Page 16 - October 23

6 26
matter hereof and supersedes any prior agreements or understandings, written or oral, with respect thereto. No statements, promises, or inducements made by any party (or their agents) to this Agreement, which are not contained in this written contract shall be valid or binding.”
Granted, this clause won’t completely protect a seller from a claim of fraudulent concealment, but at the very least, it gives cover to a buyer’s claim that: “But the seller promised me the plane was ... ”
Buyers: Keep the Seller Honest
When purchasing a used aircraft, buyers should seek certain reasonable representations from the 18 seller to ensure some semblance of transparency in the transaction. For this reason, I prefer a couple of key
clauses when representing buyers:
“Seller represents that all airframe, engine, and propeller logbooks are true and correct to the best of Seller’s knowledge”; and “No material maintenance or repairs have been performed on the aircraft during Seller’s ownership which have not been entered into the aircraft logbooks.”
As for the pre-buy inspection, a buyer should never be required to use the seller’s mechanic and should not use any mechanic who has worked on the aircraft before. Such a mechanic would have an inherent conflict of interest to inspect his own prior work and, not surprisingly, will be reluctant to report his own mistakes. Buyers should be free to use any mechanic of their choice for the pre-buy, including one a reasonable distance from the aircraft’s home base.
Deposits and Liquidated Damages
Every purchase agreement should contain a provision for the buyer to place a good faith deposit (usually 5%) as security before moving the aircraft for a pre-buy inspection. The deposit starts out as fully refundable and then becomes non-refundable after the buyer accepts the aircraft following the pre-buy. For reasons I cannot comprehend, I still see some buyers paying a deposit directly to a seller or broker. Never! All aircraft transactions should use a reputable aviation escrow company to handle all funds, including FAA sale documents and a thorough title and records search.
Sometimes, even after an aircraft is “accepted,” the buyer fails to proceed with closing. This is no time for a Seller to start calculating what their actual damages might be. Instead, the buyer’s deposit should constitute liquidated damages:
“Once Buyer has accepted the Aircraft following the Examination, and if for any reason other than a material breach by Seller, the Buyer fails to purchase the Aircraft as specified in this Agreement, Seller shall retain Buyer’s Deposit as liquidated damages, and not as a penalty.”
14 • KING AIR MAGAZINE
OCTOBER 2023