District Court Evaluates Express Warranty Of 'Airworthiness'

Marc L. Antonecchia is a Partner in Holland & Knight's New York office

Texas Court Determines That "Airworthy" Is an Unambiguous Term That Controls Over More General Disclaimers of Warranties

HIGHLIGHTS:

The "as is" clause does not negate the express warranty of an "airworthy" aircraft. The terms "airworthy" and "certificate of airworthiness" are technical terms capable of only one reasonable interpretation - compliance with FAA's technical and legal requirements. In Luig v. North Bay Enterprises, Inc., a Texas District Court recently considered a seller's obligation to deliver an "airworthy" aircraft in the context of an aircraft purchase agreement that also contained an "as is" clause.1 The contract involved the sale of a 50-year-old Bell helicopter that had undergone several changes, including the removal of the turbocharger engine. After the buyer conducted a pre-purchase inspection and indicated several items to be repaired, the seller delivered the aircraft to the buyer with the requested repairs completed.

Subsequent to delivery, the seller commenced suit seeking a declaratory judgment that it delivered the aircraft in accordance with the contract. The buyer asserted a counterclaim seeking damages for breach of contract on the basis that the aircraft failed to meet the contractual delivery condition because it was not "airworthy." Following discovery, the parties cross-moved for summary judgment. The cross-motions required analysis of two material contract terms.

The first provided that the purchaser agreed to "accept the Aircraft in an 'as is where is' condition." The second provided that the aircraft would be delivered "with all systems in an airworthy condition and a current Certificate of Airworthiness." The "As Is" Provision Disclaimed All Implied Warranties

With respect to the "as is" clause, the seller argued that the parties intended the clause to waive all express and implied warranties and other objections to the condition of the aircraft. The seller contended that it was irrelevant whether the aircraft was delivered "in an airworthy condition" because the purchaser had agreed to accept the aircraft "as is" after having an opportunity to inspect the aircraft and documentation. Conversely, the buyer argued that the "as is" clause was merely boilerplate language that should not be given effect in light of the nature of the transaction and the totality of the circumstances.

The court stated that where an "as is" clause is an...