Aviation Law Questions (AS 405) - urgent

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Contract Law

  • Contract of Sale: A contract is a promise or set of promises, for breach of which the law gives a remedy or the performance of which the law recognizes a duty
  • Express Contract: formed by language, oral or written
  • Implied Contract: parties conduct indicates that they assented to be bound
  • Quasi-Contract: One party is unjustly enriched at the expense of the other party, so the party unjustly enriched must pay restitution to the other party equal to the unjust enrichment

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-you pull up to the gas pump at my local airport and start pumping gas into the plane-there is a contract for the purchase and sale of the gas

QUASI CONTRACT EXAMPLE: You say you will rebuild my Stearman. When you are 99% finished you become ill and must move ACTION IN EQUITY – clean hands and pure heart

Contracts

  • What is a sale and what is sold
  • Governed by the Uniform Commercial Code (U.C.C.) Art. 2
  • A sale is a contract in which title of goods passes from the seller to the buyer for a price
  • Goods – all things movable
  • Tangible
  • Intangible – representing something of value
  • Examples?
  • Who sales goods
  • Non merchants
  • Merchants

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Tangible goods – airplanes, house, land

Intangible goods – it represents something - patent, stocks, a Supplemental Type Certificate to put car gas in my Stearman

Contracts

  • Traditional view
  • Bilateral Contract
  • A promise for a promise
  • Unilateral view
  • A promise to pay upon completion of the requested act
  • Modern view – most contracts are bilateral
  • Under the U.C.C. bilateral contracts can be formed by starting performance

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Bilateral: I promise to sell you my Cardinal for $100,000 and you promise to pay

Unilateral: I promise to pay $30.00 if you wash and wax my Cardinal

Modern view: I promise to pay you $30.00 if you wash and wax my plane.

Contracts

  • Under U.C.C. unilateral contract limited to
  • The completion of performance
  • An offer to the public

  • Void Contract: without legal force
  • Voidable Contract: may elect to avoid or ratify
  • Unenforceable Contract: valid except for some legal defenses
  • Lack of Capacity
  • under 18
  • Insane persons
  • Intoxicated persons (if the other party has reason to know)
  • Duress or Coercion
  • Does not comply w/ the Statute of Frauds

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I will pay you 5,000.00 to set my airplane on fire what am I asking you to do – commit a crime

Your minor son buys a car, he contracted to buy my plane for 1.00. You come along and say I do not want to void I want to Ratify.

Contracts

  • Mutual Assent
  • Offer
  • creates the power of acceptance in the offeree
  • Certainty and definiteness: of subject of sale and terms
  • Communicated to the offeree
  • Termination of the Offer
  • Revocation: by offeror before acceptance
  • Rejection: by offeree
  • Lapse of Time – offer good for 30 days
  • Termination by Operation of Law
  • Death of a party
  • Destruction of the subject matter

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Certainty: A 172 v 172XP

Communication to Offeree: what if I run in and say I lost the keys to my RG and I will give anyone 100 dollars to anyone who returns them. Offer/Acceptance by performance – Unilateral Contract

What if someone comes in and says – I found these keys anyone know who the belong to? Offer?

HYPO: I will sell my plane to you for 85,000. You say, I will give you 80,000. This both a rejection and counter/new offer. Now I can accept or reject. Now after some research you see you were getting a steal at 85,000 you cannot then say I will take if for the original asking price since that offer is gone.

Rejection v inquiry – I can give you an answer now if you will lower the price

Contracts

  • Acceptance
  • Only to whom the offer is addressed
  • If general public anyone may accept
  • Must be communicated to offeror
  • Acceptance by an act
  • If offeree takes offered benefits, or prior dealings or trade practices create reasonable expectation by offeror silence represents acceptance
  • Consideration
  • Bargained for exchange
  • That which is bargained for has legal value
  • Benefit to promisor or detriment to the promisee

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I promise to sell my RG to you and you promise to pay me $100’000. First it is a bargained exchange, my promise induced a detriment in you. Your detriment induced me to make a promise.

Both you and I have suffered detriments. I transfer ownership of the airplane to you, your detriment is you pay me $100,000.

This gets really complicated and here are some legal term associated w/ consideration, past, moral, detrimental reliance, promissory estopell

No past acts as consideration, for taking care of my mother last year I will give you my Stearman.

Contracts

  • Defenses to Contract Creation
  • Mistake – basic assumptions, material effect
  • Capacity (Voidable)
  • Age
  • Mental Incapacity
  • Intoxication
  • Defenses to Enforcement
  • Statute of Frauds–Contracts which must be in writing
  • Marriage – promise made in consideration of marriage
  • Year – by terms cannot be completed w/in one year
  • Land – sale of real property
  • Executor/administrator of a will promises to pay estate debt
  • Goods priced over $500.00 (there is a U.C.C. exception)
  • Suretyship – promises to pay the debt of another

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  • Writing must include
  • The identity of the party being charged
  • Identification of the contract’s subject matter
  • Terms and conditions of the agreement
  • Recital of consideration
  • Signature of the party or the person to be charged

Contracts

  • Rules of Construction
  • Construed as a Whole
  • Ordinary Meaning of Words
  • Preference to Construe Contracts as Valid and Enforceable
  • Ambiguities construed against party preparing Contract
  • Parol (not parole!) Evidence Rule – not a rule of evidence but a rule of substantive contract law
  • Contract in writing with the intent that it embody the full and final expression of the bargain
  • prior or contemporaneous negotiations that contradict, modify, or vary contractual terms is inadmissible to vary terms of the writing

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So, lets say we negotiate to sell my Fixed Base Operation and while we are talking I say “by the way I will include the fuel truck. However, when the contract gets written the fuel truck is not included. Parol evidence rule would preclude my statement regarding the truck.

Sometimes you will hear something as being w/in the 4 corners of the document

Contracts

  • Merger Clause – something to the effect that this contract is a complete representation of the terms of this agreement

  • Remedies for Breach
  • Damages
  • Sale of Goods
  • Buyer breaches – seller stop/withhold/resale goods & recover difference in resale and contract price goods
  • Seller breaches – buyer reject nonconforming goods cancel/cover/ recover damages for nondelivery

Contracts

  • Compensatory - to put the person in as good a position as they would have been had the other party fully performed
  • Consequential – what a reasonable person would have foreseen that such damages would result if breach
  • Punitive – to Punish, generally not awarded
  • Nominal – if no actual loss is proven
  • Liquidated
  • Damages are difficult at the time contract was formed
  • Amount must be agreed to and reasonable forecast of compensatory damages

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Remember: Punitive: wanton and willful. Reckless or malicious

  • Specific Performance
  • Subject matter of Contract is rare or unique
  • Land – not making any of that any more
  • Unique or rare goods

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So…if I purchased Howard Hughes Hercules H4 – the Spruce Goose would damages be adequate – No I want that it is the only one of its kind.

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Mutual Assent

Consideration

No Defenses

Offer

Acceptance

Bargained for Exchange

Mistake

Lack of Capacity

Illegality

Statute of Frauds

Insurance

  • A legal term for insurance would be?
  • Aviation Insurance
  • Actual damage: to the aircraft is called HULL INSURANCE
  • Aviation Liability – who, what, where something gets hurt
  • Insurance premiums based on:
  • Type of Aircraft: New, Old, Hangared
  • Airworthiness
  • Pilot Warranties
  • Experience: Age, Ratings, Hours (Total and in Type), Pilot Limitations Edmonds v. USA, Biennial flight review Note: Contract Conditions

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legally Insurance is a CONTRACT:

You promise to PAY they promise to PROVIDE

PER PERSON LIMITATIONS: THAT will apply to each person (sometime excluding passengers) or passenger who is injured or killed in an accident by act or omission

So---100,000 per person and sometimes you need to look at policy and make sure it is per person and not per seat which would be different

COMBINED SINGLE LIMIT: allows for the entire gross amount of the policy coverage to be available for the property damage and bodily injury or death of any individuals that might result from an accident.

  • Causal connection between the crash of an aircraft and its insured
  • Some states require causal connection
  • Some states do not

Hawkins v. State Life

  • "'Death of the Insured as a result of travel or flight in, or descent from or with any kind of aircraft, provided the Insured is [**2]  a pilot, officer, or member of the crew of such aircraft, or is giving or receiving any kind of training or instruction or has any duties aboard such aircraft or requiring descent therefrom.'"

Hawkins v. State Life

  • "DIED 11 June 1968 in Vietnam from burns received while pilot aboard military aircraft which was hit by hostile fire, crashed and burned."

  • Even if the policy taken as a whole is not ambiguous, a strict reading of the Aviation Provisions indicates that the insured's death was within an insured risk. The key phrase is "death. . . as a result of [aviation]." The facts of this case show that the insured did not die as a result of aviation. On the contrary his death was a result of an act of war. Had it not been for an act of war his plane would not have crashed. In all probability he died before his plane crashed. Either way death was not the result of an aviation risk. Aviation was merely an incidental condition (circumstance) at the time of death.
  • Indemnifying and hold harmless clauses
  • Indemnification: restoring victim of loss in whole or in part
  • Hold harmless: Agreement or contract in which one party agrees to hold the other w/out responsibility for damage or other liability arising out to the transaction
  • These are important clauses in lease or easement agreements and should be fully understood

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part-so if while putting your airplane back in the hangar you dent the hangar door

  • Duty to Defend: The insurance has a legal duty to defend the insured when an event is covered by the policy
  • Rights involved: whatever the policy says and to which you have agreed
  • You may agree to pay any deductibles/or not-affects price
  • Right to counsel at all stages of the proceedings
  • They choose who represents you, not you

  • Subrogation: the right of the insurer to “step into the shoes of the insured”
  • The insurer pays your claims, then you give up the right to make claims against the other party.
  • In some circumstances if you have paid deductibles you will be reimbursed as the subrogee is now seeking all the expenses they and you incurred

Terminology

  • Appraisal clause – if parties cannot agree on the amount of a loss covered, impartial and qualified 3rd party
  • What is going to affect the appraisal price?
  • Arbitration clause – arbitration of disputes that may arise between the insurer and the insured
  • Antilapse clause – policy will not automatically lapse if no payment is made by the due date – grace period
  • State law normally imposes specific requirements governing insurance