Transcript:

Once a buyer and seller have struck a deal for an aircraft purchase, they will often want to move quickly ahead with the pre-purchase inspection. Too quickly, to first degree on a comprehensive aircraft sale agreement. A letter of intent is useful to bridge this gap and serves two functions. First, to memorialize the general terms of the deal. Second, to divvy up the transaction costs the parties incur in the meantime. For example, who pays for the inspection? Who pays to move the plane to the inspection facility? Does this allocation change if one party or the other backs out of the deal? This second portion of the letter should be written as legally binding from the moment the letter is signed. Whether the first portion is binding can vary and is up to the parties in a particular transaction.