What should you Include in a Letter Of Intent, when Purchasing an Aircraft?

A Letter of Intent (LOI) is a non-binding document that serves as an initial agreement between the buyer and seller during the aircraft purchase process. While not legally binding, the LOI outlines the basic terms and conditions that both parties intend to include in the final aircraft purchase agreement. Begin the LOI with a formal introduction, stating the date when the document is being written. Clearly identify the buyer (purchaser) and the seller (current owner) of the aircraft. Include their names, addresses, and contact details. Provide a detailed description of the aircraft, including its make, model, serial number, registration number, and any other relevant details that uniquely identify the aircraft. Specify the proposed purchase price for the aircraft. If applicable, indicate whether the price is in a specific currency and if it includes any taxes or fees. Outline the amount of the deposit the buyer is willing to provide as earnest money to demonstrate their seriousness about the purchase. State whether the deposit is refundable or non-refundable under certain conditions. Include the duration of the inspection period during which the buyer can conduct a pre-purchase inspection of the aircraft. This allows the buyer to evaluate the aircraft’s condition and ensure it meets their requirements. List any conditions that need to be met for the purchase to proceed, such as satisfactory inspection results, clear title, and compliance with applicable regulations. Request the seller to make certain representations and warranties regarding the aircraft’s condition, maintenance history, and legal status. These assurances provide the buyer with confidence in the transaction. If desired, include a provision that gives the buyer an exclusive period to negotiate the purchase before the seller can entertain offers from other potential buyers. If the parties wish to keep the details of the transaction confidential, include a clause that stipulates the terms of confidentiality. Clearly state that the LOI is non-binding, except for specific provisions, such as confidentiality and exclusivity, if applicable. If the buyer and seller have a target closing date in mind, include it in the LOI. Conclude the LOI with space for both parties to sign and date the document to indicate their acceptance of the terms outlined.

Remember that a Letter of Intent is a preliminary agreement, and the final terms and conditions will be negotiated and documented in a formal aircraft purchase agreement. As such, it’s essential to work with legal counsel and aviation experts to ensure all aspects of the transaction are properly addressed and protected.

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