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Sale of New Aircraft With Used Engine Supports Claim of Fraud

The Texas Court of Appeals in Dallas ruled this week that a buyer purchasing a new aircraft from the manufacturer made a submissible case of fraud against the seller when it introduced evidence that one of the aircraft engines had previously been used on another aircraft, and that this fact had not been fully disclosed to the buyer.

Washington Decision Rejects Seller’s Reliance on Boilerplate Warranty Disclaimer

The Seattle seller of a used aircraft discovered that its use of an “as is” clause in its general disclaimer of warranties did not suffice to exonerate it from the consequences of delivering an unairworthy aircraft, even after the buyer’s conditional acceptance of the aircraft.

Certificate of Airworthiness Ineffective When Noncompliance with FAR is Present

In Munich v. Columbia Basin Helicopter, Inc., the U.S. District Court for the District of Oregon found that a contract term requiring delivery of an airworthiness certificate by the seller may be breached even when a certificate is provided at the time of delivery.

Closing on Sale and Acceptance of Aircraft with Bill of Sale Specifying “As Is” Delivery Waives Contract Provisions Requiring Seller to Correct Discrepancies and Deliver an Airworthy Aircraft

The aircraft buyer in Wedderburn Corporation v. Jetcraft Corporation learned the hard way that a contract term calling for delivery of an airworthy aircraft with discrepancies repaired would not protect the buyer under all circumstances.

Contract with Foreign Buyer Calling for Delivery in Airworthy Condition may Imply Compliance with Airworthiness Standards of Foreign Nation

In a recent decision in Daiichi Koku Co. v. J.E. Aero, Inc., the U.S. District Court for the Northern District of Illinois considered a claim in which the plaintiff, a Japanese air carrier, had entered into an Aircraft Purchase Agreement to acquire a used aircraft from an Illinois broker.

No Missouri Use Tax Due When Aircraft is Purchased for Immediate Lease to a Missouri Common Carrier

In its recent ruling in Five Delta Alpha, LLC v. Director of Revenue, the Missouri Supreme Court has ruled that an aircraft transfer is exempt from Missouri use tax under the “sale or resale” exemption even when the aircraft is leased rather than sold to a Missouri common carrier.

Alter Ego and Joint Venture Theories Permitted Under Montreal Convention

The Montreal Convention provides that carriers are liable for damages when a passenger is injured or killed on an international flight. When a carrier lacks the assets to cover these damages, however, claimants may have no recourse unless liability under the Convention may be applied against other parties. A recent ruling by the U.S. District Court for the Southern District of Florida has endorsed a theory for expanded liability in a noteworthy decision.

Court Rejects Claim That Fractional-Share Owner Holds An Interest In Operator’s Entire Fleet

The bankruptcy of fractional-share operator Avantair triggered a dispute regarding exactly what property its fractional-share owners held. Like other fractional-share operators, Avantair operated a fleet of airplanes, selling fractional shares in each of them to individual participants.

Contract Language Calling For Sale “As Is” Prevails Over Airworthiness Provision When Prepurchase Inspection Fails To Note Condition Compromising Airworthiness

The aircraft buyer in McMahan Jets, LLC v. Roadlink Transportation, Inc. discovered that a contract term calling for delivery of the aircraft “in airworthy condition” was not sufficient to protect it from aircraft discrepancies found after the buyer’s prepurchase inspection and acceptance of the aircraft.

Contract Term Requiring Delivery of Aircraft in Airworthy Condition Prevails Despite “As Is” Language in Sale Agreement

The United States District Court for the Northern District of Texas recently decided a case involving an aircraft sales agreement with seemingly conflicting provisions. While calling for the seller to deliver its aircraft “in an airworthy condition and [with] a current Certificate of Airworthiness” the agreement also provided that the buyer agreed to accept the aircraft “in an ‘as is where is’ condition.” On these facts, the court in Luig v. North Bay Enterprises, Inc. ruled that the “as is” clause served only to waive implied warranties on the aircraft, and that the promise to deliver the aircraft in an airworthy condition created an express warranty that was not subject to this disclaimer. Because the aircraft in question was delivered with an airworthiness certificate that was not the correct type designation due to prior engine modifications, and because the aircraft log book did not clearly indicate compliance with one of the Airworthiness Directives applicable to the aircraft, the Court found that the aircraft was not delivered in an airworthy condition, in breach of the seller’s express warranty. 

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