Agreement (APA), they proceed to select a repair station and the scope of inspection. Although the repair sta- tion itself and the scope of the inspec- tion may be stated in the aircraft sales agreement, it is important to under- stand that the repair station is not a party to the sales agreement. A repair station must have its own written agreement in place before proceeding to perform any services. This agree- ment functions as a legal contract between the parties. It may take vari- ous forms, but whatever the form, it should incorporate essential elements to create an effective and legally bind- ing contract and to protect the repair station. Unless there is a properly drafted and enforceable contract, repair stations risk nonpayment for their services, being liable for ambig- uous or unmet customer expectations, or worse, lawsuits over myriad issues. Identify the Customer and Who is Authorized to Sign for the Customer It may be obvious, but the first task is to clearly identify the customer. It may be the buyer or seller (or both), but the repair station must be clear as to whom it takes its directions from and from whom it will be paid. The agreement should clearly indi- cate the company’s name (correctly spelled and fully named), its state of corporate formation (or foreign country, if applicable), and complete address. For companies formed in the United States, a quick check of the state’s business registration listings will confirm the existence of the company and its full and correct name. If the company name can- not be confirmed through a check Aviation Business Journal | 4th Quarter 2016 of the state’s corporate registry, this should raise a red flag and a follow- up discussion with the customer. To make a contract binding, an authorized representative of the company must sign the contract. When the customer is a corpora- tion, the company’s officers generally have authority to sign on behalf of the company. When the customer is a limited liability company (LLC), the LLC’s members (or in some cases an appointed manager or appointed third parties) have authority to sign contracts. If the company is any other kind of entity, such as a general partnership or limited partnership, the repair station should take extra care to ensure that the company’s representative has actual authority to bind the company because there are special requirements. If there is any question, the repair station may consider requesting the com- pany provide verification that the individual in question has actual authority to bind the company. Execute Separate Customer Contracts Often, both the buyer and the seller in a pre-purchase agreement are the repair station’s customers. For instance, the buyer pays for the flat- rate, pre-purchase inspection and the seller pays for repair of discrepancies. This may be handled as a three-party agreement, between the repair sta- tion, and the buyer and the seller. Depending on the specific scenario, it may be best handled as two separate contracts, one each with the buyer and seller. As a general rule, when- ever different parties authorize dif- ferent work scopes and have separate responsibility to pay, there should be separate contracts. The agreement(s) between the repair station and the buyer and seller should clearly set forth the separate work scopes (flat-rate inspection versus repair of discrepancies). Furthermore, if the buyer plans to have the aircraft refur- bished and upgraded after the aircraft changes hands, a separate agreement between the repair station and the buyer should be drafted to cover the post-sale work. All of the elements discussed here apply to each contract. Clearly Identify the Work Scope The aircraft purchase agreement between the buyer and the seller may include a contractual definition of the aircraft’s expected condition. The repair station can and should be provided with a copy of any such language and should analyze it to see how it aligns with the services it is being contracted to provide. It is essential to clearly identify what is included in each work scope. The extent of the records review should be fully described. The full description of the particular inspec- tion, or individual inspection tasks, should be set forth in detail. In particular, point out anything that is not included. There should be no unwritten assumptions about what is or is not included. Based on the aircraft’s maintenance history and age, the buyer and seller may agree that specific areas should receive ad- ditional review above and beyond the standard make and model inspection. The repair station’s agreement should Continued on page 46 45