Detailed Analysis of the Demolishcon Contract for Ship Recycling

This report provides an analysis of the Demolishcon contract, a revised version of the sales contract used for ship recycling. The contract is divided into two parts: Part I covers the ship's physical details, sale location, and buyer/seller information. Part II outlines the commitments of both parties to adhere to industry standards for safe and environmentally sound recycling. The report discusses key clauses, including those related to purchase price, payment, advance notice of arrival, readiness of delivery, and delivery terms. It also explores the global landscape of ship recycling, highlighting the dominance of developing countries like China, India, and Bangladesh due to factors such as lower labor costs, demand for steel, and favorable exchange rates. The report references relevant literature, including works by Grube (2006) and Puthucherril (2010), to support the analysis and provide context for the contractual and industry practices.

Demolishcon is the revised version of previous salescrap 87 contract used for negotiation
while selling a vessel for the purpose of recycling and demolition. The clauses of this
document were grouped in two parts (Grube, 2006).
The features of these are discussed below in brief:
Part I
This part of the document mainly covers the details regarding the ship to be sold for
recycling. It contains the name and address of the owner of the ship, IMO number, IMO
registered owner identification number, IMO company identification number, Ship gross
tonnage, port of registry, distinctive letters or number of ship and date of construction, etc. In
other words, it contains all the physical details of the ship, the place where it is sold, buyers
and sellers information, selling details, etc.
Part II
This part starts with a preamble of undertakings of both the parties i.e. seller and buyers to
comply in accordance to the industry code of practise for selling & recycling in a safe and
environmentally sound manner. This explains the procedure to be followed for selling of the
vessel and provides an outline and the way by which the contractual parties can best act. This
contact has to be as per the national and international stated in accordance with clause 17.
The 5 clauses which more or less are common which are as follows:
Clause 2 (Purchase price) and Clause 4 (Payment):
These two clauses are common as both is related to the price of the contact (Puthucherril,
2010). Clause 2 is about the price of the ship set out by the contractual parties while is about
the release of same payment which was decided after the timely delivery of consignment.
Clause 6 (Advance Notice of Arrival), clause 7(Notice of Readiness of Delivery) and clause
8(Delivery):
All these 3 clauses are related to the delivery of the vessel. Clause 6 states the prior notice to
the buyers about the vessel position and estimated arrival time of the vessel. Clause 7 states
the notices of readiness of the physical delivery of the vessel while clause 8 sets out the
conditions in which the vessel must be delivered. As all 3 states the delivery terms and
conditions, it could have been explained under one clause.

The demolition market is more favourable in less developed or developing countries due to
the lax environmental regime. These includes mainly the Asian countries like China, India,
Bangladesh and Pakistan where the labour cost is very low in comparison to the western
countries. Despite these countries are under Basel convention, they do not follow any safety
environmental precaution due to high internal corruption. The other factors being the demand
of steel in the domestic market, good value of machinery and other reusable items in the
second-hand market and the difference in exchange rate i.e. US dollar against the local
currency promotes created bigger market in these less developed countries.
China, India and Bangladesh are the 3-major player in this market. China is the leading
followed by India and Bangladesh.
Bibliography

Grube, P. (2006). BIMCO. Retrieved from http://archive.basel.int/ships/docs/11e.pdf
Puthucherril, T. G. (2010). Legal Aspects of Sustainable Developments. Boston: Martinus
NIJHOFF.