On 29 April 2024, a judgment of the Amsterdam Court of Appeal was published in a dispute over warranty defects on a delivered yacht (ECLI:NL:GHAMS:2024:1146).
Presented facts
The client ordered a yacht from shipyard VMG Yachtbuilders in January 2018. The contract stipulates that, although warranty work would in principle take place at the yard’s premises, the client had the right – after prior notice to the yard – to have such work carried out elsewhere by third parties at the yard’s expense if it would be impractical to bring the yacht to the yard. After the yacht was delivered in May 2019, the parties communicated about defects identified by the client.
In August 2019, a team from the yard travelled to the yacht’s berth in Spain to rectify warranty issues. Following a verbal argument between the parties, the yard’s team was denied further access to the yacht. The client then had the yacht examined by an expert who assessed the repair costs, and asked the yard to agree to that assessment and have the work carried out by third parties. The yard rejected client’s request and expressed its willingness to repair the work itself in the Netherlands, or alternatively in Spain on condition that the client cover travel and accommodation costs. The client did not agree to that condition.
The court rejected the client’s claim for payment by the yard of the repair costs under the warranty clause in the contract.
Court considerations
The court of appeal considered that the client was not entitled to rely on the clause in the contract because the yard had travelled to the location of the yacht at its own expense to repair the defects itself, but the client had dismissed the yard’s team while they were carrying out repair work. Since the verbal argument between the parties was not a justifiable reason for expelling that team, nor was there any other justifiable reason for denial of access to the yacht, the client fell into creditor default.
Creditor default results, on the one hand, in the yard being entitled to claim compensation for costs resulting from the default. Accordingly, the yard was entitled to seek compensation for travel and accommodation costs as a condition for subsequent repairs in Spain, the court said. On the other hand, the yard itself did not default on its own contractual repair obligations.
The court also considered that the client had not sent any prior notice to the yard and that the notice of default required for default on the part of the yard was also otherwise lacking.
Lessons learned
This case demonstrates that buyers of yachts are not simply entitled to have defects on the yacht repaired by third parties during the warranty period and then charge the repair costs to the yard. Moreover, buyers should give the yard sufficient opportunity to repair the defects. If the buyer fails to do so and thereby effectively impedes the yard’s fulfilment of its repair obligation, this cannot be held against the yard.
In this case, the yard was willing to repair the defects itself. Discussions may however also arise between the parties as to whether a defect exists or whether the yard is obliged to repair it. This will depend on the wording of the warranty clause and to what extent it deviates from the legal conformity regime. Statutory rules typically offer consumer buyers in particular far-reaching protection in the event of non-conforming products.
We have extensive experience in drafting yacht construction and sale contracts, and litigating warranty issues on behalf of shipyards and clients. If you have questions about the content of a warranty clause or have a dispute about an alleged defect in a yacht, please feel free to contact us.
