Owning and operating an aircraft is an extremely expensive proposition. The purchase of a single-engine plane can cost up to $100,000, and multi-engine planes can run up to several hundred thousand dollars. Jets can cost tens of millions of dollars, depending upon the type, range, and amenities. In addition to the costs to purchase an airplane, there are operational costs of fuel, storage, maintenance, insurance, and crew.
In order to protect your investment, it’s important to have thorough and detailed contracts covering the purchase of your aircraft, as well as all of the services that you procure for your aircraft. These might include maintenance contracts, insurance contracts, pilot services agreements, hangar storage agreements, charter services agreements, and many others.
Important Elements of a Contract
For a contract to be valid and recognized by statute or the common law, it must include certain contracdtual elements such as an offer, an acceptance, consideration, meeting of the minds, consideration and capacity. Without these elements, a contract is not legally binding and may not be enforced by the courts
Offer - All contractual agreements start with desire and responsibility. That is, one party needs or wants something, and the other party takes responsibility to fulfill that need.
The offer, then, is the first essential element of a contract. An offer exists when the offeree, or the requesting party, receives the offer from the offeror. The offer can be revoked, altered or terminated at any time before acceptance. The offeree is also free to extend a counter-offer. In most cases, when a counter-offer is made, the original offer is terminated.
Acceptance - After an offer is presented, the offeree can accept or reject it. Acceptance can take many forms, including acceptance by action or conditional acceptance. But whatever the form of acceptance, it must be explicit. In most cases, a counteroffer is considered to be a rejection or termination of the original offer. Most states follow some form of the so-called “mailbox rule,” which states that an offer is considered accepted when the acceptance is communicated, whether by email, mail or in some other fashion.
Meeting of the Minds - It is essential to the formation of a contract that the parties have a “meeting of the minds.” This means that the parties must both be active participants and agree to the contractt’s terms and conditions. For a contract to be binding, both parties must first be aware that they are entering into an agreement. They must recognize the contract exists and freely agree to be bound by that document’s obligations. If one of the parties can prove that the agreement was signed due to fraud, misrepresentation or undue influence, the contract may be invalidated. As a result, it is crucial for all parties entering into a contract to clearly and decisively establish that the agreement is genuine, mutual, and all parties consent to its contents.
Consideration - Consideration is the value that the parties have agreed upon for the product or service. It’s important to be aware that a financial component is not necessary for the consideration to be valid. Parties can agree to exchange services, for example. What’s important is that the consideration has an agreed-upon value to the parties to the contract.
Capacity - Capacity means that the parties are contractually or legally capable of signing an agreement. Generally, people who are minors, are under the influence of drugs or alcohol, or who are for other reasons not able to understand a contract do not have the legal capacity to sign.
Aviation Contract Tips
Tip 1: A pre-purchase inspection should be performed by an A&P or authorized inspection station.
Tip 2: If you are selling an aircraft “As-Is Where-Is”, do not make any representation concerning the aircraft or the engine.
Tip 3: Always complete a title and lien search.
Contact Lento Law Group for Your Aviation Contract Needs
To protect you and your investment, it’s imperative that your aviation contracts meet all legal requirements for a valid agreement. Contact Lento Law Group today to help you with all of your aviation contracting needs.