Gesner Investments Ltd v Bombardier Inc(1) related to a claim made by the purchaser of an aircraft that the manufacturer was not entitled to retain moneys as liquidated damages on termination of the agreement. The case concerned an application for summary judgment by Gesner Investments Ltd, the purchaser under an aircraft purchase agreement between Gesner and Bombardier Inc for the manufacture, sale and purchase of a new Bombardier Global Express aircraft.

The trial judge had to decide whether Gesner had an arguable case. He dismissed the application for summary judgment.

Gesner appealed to the Court of Appeal. The Court of Appeal reviewed the arguments put forward by Gesner and Bombardier. It considered in detail the provisions of the aircraft sale and purchase agreement relating to non-excusable and excusable delay and the various termination rights contained in the agreement (for further details please see "Court rejects purchaser's claim on termination of aircraft purchase agreement"). The Court of Appeal agreed with the reasons given by the trial judge and dismissed the appeal.

The case turned on its specific facts. However, as Bombardier is a major aircraft manufacturer and as the case concerned Bombardier's wording in its standard aircraft purchase agreement, it is of interest to the aviation industry as a whole.

The case underscores the importance for a potential aircraft purchaser of carefully scrutinising the terms of a purchase agreement into which it may seek to enter, as well as the need to focus on the purchaser's right to terminate the agreement if the manufacturer is late in tendering the aircraft for final inspection. The case highlights the fact that if an aircraft purchaser wishes to have a clear final cut-off date for the manufacturer to tender the aircraft for final inspection (or to make final delivery of the aircraft after the rectification of defects), clear terms should be negotiated and included.

For further information on this topic please contact Austen Hall at Hogan Lovells by telephone (+44 20 7296 2000), fax (+44 20 7296 2001) or email (austen.hall@hoganlovells.com).

Endnotes

(1) [2011] EWCA Civ 1118. The case was heard before Lords Justices Rix, Longmore and Patten. Judgment was given on October 11 2011.

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