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Aircraft Sales

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.

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.

“Common Carrier” and “Sale for Resale” Tax Exemptions Denied to Lessor of Aircraft

The Missouri Administrative Hearing Commission has held that a lessor of an aircraft does not qualify for the “common carrier” or the “sale for resale” tax exemptions, even if the lessee of the aircraft would qualify.

Missouri Legislature Considers Proposals to Extend Sales Tax Exemption on Aircraft Replacement Parts

Both the Missouri House and Senate are currently considering bills that would extend indefinitely the exemption of aircraft replacement parts from the Missouri sales tax.

Missouri Use Tax Applies To In-State Aircraft Sale When Sales Tax Not Collected

In Featherston v. Director of Revenue, the Missouri Supreme Court addressed the question of whether Missouri use tax applied to an in-state sale of an aircraft that fell outside the scope of Missouri’s sales tax statute. Missouri sales tax applies only to in-state transactions. Sales tax does not apply unless the seller is engaged in the business of selling tangible personal property.

Presence Of Unrepaired Squawks Does Not Overcome Sale Contract’s Allocated Risk Of Loss

In a recent decision in the case of Eagle Jets, LLC v. Atlanta Jet, Inc., the Georgia Court of Appeals considered the claim of an unfortunate buyer whose aircraft crashed during the ferry flight from the seller’s locale to the buyer’s.  The case illustrates the importance of including a clear allocation of the risk of loss in any aircraft sale contract.

Aircraft Dealer’s Compliment Concerning A Distressed Manufacturer Does Not Constitute Fraud

Though buyers sometimes seek to undo purchase agreements by claiming they were misled by a crafty salesperson, a recent federal case illustrates the limits of this tactic. In Morris Aviation, LLC v. Diamond Aircraft Industries, Inc., the Sixth Circuit Court of Appeals upheld the dismissal of an aircraft buyer’s claim of fraudulent misrepresentation.

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