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Construction, certainty of terms and the question of penalties in an aircraft contractual dispute decided on a summary basis.

This claim concerned contractual liabilities owed by the defendant company following its repudiation of a contract to purchase a number of aircraft from the claimant, giving rise to liquidated damages in the sum of $US 42.95m. The defendant had ordered 25 aircraft from the claimant but had failed to pay pre-delivery payments (PDPs) in respect of aircraft 6-20 and to take delivery of aircraft 6-8.

The claims concerned whether the defendant was liable to pay liquidated damages, which involved the question of whether a change order 6 (CO6) which amended the purchase agreement in respect of scheduled delivery dates suspended the defendant’s obligation to make payment.

The defendant also contended that there had been a breach of the agreement by the claimant in respect of its obligations to provide assistance in arranging financing. Further, the defendant contended that the liquidated damages amounted to a penalty. The court awarded summary judgment, having construed the contract in favour of the claimant.

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This article was first published by Lexis®PSL on 10 March 2021.

Authored by Luke Tucker Harrison, co-founding Partner.