Letter of Intent – Sale Agreement – Used Aircraft

Once a suitable aircraft has been identified or a purchaser has been located (depending on for whom Lateral 4T is acting) a letter of intent will commonly be used in order to signify the intention of the  parties to enter into a transaction for the sale and purchase of an aircraft.  The nature of the letter of intent is such that the purchaser will confirm that it is interested in purchasing the aircraft for a certain price subject to the satisfactory conduct of a pre-purchase inspection.  The letter of intent will contain basic provisions relating to the timescale of the transaction and give a confirmation that a deposit is lodged with the Escrow Agent.  The letter of intent will indicate that it will be replaced by a formal sale agreement incorporating the basic terms of the letter of intent but it is important that whilst there is a signification of intent no binding contract.  This enables both parties to “walk away” from the transaction up until the pre-purchase inspection is completed and the aircraft is formally accepted.

The sale agreement is an important element of the transaction as it will contain certain warranties and representation and indemnities for the protection of both parties.  The negotiation of the terms of the sale agreement will dictate the overall speed of the transaction and with in excess of 187 transactions completed over the past 20 years Lateral 4T is very familiar with the negotiation of the sale agreement for the benefit of its clients.  Major pitfalls and misunderstandings can be avoided if the sale agreement is correctly negotiated and where a financier is involved they will require sight of an will wish to approve the terms of the sale agreement to ensure that adequate warranties and representations are included to satisfy their needs and requirements.