Can an Aircraft Buyer Pull-Out Once The Letter Of Intent Has Been Sent?

In most cases, an aircraft buyer can withdraw from a purchase even after they’ve submitted a Letter of Intent (LOI). An LOI is typically a non-binding document that outlines the preliminary terms and conditions of a potential aircraft sale. While it expresses the buyer’s intent to proceed with negotiations and provides a framework for the transaction, it does not create a legally binding commitment to purchase the aircraft.

An LOI is generally considered a non-binding document, which means that neither party is legally obligated to complete the transaction based solely on the LOI. It serves as a starting point for negotiations, and the terms and conditions outlined in the LOI are typically subject to further negotiation and change. The non-binding nature of the LOI allows both the buyer and seller to have flexibility during the negotiation process. If, for any reason, the buyer decides to withdraw from the purchase during the negotiations, they can do so without legal consequences. Buyers often use the period following the submission of the LOI to conduct due diligence, which may include inspections, title searches, and other investigations to ensure that the aircraft meets their expectations and requirements. If the results of due diligence are unsatisfactory to the buyer, they may choose to withdraw from the purchase. Many LOIs include contingencies or conditions that must be met for the sale to proceed. These may include financing approval, inspection results, and other specific requirements. If any of these conditions are not met or if the buyer is unable to secure financing, they may choose to withdraw from the transaction. While the LOI is non-binding, it is generally expected that both parties will act in good faith during the negotiation process. This means engaging in meaningful discussions and negotiations without attempting to undermine the process.

It’s important for both the buyer and seller to clearly understand the non-binding nature of the LOI and to have clear expectations about the negotiation process. Any provisions within the LOI that the parties intend to be legally binding (such as confidentiality or exclusivity clauses) should be explicitly stated.

An aircraft buyer can generally withdraw from a purchase even after submitting an LOI because the LOI is not a legally binding contract. The legal commitment to the purchase is typically established through the execution of a formal purchase agreement, which becomes binding once all terms and conditions are agreed upon by both parties.