Before entering into a contract to purchase an aircraft, it is essential to have a proper letter of intent. As with any other transaction, buyers and sellers have certain risks. The risks include: 1) price fluctuations, 2) the uncertainty in each step of the transaction, 3) potential disagreements over who pays for what, 4) unexpected delays, 5) third parties, and 6) other factors.
A comprehensive letter of intent for a purchase of an aircraft should address all of the above and more.
1) Conduct due diligence on the buyer or seller - who actually owns the aircraft, are you dealing with a reputable company?
2) Lock in the purchase price - prices fluctuate and someone else may want to buy it for more.
3) Detail the inspection schedule - what happens if there is a delay, or what if there is something wrong with the aircraft?
4) Detail the entire transaction schedule, including the final purchase agreement signing date - anticipate and avoid delays. For how long is your offer open? Who delivers what, where, in what condition, and when?
5) Finalize all information on escrow accounts - avoid costly mistakes of losing the initial deposit.
6) Outline legal remedies for potential breaches - what is a material breach? When does it occur?
7) Address potential contingencies - what happens if there is a delay? Is time of the essence?
8) There are other contingencies - consult with your attorney to address your specific facts.
Letters of intent are important to clarify the expectations of the buyer and the seller and to prevent litigation. Communication and understanding between the buyer and the seller is critical.
This information is not legal advice. It is intended for the general public only. Contact an attorney from the Federal Practice Group for a free consultation to address your specific legal needs.
