Guarantees and Warranties in Shipbuilding: What Buyers and Yards Must Know

My name is Davide Ramponi, I am 20 years old and currently training as a shipping agent in Hamburg. In my blog, I take you with me on my journey into the exciting world of shipping. I share my knowledge, my experiences, and my progress on my way to becoming an expert in the field of Sale and Purchase – the trade with ships.

Every shipbuilding project begins with optimism. Blueprints are approved, steel is cut, and everyone looks forward to launching a vessel that meets the latest technical, operational, and environmental standards. But between contract signing and vessel delivery, a lot can go wrong—and that’s where guarantees and warranties come into play.

In today’s shipping industry, guarantees and warranties are not just legal formalities—they’re essential tools for protecting both shipowners and shipyards from risks and misunderstandings. They set expectations, define responsibilities, and provide a roadmap for resolving defects or performance issues long after the ship has left the yard.

In this blog post, I’ll break down the most important types of guarantees and warranties in newbuilding contracts, explain how warranty claims are enforced, and share practical tips for protecting the interests of both buyers and builders. Whether you’re commissioning your first vessel or managing a fleet expansion, these are the safeguards you need to understand.

Why Guarantees and Warranties Matter in Shipbuilding

Building a ship is a massive investment. Even a relatively small vessel can cost tens of millions of dollars, and more complex ships—like LNG carriers or offshore vessels—can exceed $200 million.

For shipowners, warranties offer peace of mind that they’re getting what they paid for. For shipyards, guarantees serve as a quality promise and help preserve business reputation. But without clear definitions and legal backing, even minor defects can spiral into costly disputes.

Let’s look at the most relevant types of guarantees you’ll find in a modern shipbuilding contract.

Types of Guarantees and Warranties in Newbuild Projects

### **1. Construction Guarantees: The Foundation of Trust

Construction guarantees, also known as builder’s warranties, cover the overall integrity of the vessel’s structure and systems.

✅ What’s typically included:

• Hull structure (including welding quality and plating).

• Stability and structural compliance.

• Shipyard workmanship.

✅ Duration:

Usually valid for 12–24 months from the date of delivery or sea trials.

💡 Pro tip: Buyers should ensure the contract includes clear inspection protocols and acceptance criteria, so defects are not open to interpretation later.

2. Machinery and Equipment Warranties

Modern ships rely on a complex array of machinery and onboard systems. That’s why most newbuilding contracts include separate warranties for machinery, often passed through from the original equipment manufacturers (OEMs).

✅ Typical components covered:

• Main engine and auxiliary engines

• Propulsion systems and steering gear

• HVAC, electrical systems, and automation

✅ Duration:

Varies by supplier but often ranges from 1 to 5 years, depending on component criticality and manufacturer policy.

🔍 Watch out for:

• Warranty exclusions (e.g., damage due to operator error or lack of maintenance)

• Local service availability, especially for foreign-made systems

💡 Tip for shipowners: Request a warranty transfer document that guarantees coverage even if the ship is sold within the warranty period.

3. Environmental and Regulatory Compliance Guarantees

With environmental regulations tightening, especially under IMO frameworks like EEXI and CII, shipowners now expect guarantees that the vessel will meet relevant standards.

✅ What to look for:

• Guarantees that the ship complies with IMO 2023, MARPOL Annex VI, and ballast water regulations

• Fuel consumption benchmarks under defined sea conditions

• Validated emissions data at delivery

✅ **Why it matters:

If a ship fails to meet required emission levels, owners could face regulatory penalties or trading restrictions—with no clear legal recourse unless a warranty is in place.

💡 Tip: Ensure the contract includes performance testing clauses tied to real-world conditions, not just theoretical models.

How to Enforce a Warranty Claim

Even with clear warranty terms, enforcing a claim requires diligence and documentation. Here’s how the process typically works:

Step 1: Identify and Document the Issue

As soon as a defect or failure is noticed, log the issue immediately. Include:

• Photos or video evidence

• Operational logs

• Description of the fault and how it was discovered

The more detailed the report, the stronger your claim.

Step 2: Notify the Shipyard or Supplier in Writing

Most contracts require formal written notification of defects within a specific timeframe (e.g., within 15 days of discovery).

✅ Include:

• Date and nature of the problem

• Supporting documentation

• Request for remedy under the warranty clause

Failing to notify in time can invalidate the warranty, so don’t delay.

Step 3: Agree on Inspection and Repair Procedure

The shipyard may want to inspect the defect firsthand, or appoint an OEM technician. Repairs can either be performed by the shipyard or—if urgent—by the shipowner with pre-approval and cost reimbursement.

💡 Best practice: Use third-party inspectors to verify repair quality and avoid future disputes.

Step 4: Keep Detailed Records of All Correspondence

Warranty claims can lead to arbitration if disagreements arise. Keep copies of:

• All emails, letters, and reports

• Inspection notes and approvals

• Invoices and repair records

This documentation can make or break your case if legal enforcement becomes necessary.

Tips to Protect Both Shipowners and Shipyards

Guarantees should offer balanced protection—they aren’t just about shielding one side. Here’s how both parties can minimise risk and maintain trust.

For Shipowners: Protect Your Investment

✅ Negotiate warranties early. Don’t treat them as boilerplate—customise based on your operational needs.

✅ Request warranty backups from key suppliers, especially for propulsion, navigation, and environmental systems.

✅ Insist on pre-delivery testing with performance benchmarks written into the contract.

For Shipyards: Limit Exposure Without Compromising Quality

✅ Define warranty scope clearly—avoid vague terms like “defects” or “non-compliance” without objective criteria.

✅ Establish warranty claim procedures, including notification timelines and cost responsibility.

✅ Include limitations, such as exclusions for damage due to misuse or external incidents (e.g., grounding, piracy).

💡 Bonus tip: Offer optional extended warranties for critical systems—this builds buyer confidence and can be a revenue source.

Conclusion: Guarantees Are the Safety Net of Shipbuilding

In a high-stakes, high-cost industry like shipbuilding, warranties and guarantees are not just legal tools—they are trust builders. They ensure that expectations are met, responsibilities are clear, and problems are resolved without damaging long-term relationships.

🔹 From hull structure to engine performance and environmental compliance, every part of the newbuild process should be backed by clearly defined, enforceable warranties.

🔹 Shipowners must stay vigilant, document issues thoroughly, and follow claim procedures precisely.

🔹 Shipyards, in turn, can protect themselves with well-crafted clauses that ensure fairness and prevent abuse.

Have you experienced a warranty dispute or claim in a newbuilding project? How was it handled—and what would you do differently? Share your experience in the comments—I look forward to the exchange! ⚓📄

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