A recent thread described a sale in which a buyer threatened to sue a seller. As Scroll pointed out, we don't discuss lawsuits here, per the The Rules. However, it could be useful to review a few practical fundamentals, with an eye toward reducing exposure.
Up front, know this...the thread is about sales paperwork and procedure. If you run off into swamp, the thread will get closed, which is fine with me.
Ok, so why practical? I'm not an attorney. I spent most of my working career running auto dealerships, where limiting legal risk is a very practical management task. There is no absolute shield, but common sense and good paperwork can reduce the risk to very low levels.
Specific to homebuilt airplanes, the #1 error is failure to use a sales contract separate from the Form 8050-2 FAA Bill of Sale.
Think of it this way...the 8050-2 is the minimum sales document acceptable to the FAA for transfer of registration. Our friends in OK City provide it as a convenience to themselves, as it ensures they get the basic information required to do their job. It's not actually required. You could write your own bill of sale on any handy sheet of paper, and if it incorporates all the information on an 8050-2, it would be equally valid.
That said, in the airplane world everyone expects an 8050-2. So, give 'em one, but accompany it with a contract spelling out the details not found on the government form. There are samples available from EAA, AOPA, and other sources, as well as generic forms. Any of these can be modified to suit your particular situation, DIY or with the help of an attorney. The basics are...
Identify the parties.
Show consideration (i.e. state a price)
Describe the goods in detail.
Disclaim all goods not listed (i.e. if it's not listed above, it's not included).
Include a statement that the buyer has physically inspected the goods, or that he agrees he was offered a reasonable opportunity to do so, and he accepts those goods without reliance on any statement of the seller.
Include the phrase "Sold AS IS, No Warranty" (in bold, just as you see it here).
Spell out the physical point of delivery. When it moves from there, it's his responsibility.
Spell out the terms of delivery (for example, when funds clear).
Spell out the conditions under which you accept a deposit. If it is non-refundable, be sure to spell out two major points, those being "without exception of any kind", and a drop dead date after which you may keep his deposit and sell the airplane elsewhere. And BTW, cash the deposit check as soon as you get it.
Include a "Hold Harmless", a statement in which the buyer effectively agrees to be a firewall between you and any subsequent owner.
State any insurance in effect does not protect his interests. For example, you take a non-refundable deposit, but lightning strikes the hangar before he can return to pick up the airplane.
State any agreement regarding who pays property taxes or sales taxes. Details can vary a lot depending on location.
State a jurisdiction. Your state law may be more friendly to a seller, and anyway, if the buyer is from out of state, it's less convenient for him to be a problem later.
Include an agreement regarding attorney's fees, typically "loser pays".
Include agreement regarding waivers, severability and entirety...meaning should you and your buyer subsequently agree to some variation, it doesn't change the rest of your agreement.
Signatures, with printed names and a date.
Ok, those are the basics. They're not necessarily all-inclusive, nor are they qualified legal advice. Some points are negotiable, others are not. Nothing is ironclad. You can still be sued. If you really did lie or cheat, you'll lose. The goal here is entirely practical; all parties agree on the rules, in writing, so no one can easily make up new rules later, and if someone calls foul, the referee has a reference.
Do not deliver an 8050-2 without a written agreement.
No written agreement? Buyer won't sign it? Exercise self-discipline...pass. Find a new buyer. With just a 8050-2, you may as well tape a bullseye to your back.
Up front, know this...the thread is about sales paperwork and procedure. If you run off into swamp, the thread will get closed, which is fine with me.
Ok, so why practical? I'm not an attorney. I spent most of my working career running auto dealerships, where limiting legal risk is a very practical management task. There is no absolute shield, but common sense and good paperwork can reduce the risk to very low levels.
Specific to homebuilt airplanes, the #1 error is failure to use a sales contract separate from the Form 8050-2 FAA Bill of Sale.
Think of it this way...the 8050-2 is the minimum sales document acceptable to the FAA for transfer of registration. Our friends in OK City provide it as a convenience to themselves, as it ensures they get the basic information required to do their job. It's not actually required. You could write your own bill of sale on any handy sheet of paper, and if it incorporates all the information on an 8050-2, it would be equally valid.
That said, in the airplane world everyone expects an 8050-2. So, give 'em one, but accompany it with a contract spelling out the details not found on the government form. There are samples available from EAA, AOPA, and other sources, as well as generic forms. Any of these can be modified to suit your particular situation, DIY or with the help of an attorney. The basics are...
Identify the parties.
Show consideration (i.e. state a price)
Describe the goods in detail.
Disclaim all goods not listed (i.e. if it's not listed above, it's not included).
Include a statement that the buyer has physically inspected the goods, or that he agrees he was offered a reasonable opportunity to do so, and he accepts those goods without reliance on any statement of the seller.
Include the phrase "Sold AS IS, No Warranty" (in bold, just as you see it here).
Spell out the physical point of delivery. When it moves from there, it's his responsibility.
Spell out the terms of delivery (for example, when funds clear).
Spell out the conditions under which you accept a deposit. If it is non-refundable, be sure to spell out two major points, those being "without exception of any kind", and a drop dead date after which you may keep his deposit and sell the airplane elsewhere. And BTW, cash the deposit check as soon as you get it.
Include a "Hold Harmless", a statement in which the buyer effectively agrees to be a firewall between you and any subsequent owner.
State any insurance in effect does not protect his interests. For example, you take a non-refundable deposit, but lightning strikes the hangar before he can return to pick up the airplane.
State any agreement regarding who pays property taxes or sales taxes. Details can vary a lot depending on location.
State a jurisdiction. Your state law may be more friendly to a seller, and anyway, if the buyer is from out of state, it's less convenient for him to be a problem later.
Include an agreement regarding attorney's fees, typically "loser pays".
Include agreement regarding waivers, severability and entirety...meaning should you and your buyer subsequently agree to some variation, it doesn't change the rest of your agreement.
Signatures, with printed names and a date.
Ok, those are the basics. They're not necessarily all-inclusive, nor are they qualified legal advice. Some points are negotiable, others are not. Nothing is ironclad. You can still be sued. If you really did lie or cheat, you'll lose. The goal here is entirely practical; all parties agree on the rules, in writing, so no one can easily make up new rules later, and if someone calls foul, the referee has a reference.
Do not deliver an 8050-2 without a written agreement.
No written agreement? Buyer won't sign it? Exercise self-discipline...pass. Find a new buyer. With just a 8050-2, you may as well tape a bullseye to your back.
Last edited:
