Minimum Provisions Aircraft Purchase Agreements

Home/Minimum Provisions Aircraft Purchase Agreements
Minimum Provisions Aircraft Purchase Agreements 2017-06-13T02:14:03+00:00

The Minimum Provisions to Consider for Aircraft Purchase Agreements:

  1. Identity of the Parties. Name, address, place of incorporation or organization, if not acting in individual capacity.
  2. Terms of Purchase. Who is selling what to whom? Who is purchasing what from whom? Include a description of the airplane (the “Aircraft”) by make, model, serial number of airframe and engine(s), and the aircraft registration number.
  3. Purchase Price; Deposit; Escrow – What is being paid for the airplane? How much of a deposit is required? Is the deposit refundable? Under what conditions?
  4. Taxes. – Who is paying what taxes related to the transaction? Has the proper sales and use tax analysis been done to ensure that the ownership structure and delivery locations with the most favorable tax ramifications have been identified?
  5. Pre-Purchase Inspection – What will be included? Are there any past due inspection or maintenance items the payment of which the Seller is responsible?
  6. Delivery Condition – What will be required? Who determines if the airplane is delivered in less than the Delivery Condition?
  7. Release of Liens; Good and Marketable Title – It is critical to ensure everything is released at the time of closing, prior to the shift of title.
  8. Closing; Transfer of title and Risk of Loss – When does damage to the airplane become the purchaser’s responsibility?
  9. Delivery of Aircraft – Where and when will the airplane be delivered to the purchaser? Will the Purchaser get to choose the location to ensure no unnecessary sales taxes are incurred?
  10. Export Considerations – If the airplane is going to be exported, who is responsible for paying to get it ready for export?
  11. Registration with the FAA and the International Registry. Will the airplane be registered with the FAA? Does it have to be de-registered from a foreign aircraft registry first? Will the airplane purchase be registered with the International Registry (IR)?If yes, are airplane buyer and seller each a TUE with a designated PUE with the IR? If they are not, who is responsible for the fees to get each unregistered party signed up as a TUE?
  12. Warranties. Is it a new airplane or a used one being sold “as is”? Is the seller an aircraft manufacturer or dealer?
  13. Covenants and Representations – Do the parties have the legal authority to buy or sell the airplane? Will you be indemnified and held harmless if the other party breaches the contract?
  14. Default; Remedies; Termination. Will each party have a right to terminate before the end of the term? If so, under what circumstance (with or without cause, upon days prior notice, etc.)? Will a different termination right apply in the case of a breach of contract (i.e., termination for cause).
  15. Standard provisions.
    1. Notices
    2. Further assurances/duty to cooperate
    3. Assignment
    4. Construction of terms/choice of law/forum selection
    5. Confidentiality
    6. Severability
    7. Force Majeure
    8. Compliance with laws
    9. Integration clause/amendment
    10. Arbitration
    11. Non-Waiver
  16. Signature Blocks. Always make sure you have the correct parties signing so that the agreement is legally binding.