Contributed by Doug Roth, Aircraft Sales Rep with Duncan Aviation
Whether you are buying or selling a business aircraft, the Aircraft Purchase Agreement (the Agreement) is the most important document to the transaction. It incorporates all terms and conditions of the sale. It is vital that you understand all the details of the contract before you sign.
The initial purchase agreement should be prepared by the legal counsel of either the buyer or seller with the final terms and conditions negotiated and agreed to by both parties. A typical Agreement can be only a few pages to well over 20 pages when finalized. The majority of the language will be about the pre-purchase inspection, the condition of the aircraft at closing, how the closing will occur and what happens if either party does not perform as agreed.
Buyer & Seller Responsibilities
Throughout the Agreement there will be detailed language instructing the buyer and/or seller to perform specific tasks at a specific time. For a buyer, these tasks can include placement of a deposit in escrow, scheduling the pre-purchase inspection, accepting or rejecting the aircraft and placement of the balance of the purchase price in escrow for closing. For the seller, these tasks can include movement of the aircraft to pre-purchase inspection, the correction of pre-purchase discrepancies and placement of the required documents in escrow for closing to transfer clear title to the aircraft.
The actual number of tasks and their timing can vary widely depending on what all Parties agree to and the legal safeguards added to the Agreement. Timing is a very important element to consider since one task may not be able to begin until another task is completed. For example, the acceptance or rejection of the aircraft typically does not occur until the pre-purchase inspection is complete or the closing typically does not occur until all discrepancies are corrected.
Before signing the Agreement, I recommend both the buyer and seller go through the Agreement and make a list of all the tasks that both Parties are responsible for including requirements and completion timing. Using a simple checklist will keep you prepared to easily meet your obligations of the Agreement as the aircraft transaction progresses, eliminating the need to request a time extension for something overlooked. Also, by making the list before signing, there is still time to negotiate tasks that might conflict with each other or negotiate obscure tasks added by legal counsel.
Buying and selling an aircraft can be a stressful experience. You can lessen the stress by having a thorough understanding of the Aircraft Purchase Agreement.
Duncan Aviation’s Aircraft Sales & Acquisitions has been assisting operators buy and sell aircraft since 1991. Backed by in-house legal counsel, flight operations staff and more than 2,000 airframe, engine and avionics technical representatives located around the world, Duncan Aviation has unmatched, first-hand access to and knowledge of the aircraft marketplace.
Visit www.DuncanAviation.aero/aircraftsales/listings.php for the latest aircraft for sale.
Doug Roth is an Aircraft Sales and Acquisitions Rep at Duncan Aviation’s Lincoln, Nebraska, facility. With his experience as an avionics tech and pilot, he skillfully values aircraft and provides comprehensive aircraft consignment and acquisition services.