What Is an Aircraft Sales Agreement?
An agreement for aircraft sales includes the names of the buyer and seller of the aircraft. The details of the aircraft and the total amount payable for the aircraft. Normally, for such purchases, the buyer inspects the aircraft to determine its condition. The agreement contains all clauses to protect the rights of both parties.
When Do You Need an Aircraft Sales Agreement?
A simple aircraft sales agreement is required when there is a purchase or sale of an aircraft. The agreement ensures that both the seller and the buyer of the aircraft fulfill their rights and obligations mentioned in the contract.
Inclusions in the Aircraft Sales Agreement
The contents of this agreement can be checked by studying an aircraft bill of sale form. The following information can be found in these agreements:
- The parties to the contract – the buyer and seller
- Make, model and registration details of the aircraft
- Considerations payable including setting up an Escrow account along with a deposit
- Inspection and delivery of the aircraft
- Counterparts to the agreement
- Definitions to the contract
- Waiver of liability
- Service and maintenance including service schedules
- Payment schedules and modes of payment
- When transfer would happen
- Details of taking possession of the aircraft
- Representation and warranties
- Governing laws
- Costs and responsibilities
- Guarantees of performance and warranties
- Treatment of breach of warranty and insufficient performance
- Representation of the aircraft and limitation of liability
How to Draft the Aircraft Sales Agreement?
You can use a sample aircraft sales agreement as a reference to draft the contract. While drafting a contract:
- Governing law: The laws of the state regarding aircraft sales
- Business section: The deliverables by both the buyer and the seller of the aircraft
- Termination section: Events leading to contract termination
- General provisions
- Guarantees of performance
- Waiver of liability
- Retention money, advance, security payments
- Limitations terms and conditions of performance
Benefits of Aircraft Sales Agreement
The benefits of having an aircraft sales agreement are as follows:
- Benefits assured for both parties: The seller will get their payment on time, and the buyer will get the required aircraft.
- Legal action: If any party deviates from their contractual obligation, they will face legal action and have to pay penalties mentioned in the contract.
Key Terms/Clauses in Aircraft Sales Agreement
The key terms in an aircraft bill of sale are as follows:
- Severability: The whole agreement will not be invalid if one part is invalid
- Escrow: Payment mode
- Deposit: May be refundable or non-refundable
- Warranties: Aircraft is sold as-is, no warranties other than fitness
- Seller’s/Buyer’s inability to perform
- Attorney fees: Rules regarding sharing
- Assignment: No assignment or transfer without the consent of both parties
- Taxes: Buyer has to pay state or local tax associated with the sale of the aircraft
- Waiver: If one party does not enforce a particular clause against the other party, it will not be considered a waiver
What Happens in Case of Violation?
To see the terms and conditions, you can download the aircraft sales agreement pdf. If any clause is violated, the following remedies are available:
- Monetary damages including lost profits if there has been a total breach
- Specific performance if the contract is at an advanced stage
- Cancellation of contract or rescission in case of fraud: Neither party has any further contractual obligations
- New contract or reformation: The court draws up a new contract if fraud is detected in the contract
- Restitution is awarded when the injured party does not want to proceed with the contract but instead wants any property or money given to the other party returned
Aircraft Sale Agreements are used in almost every aircraft sale including sectors like airports, repair stations, pilots, mechanics, and other aviation. An aircraft sale agreement is a valuable tool to ensure that each party to an aircraft sale transaction receives what is expected. It prevents confusion and misunderstanding and also provides security that a party will have recourse if the other party to the transaction fails to perform as required.
[Also Read: Aircraft General Terms Agreement]
Sample for Aircraft Sales Agreement
A sample of the agreement can be downloaded from below.