Elements of an Aircraft Purchase Agreement

2008-07-24 11:19:56

( Travel )



Definition of an Aircraft Purchase Agreement

Buying an airplane is a high involvement decision and involves many requirements for both buyer and seller. The most important requirement is the aircraft purchase agreement.

When you look into the text of an aircraft purchase agreement, you will notice that it resembles the purchase contracts or deeds of sale of many other capital goods such as real property and cars. And like aircraft lease agreements and other similar documents, it contains specific provisions that either party needs to comply with before an actual exchange and transfer of ownership takes place.

Basic Transaction Information

The first parts of the aircraft purchase contract mentions the names of the buyer and seller, the model and other specifications of the aircraft, and the selling price agreed upon by both parties.

Some Conditions of Sale

This is a crucial part of the aircraft purchase agreement because it states all the terms and conditions that each party needs to comply with. For instance, the seller must agree to allow the buyer to make a thorough inspection of the aircraft prior to closing the sale.

While the aircraft is sold at its current condition, the buyer should be duly informed of its exact condition, such as its mileage and years of operation. Furthermore, the aircraft must be in full operational condition at the time of purchase, and its maintenance program must be up to date as prescribed by the manufacturer.

At the close of sale, the seller also has to specify the exact amount of deposit that the seller needs to pay, and also names the escrow agent who will keep the pertinent documents in escrow until actual deposit payment has taken place.

Other Supplementary Documents

Aside from the document containing the aircraft purchase agreement, buyer and seller also need to submit other related documents before the actual exchange can take place. These supplements are as important as the main purchase agreement, because they provide supporting information and legal power to protect both parties.

The buyer completes an aircraft inspection report as one of the supplements. This document shows that he has thoroughly inspected the aircraft and is confirming that its condition is airworthy.

The seller also has to complete a Bill of Sale as well as a Delivery Receipt which confirm that the aircraft is free of any lien or liability at the time of the sale.


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