Commissioning a Custom Sailboat: What Your Build Contract Should Cover

Commissioning a custom sailboat is one of the most exciting—and financially significant—projects a boat enthusiast can take on. You’re not just buying a product off a lot; you’re funding design decisions, sourcing, skilled labor, and a build timeline that may span months (or longer). That’s why your paperwork matters as much as your sail plan.

A well-drafted custom sailboat contract (also called a commission boat building contract or sailboat construction agreement) should do more than confirm price and delivery. It should translate your vision into measurable specifications, manage change without chaos, allocate risk, and give you clear remedies if the build veers off course. In short: it should protect the joy of the process by reducing uncertainty.

Below is a buyer-focused checklist of the key terms your build contract should cover—written for enthusiasts ordering custom vessels and want a contract that feels as seaworthy as the boat itself.

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1) Identify the Parties, Project, and Contract Documents

Start with the basics, but do it precisely. Custom projects often involve multiple entities: the shipyard, a design firm, a project manager, and subcontractors.

Your contract should clearly state:

• Legal names and addresses of the buyer and builder (and any guarantor entity, if applicable)
• Where the vessel is being built and where it will be delivered
• The vessel’s intended use (e.g., cruising, racing, offshore passagemaking)—this often impacts standards and equipment
• A list of contract documents that control the build, such as:
  • Specifications (the “Spec Book”)
  • General arrangement drawings
  • Rig and sail plans
  • Systems schematics (electrical, plumbing, fuel, steering)
  • Builder’s proposal/quote (only if incorporated)
  • Change order forms
  • Any classification/standards documents

Tip: Include an “order of precedence” clause so that if drawings conflict with specs, you know which controls.

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2) Define Scope and Specifications (The Heart of the Deal)

The biggest source of disputes in a custom yacht contract is unclear scope. Your contract should describe the vessel in a way that is measurable and auditable.

Key scope components to lock down

• Hull and deck construction: material (fiberglass, carbon, aluminum, steel, wood/epoxy), core type, laminate schedule, corrosion protection, coatings
• Dimensions and performance targets: LOA, LWL, beam, draft, displacement, ballast ratio
• Keel and rudder: type, material, bearings, grounding reinforcement
• Rig: mast type, standing and running rigging, spars, boom, furling systems
• Sails: inventory, cloth type/weight, measurement standard, reef points, covers
• Propulsion: engine make/model, horsepower, shaft/prop, saildrive, sound insulation, ventilation
• Systems: electrical (DC/AC), batteries, charging sources (alternator, shore power, solar, wind, generator), plumbing, heads, watermaker, HVAC
• Electronics: navigation suite, autopilot, radar, AIS, VHF/SSB, network standard (NMEA 2000, etc.)
• Interior and finish: joinery materials, layout, upholstery, hardware grade
• Deck hardware and safety gear: winches, cleats, stanchions, lifelines, jacklines, fire suppression

Standards and compliance

Your sailboat construction agreement should state what standards apply, such as:

• ABYC (commonly used for electrical and safety in the U.S.)
• ISO standards (common internationally)
• CE/RCD compliance if relevant for the EU
• Any classification society requirements (if you’re classing the vessel)

If the builder says “built to best practices” without specifying standards, push for defined criteria.

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3) Design Responsibility: Who Owns the Naval Architecture?

Clarify whether the builder is building from:

• Your existing design (supplied by you), or
• A designer engaged by the builder, or
• A designer engaged by you directly

Your contract should address:

• Who is responsible for design adequacy (including structural engineering)
• Whether the builder can make substitutions without approval
• Whether drawings are “for construction” and when they must be finalized
• How design changes affect price and schedule (see Change Orders below)

Risk note (buyer perspective): If you supply the design, builders may try to limit responsibility for performance or compliance issues. If the builder supplies design/build, you can often demand stronger warranties tied to the complete package.

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4) Price Structure and Payment Schedule (Avoid Surprise Invoices)

Custom builds often use one of three pricing models:

1. Fixed price (best for budget certainty; requires tight specs)
2. Cost-plus (more flexible; requires strong transparency and audit rights)
3. Hybrid (fixed for hull/deck, cost-plus for owner-selected equipment)

Your commission boat building contract should clearly state:

• Contract price or pricing method
• What is included/excluded (shipping, commissioning, travel, storage, taxes, registration)
• Payment milestones (e.g., deposit, hull layup complete, deck join, engine install, launch, sea trials, delivery)
• Retainage/holdback (e.g., 5–10%) until punch list completion

Protect yourself with payment controls

• Require itemized invoices and progress documentation
• Tie payments to objective milestones verified by your surveyor/representative
• Avoid paying too much upfront relative to work completed
• Specify late-payment consequences—but also builder delay consequences (see below)

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5) Change Orders: The Clause That Saves Relationships

Almost every custom sailboat evolves during the build. Without a strict change-order process, you’ll see cost overruns, schedule drift, and disagreements about “who approved what.”

A solid custom sailboat contract should require:

• Written change orders signed by both parties
• Description of the change and updated drawings/spec sections
• Price impact (increase/decrease), including labor and materials
• Schedule impact (additional days/weeks)
• Impact to warranties and performance targets (if any)

Practical tip: Add a “no verbal approvals” clause. Friendly dockside conversations are not contract amendments.

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6) Timeline, Milestones, and Delay Remedies

Custom boat builds are notorious for delays—some reasonable (material lead times), some avoidable (overbooked yard, poor project management). Your contract should define:

• Start date (or triggering event, such as design approval)
• Milestone dates and target launch/delivery date
• Builder obligations to provide progress updates (weekly/monthly)
• Delay categories:
  • Force majeure (storms, war, pandemics, port closures)
  • Supply chain disruptions (define what qualifies)
  • Owner-caused delays (late selections, late payments, scope changes)
  • Builder-caused delays (staffing, scheduling, rework)

Remedies for delay (buyer-friendly options)

• Liquidated damages (a set amount per day/week of delay)
• Service credits (storage, dockage, commissioning support)
• Termination right if delay exceeds a defined threshold
• Requirement to mitigate delays (e.g., sourcing alternatives with approval)

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7) Quality Control, Inspections, and Owner’s Representative Rights

You should have the right to verify that what’s being built matches the specs—without disrupting the yard.

Include clauses for:

• Reasonable access for you, your surveyor, or an owner’s rep
• Required inspection points (e.g., pre-lamination, post-lamination, systems rough-in, pre-paint, pre-launch)
• Non-conformance reporting and correction process
• Photographic documentation requirements
• Sea trial procedures and acceptance criteria

Buyer tip: If your budget allows, appoint an experienced owner’s representative early. A few well-timed inspections can prevent expensive rework.

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8) Materials, Substitutions, and Supply Chain Subcontracting

Substitutions are a major hidden risk. A builder might swap hardware models, resin systems, electronics versions, or interior materials due to availability or cost.

Your custom yacht contract should:

• Require written approval for substitutions
• Define “equal or better” and how it’s determined
• Require disclosure of lead times and long-lead items early
• Address subcontractors: who they are, builder responsibility for their work, and minimum qualifications

Also consider requiring that critical components (engine, mast, winches, electronics) be sourced from authorized channels to protect warranties.

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9) Title, Ownership of the Vessel in Progress, and Risk of Loss

This is where buyers can get blindsided. If the yard experiences a fire, flood, theft, or insolvency, you need to know:

• When title transfers (upon delivery? as payments are made? upon completion of certain stages?)
• Who bears risk of loss during construction and storage
• How “buyer-furnished equipment” is handled and insured
• Whether the builder can place liens on the vessel for unpaid subcontractors (and how lien waivers are handled)

Protective clause to request: The builder should provide lien waivers (or equivalents) from key subcontractors and suppliers as payments are made.

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10) Insurance Requirements (Builder’s and Buyer’s)

Your sailboat construction agreement should specify minimum insurance coverage, such as:

• Builder’s risk (covers the vessel in progress)
• General liability
• Workers’ compensation
• Professional liability (if the builder or its designer is responsible for design)

The contract should state:

• Who is named as additional insured
• Policy limits and deductibles
• Proof of insurance timing
• Claims process and cooperation obligations

If you’re providing high-value equipment (electronics, sails), confirm whether it’s covered under the builder’s risk policy or your own.

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11) Warranties and Post-Delivery Support

Custom builds require a realistic warranty structure. Ensure the contract includes:

• Warranty term(s) (e.g., 12 months from delivery; longer for structural components)
• What’s covered (materials, workmanship, systems)
• What’s excluded (normal wear, misuse, racing, grounding, corrosion due to neglect)
• Remedy: repair, replace, or refund (typically repair/replacement)
• Travel and haul-out costs—who pays if warranty work requires hauling or relocating
• Response times and scheduling for warranty repairs

Buyer tip: Separate “manufacturer warranties” (engine, electronics) from builder workmanship warranties, and make sure the builder transfers all applicable warranties to you at delivery.

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12) Acceptance, Sea Trials, and the Punch List Process

Your contract should define a clear acceptance procedure:

• Pre-delivery inspection
• Sea trials: conditions, duration, test plan (speed, steering, autopilot, charging, refrigeration, watermaker output)
• Acceptance criteria (what qualifies as a defect vs. a minor adjustment)
• Punch list creation and timeline for correction
• When final payment is due (ideally after punch list is completed or with retainage held back)

Avoid “deemed acceptance” clauses that treat silence or a short inspection window as acceptance of major issues.

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13) Documentation and Deliverables at Handover

A professional handover package reduces frustration and improves resale value.

Require delivery of:

• As-built drawings and wiring diagrams
• Manuals and warranty cards
• Maintenance schedules
• Spare parts list
• Certificates (compliance, CE, stability documentation if applicable)
• Inventory list (tools, spares, sails, safety gear)
• Commissioning checklist signed off

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14) Intellectual Property and Confidentiality (Yes, It Matters)

If you’re commissioning something truly unique, clarify:

• Who owns the design rights and whether the builder can replicate the design
• Whether the builder can use photos of your boat for marketing
• Confidentiality obligations (especially for proprietary layouts or engineering solutions)

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15) Dispute Resolution, Governing Law, and Venue

Boat builds can cross borders—design in one place, build in another, delivery elsewhere. Your contract should specify:

• Governing law (state/country)
• Venue (where disputes are resolved)
• Dispute escalation steps (negotiation → mediation → arbitration/litigation)
• Attorney’s fees clause (who pays in a dispute)
• Time limits for claims

Buyer tip: Arbitration can be faster and private but may limit appeals. Litigation can be slower but may provide stronger remedies. Choose intentionally.

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16) Termination Rights and What Happens Next

Termination provisions often get overlooked until things go wrong. Your commission boat building contract should cover:

• Termination for cause (material breach, persistent delay, insolvency)
• Termination for convenience (if permitted, at what cost)
• How work-in-progress is valued
• Transfer of title to partially completed vessel and materials
• Access to molds, tooling, drawings (if relevant)
• Delivery of buyer-furnished equipment and any prepaid items

Make sure there’s a practical exit path that doesn’t trap you financially.

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Practical Red Flags in a Custom Sailboat Contract

Watch for:

• Vague specs (“high quality,” “yacht finish”) without measurable criteria
• Broad substitution rights without approval
• Payment schedule heavily front-loaded
• No change-order process
• No inspection rights
• Very short acceptance windows or “deemed acceptance”
• Warranty disclaimers that effectively eliminate recourse
• Unclear title/risk of loss terms
• No defined delivery conditions or sea trials

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Final Thoughts: Your Contract Is Part of the Build

Commissioning a custom sailboat is a craft project, a logistics project, and a risk-management project all at once. A strong custom sailboat contract—whether you call it a sailboat construction agreement or a custom yacht contract—should make expectations concrete, create a fair system for changes, and give you clear rights if timelines or quality slip.

If you want a faster way to draft and refine a boat-building agreement framework (and then tailor it with your builder, designer, and surveyor), you can explore Contractable, an AI-powered contract generator, at https://www.contractable.ai.

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Other Questions You May Ask Next

• What’s the difference between a fixed-price and cost-plus commission boat building contract, and which is safer for buyers?
• How do I write acceptance criteria for sea trials (speed, heel angle, systems performance)?
• Should I hire an owner’s representative or marine surveyor during construction, and what should they inspect?
• How do lien waivers work in a sailboat construction agreement?
• What insurance should I carry while my vessel is under construction?
• How should a contract handle delays caused by supply chain disruptions?
• What warranties are reasonable for hull structure vs. onboard systems?
• How do I structure retainage so punch-list items actually get completed?
• What delivery terms should I use if the boat is shipped internationally?
• How can I protect my design and prevent the builder from replicating my custom layout?