacturers, most are well represented and will negotiate hard and so one will end up having a fair deal. However, there are at least a couple of boat manufacturers I know of right now that I could pretty much get to sign a very one sided deal due to issues they have. The problem is they might sign the deal, but doesn't mean they could ever fulfill it.

As a consultant your role is to work for your client and I respect that. Now, as a businessman I always valued my employees, customers and vendors very high. I negotiated hard but wanted long lasting relationships so fairness was also important even when they might have settled for less than that.

My point exactly, yes.

There's this tricky moment: all you say is entirely right, as long as you expect the "lasting relationships". In "extra big purchase/construction" case most of the time you won't have any further relationships with supplier of magnitudes comparable to that single project cost. Support/repairs/refit are either in very distant future, 10's to 100's times cheaper, likely to come from a different contractor or combination of the above. Then it makes business sense to focus on this one time in isolation, so aside from the very legitimate reason we just outlined above there's little other for being nicier then you could get away with

Fellas

I'm am not being disrespectful, but your latest conversation is proving why these deals need a seasoned transactional attorney on the purchase team ... just saying. IMO, you should try to get a security agreement as favorable to you as you can negotiate. There is nothing unfair or immoral about credible, but hard, negotiations. The "due diligence" hairs on the back of your neck should go up if you can put the manufacturer at a disadvantage. If all works out, the document gets dusty and turns brown, but when you need that doc for your protection you don't want it to be brown already. Who wants a half manufactured hull that's lost half its parts value already and doesn't quite fit on that truck you have? Clean letters of credit are routine commercial documents. If the manufacturer can't obtain one, then something is wrong already. In the LC world, its generally a matter of who will bear the cost, but they are less costly than a bond.

I believe you missed the whole point of our conversation. For example, this specific thing being addressed and digested a short while earlier. Like, most of the first page of this very thread or my response to your previous comment just several posts earlier. Tl;dr version: don't rely on any agreement you will have to enforce through the court as your primary risk control measure if you can start with limiting your exposure first.

Actually letters of credit will not function here as they are for delivery of product. They would be fine to insure payment. But they won't fund the work in process. As to the use of an attorney for such, absolutely, including a corresponding attorney in the country you're buying from.

Such a basic advice yet worth repeating everytime, indeed. For a deal of yachtbuilding magnitude one needs a whole law team, even if small one. In must include competences in all jurisdictions and aspects (such as financial and technology/specifications) involved plus someone whom a buyer could practically trust with the sum (e.g. to watch over integrity of everything and everyone else). In large deals all of this could rarely be found in one person.
Edit: and if it is, that person probably costs the same as the team ))

A security bond or an LC almost never serve as the payment vehicle alone like a bank check. They are used to guarantee payment, performance of something, or make you whole if that doesn't happen. (though an LC can turn into the payment doc upon the occurrence of a particular event and presentation of other doc's)

In the transaction type that we have been discussing, progress payments are still made by the purchaser, but the manufacturer issues a clean LC or performance bond to guarantee construction and delivery of the vessel. Upon successful transfer, those instruments would be extinguished. Upon a default, the purchaser 'calls' the bond or letter to be made whole in dollars (USA centric)

Over and out, standing by on channel 9.