Read the contract

Something about a pre-owned airplane deal tends to bring out the worst in people, like the entrance to the Holland Tunnel at rush hour. You would bazooka an ice cream truck to gain position because if you don’t, Mr. Good Humor will. In every merge there is a winner and there is a loser.

So, with the tension meter permanently in the red it doesn’t take much for a full-blown attack of road rage to break out in the middle of a pre-buy or 10 minutes before closing.

It usually starts when Party A begins to think Party B is intentionally trying to cheat the deal. Then Party A immediately downshifts into OUTRAGE mode and threatens counter-attack.  At this point both sides think the other is prepared for war.

Once trust has been broken it can’t be fully restored and both parties walk away with another airplane deal horror story. Here’s the punchline: most of the time, neither party intended to cheat … they just accidentally appeared that way. Avoidable and unintentional conflicts routinely infect airplane deals.

Why? #1 reason is that somebody is not reading or not understanding the contract.

Most sales agreements- at least the ones negotiated by competent and experienced aircraft attorneys- are thorough documents. They lay out the responsibilities of each side and outline a step-by-step process from signature through delivery. But they are really long and dense and not exactly in the style of Tom Clancy. For sure they are outside the boundaries of our preferred 280- character attention span.

In many cases a lawyer is the only member of the buyer/seller team to have actually read the entire agreement- or even a meaningful portion of the agreement. Yet, most of the actual doing things part of the deal (like the PRE-BUY) will be handled between brokers, technical representatives, flight department personnel, management companies, etc.

When the people doing the work don’t know the deal, problems happen. Those problems can get reported to the principal, who probably doesn’t know the contract either, and they inject the kerosene. Boom.

Your side needs a head coach to ensure coordination throughout the team. Hopefully that’s your broker, but whomever it is, somebody needs to do the following:

  • Read the contract, know the contract, and refer back to it often. The first move after ANYTHING happens in a deal is to re-read the contract and understand how it applies.

  • Make a checklist. The contract is long and it’s hard to find things. You need a simple list in front of your face that summarizes the responsibilities for each side, milestones, timeframes, and the delivery conditions.

  • Keep an eye on the other side. Yes, you can make sure your side has memorized the contract backwards in Latin, but that won’t help when the other side is (metaphorically or actually) on vacation at the beach playing flip-cup with their college buddies. Hopefully, you draw a competent counterparty. But if not, you need to manage them too. Sorry.

  • Don’t forget the technical people. They need to fully understand which findings will be remedied during the pre-buy and which are outside the scope of the agreement. And it’s best if they know that before they start making their own unilateral decisions.

Best advice we’ve ever received for keeping the peace during a transaction: no sudden movements. Take it easy when problems develop, read the contract, and consider how your words and actions will appear to the other side.