BFV Perspectives, Georgia Business Disputes, | Jun 24, 2013

Un-Bolivia-ble: Who Bears The Risk of Loss During Delivery?

Who should bear the risk of loss for a helicopter purchased in Bolivia and transported to Florida?  In Eagle Jets, LLC v. Atlanta Jet, Inc., a jury was asked to answer this question as it pertained to a $1,025,000.00 helicopter that, only days after it was purchased, crashed on the delivery flight between Bolivia and Ft. Lauderdale, Florida.  In this case, Eagle Jets, LLC (“Eagle Jets”) was the purchaser, and it filed suit to recover the purchase price from the aircraft broker, Atlanta Jet, Inc. (“AJI”).

During Eagle Jets’ pre-purchase inspection period in Bolivia, multiple mechanical problems with the helicopter were identified.  However, the owner of Eagle Jets decided that most of the problems could be remedied once the helicopter was delivered to Ft. Lauderdale.  The sale closed on November 26, 2003, at which time Eagle Jets paid in full for the helicopter.  On December 9, 2003, the helicopter was being flown up to Ft. Lauderdale when it crashed in Brazil, sadly killing two passengers.

Eagle Jets filed suit for breach of contract against AJI relying on the Aircraft Purchase Agreement.  Yet, Eagle Jets later amended its complaint, pointing out that the Aircraft Purchase Agreement had never been signed and insisted that the parties’ oral agreement should govern instead.  However, the Court determined that the allegations in Eagle Jets’ own lawsuit created a factual presumption that the Aircraft Purchase Agreement reflected the parties’ agreement, and it instructed the jury regarding this presumption.  This was particularly important to Eagle Jets’ claims because, under the terms of the Aircraft Purchase Agreement, title to the helicopter passed to Eagle Jets when the purchase price was paid in full and it assumed the risk of loss during delivery.

In evaluating the evidence, the jury determined that the Aircraft Purchase Agreement did, in fact, reflect the parties’ contract.  The jury also found that Eagle Jets had, in fact, accepted delivery of the helicopter in Bolivia.  Thus, the helicopter became Eagle Jets’ property before it left Bolivia, and Eagle Jets assumed the risk of loss pursuant to the Aircraft Purchase Agreement.  As a result, Eagle Jets was not permitted to recover the million dollar purchase price for the helicopter it ultimately did not get.

This somewhat unbelievable and unfortunate sequence of events points out an important lesson to businesses and individuals alike.  When making a substantial purchase, where the item is being delivered from one location to another, it is crucial that the parties involved clearly address in any agreement the time when ownership is transferred and who will bear the risk of loss during delivery.  As illustrated by the Eagle Jets case, anything can happen.

BFV Perspectives, Georgia Business Disputes, | Jun 24, 2013