If you’re interested in buying or selling aircraft, your intentions may be clear to you, but not necessarily to the other party. When you’re the buyer, a Letter of Intent (LOI) establishes you as a seriously interested buyer but without necessarily committing you to complete the transaction. When you’re the seller, requesting an LOI weeds out tire kickers and allows you to focus on buyers who are more likely to make the purchase.
An LOI outlines key points in an aircraft purchase and sale transaction. A carefully crafted LOI brings the buyer and seller together. It encourages both parties to resolve key deal points before being heavily invested in a transaction. When done correctly and thoroughly, an LOI can save you from emotionally-charged, last-minute negotiations to cover points that should have already been resolved.
Four reasons to use or request an LOI when buying or selling aircraft
- A Buyer and Seller have different expectations or motivations for a purchase or sale. An LOI establishes the relationship and expectations between the parties.
- An LOI is generally non-binding. It encourages the parties to continue discussions without forcing them to make the conversation exclusive.
- Carefully negotiating an LOI can save time and money when negotiating a purchase agreement. The parties have already worked through controversial provisions.
- An LOI addresses the most important transaction terms, such as:
- Price
- Scope of inspection
- Inspection location
- Deposit
- Aircraft delivery conditions
- Aircraft movement costs
- Choice of law, jurisdiction and venue
A well-written LOI can be used effectively to define the aircraft transaction terms, establish the relationships, and to set the tone for the potential sale or purchase before any additional time or resources are expended.
If you have questions or require assistance in preparing an LOI for a future aircraft transaction, consult Kali M. Hague at Jetlaw, L.L.C. or contact us at 202.847.6272 or www.jetlaw.com.
