Common use of Allocation of Insurance Proceeds Clause in Contracts

Allocation of Insurance Proceeds. (i) In the event that the Vessel is at any time prior to or at delivery damaged by any insured cause and provided such damage does not constitute an actual or constructive total loss of the Vessel, the Builder shall make good such damage and shall apply any amounts recovered under the insurance referred to in Sub-clause (a) to the costs of any repair or replacement, including repair or replacement of lost or damaged Buyer’s Supplies. Such damage shall be made good so as to comply with this Contract and all repairs shall be carried out in compliance with the requirements of the Classification Society and Regulatory Authorities as appropriate without qualification. (ii) Should the Vessel become an actual or constructive total loss from any insured cause: (1) the Builder and the Buyer may agree that a new vessel is built or the Vessel reconstructed in accordance with the terms of this Contract provided agreement is reached in writing to an extension of the Delivery Date and/or any other necessary amendment to the Contract, in which case any amounts recovered under the insurance referred to in Sub-clause (a) will be applied to the construction or reconstruction of the Vessel if appropriate; or (2) If the Builder and Buyer are unable to agree within a reasonable time (and, if reasonably possible, within 90 days of the Buyer receiving written notice of the damage) on an extension to the Delivery Date and/or any other necessary amendment to the Contract as provided for in Sub-clause (c)(ii) (1) the Builder shall: (i) promptly refund to the Buyer the full amount of sums paid by the Buyer to the Builder together with interest thereon at a rate per annum as stated in Box 30 from the date of payment to the date of refund (however no interest shall be payable if the total loss was caused by a force majeure event, cf. Clause 34(a)(i), provided the conditions in Clause 34(a)(iii) are fulfilled); and (ii) make payment to the Buyer of the insured value of the Buyer’s Supplies or alternatively, at the Builder’s cost, deliver the Buyer’s Supplies to the Buyer in undamaged condition. Once all payments have been made by the Builder to the Buyer in accordance with Sub-clause (b)(ii)(2) this Contract shall be deemed terminated and all future rights and obligations of each of the Parties to the other shall cease whereupon the guarantees provided under this Contract shall be returned.