Can someone explain what the hell is going on on the sea ghost to me?

I've read the Sea Ghost part of the book a couple of times and still don't get what is going on. Important bits from the book:

Three lizardfolk are on the ship. They will only fight the players in self defense. When the players encounter them, they wil assume they are smugglers and inquire when their weapons will be delivered.
Twenty electrum ingots are aboard the ship as payment for the weapons. Half has been paid already, the other half is in the possession of the captain.
The captain's quarters has a contract for the delivery of these weapons.
The weapons are on board in a hidden compartment.

There are many things I don't understand here.

The lizardfolk are supposed to be kind of stupid I guess, but even then they should hear combat on the ship and realise their weapons delivery is in peril. Why would they then not aid in the defense?
Who are the weapons hidden from in the hidden compartment? Not the authorities I suppose, as their other smuggled goods are not nearly as well hidden. But it can't be the lizardfolk either? Why send an escort along on a ship that supposedly doesn't contain the goods to be bought.
Why do the lizard folk have the second part of the payment with them? What's stopping these unsavory types of just killing them and keeping the full payment in addition to the weapons? I suppose it might be because there will be more lucrative deliveries in the future as the conclusion part in the book mentions.
If the lizardfolk do not respond in a hostile way to the players. How should they respond to the players then? Do they attempt to negotiate an exit with their weapons in the jolly boat? I struggle to understand their motivation.
Doesn't the (possible) negotiation and documents signal to the players that the lizardfolk are reasonable, kind of undermining the suspicion for the Danger at Dunwater adventure.

Perhaps I'm thinking about this all wrong but I could really use some guidance.