When boats are built to order, I don't know any builder that will do it
without progress payments. At Manta it has been in 1/3 installments, and I
believe Endeavour does it the same way. With a Semi-production boat like the
Manta the bottom line is defined, however in custom projects it is usually
"time and material" which leaves the bottom line open. Is there risk? Yes if
the builder goes out of business before completion, which has happened in this
industry as well as others. I am completing a custom 50 ft sailing catamaran
for an owner right now that was not finished because the builder went out of
business before completion. This owner looked at everything available to him
on the retail market, and elected to pay to finish it and in the end will get
the boat he wanted and probably for no more cost than a retail replacement.

Having experienced losing out on $$ and a boat when the builder goes under,
I9m very sensitive to this issue.  A letter of credit (LOC in banking
jargon) solves this problem for a foreign builder.  Perhaps a trust could be
established that would work similarly for a domestic contract; that9s how I
plan to handle it next time.

Basically, a LOC is a banking instrument that ensures that both parties
fulfill their terms of the contract when neither is willing to trust the
other.  The buyer must obligate the funds, but nothing is given to the
builder until the terms of delivery are met.  The builder may borrow against
the LOC in order to have working capital, but the risk lies with the bank,
not the buyer.  If everything goes right, the buyer gets the product (in
this case, a boat) and the builder gets the money.  If things don9t go
right, the buyer gets his/her money back and the builder has a mess to deal
with.  So, the builder has every incentive to make things go right.

Obviously, this adds some cost to the transaction, but it9s not prohibitive.
Terms are negotiable.  The builder must have sufficient means such that a
bank sees them as a reasonable risk, so not every situation will meet with
approval from the bank.  However, if the bank doesn9t like the
credit-worthiness of the builder, that9s enough reason not to buy their
boat.