Return Conditions & Lease Contracts

When considering lease return conditions or lease contracts, awareness of the contract is an integral part of the process.

Initially the contract can seem to be quite complex and one important area of awareness is how contracts define words – this is typically in two main ways:

1.      Defined Term List (a separate section at the beginning usually of the contract)

2.      Defined Terms within the document (the first time a word is used the definition it is defined; all further uses relate to this definition)

You might see terms such as “Aircraft” defined initially as a type detailing MSN and configuration of engines – subsequently Aircraft means as it was defined. (Note the use of the word begins with a capital A).

Throughout the lease note the word and the capital letter – this means it is a defined term: “As a guarantee against the cost of maintenance on the Aircraft, Lessee will provide to Lessor Maintenance Letters of Credit…”

Terms may be defined including: “Minimum Airframe Life Limited Component Cycles means 2,500 Cycles.”

Understanding lease agreements is critical part of any aircraft lease transition and interpretation is equally important.

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