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Hangar Rash: Bad Contracts

Did you read that right? Bad C-O-N-T-R-A-C-T-S was the title, not contacts. Believe it or not, some airport contracts (hangar leases) have some real hum-dingers in them.

Did you read that right? Bad C-O-N-T-R-A-C-T-S was the title, not contacts. Believe it or not, some airport contracts (hangar leases) have some real hum-dingers in them. The problem with these little contracts is while they may be wacky, they also can cause you to sign over some rights for you might rather have should misfortune visit your aircraft while it sits otherwise peacefully on the ground.

HERE ARE SOME EXAMPLES. In one contract, we found a statement that said the following: (the text is included for the lawyers who visit this site, who no doubt would say we are "misinterpreting it")

"Lessee further covenants and agrees that it will hold the lessor, its members, agents, or employees harmless and agrees to indemnify them from any loss occasioned by fire, theft, rain, windstorm, hail, or from any other cause whatsoever, whether said cause be direct, indirect, or merely a contributing factor in producing the loss to any aircraft, automobile, personal property, parts or supplies that may be located or stored in the hangars, offices, aprons, field or any other location at the airport; the lessee agrees that the aircraft and lessee's property are to be stored, whether on the field or in the hangars, at the lessee's own risk."

LAYMAN'S TRANSLATION

The above statement contains the word "Indemnify" in the context of acts of God. In a legal sense, this statement means you will compensate the airport for acts of God... Don't they have insurance for that?

How about this statement:
"$ ______________ (written in "fuel, hangar, rent") is due and payable to LESSOR within 10 days or receiving statement. Payment must be mailed to (address of airport) or delivered to LESSOR. Rent checks should be made payable to (name of airport). No proration will be made of space vacated during the month."

Contracts are a legal instrument, and this one contains some two fatal flaws in this section alone. First off, no amount was stated for the hangar rent on a monthly basis. This means the airport operator has full freedom to change your rent ANY TIME HE OR SHE WANTS. The airport operator screws up and mashes the tug into the fuel truck, your rent jumps by $100 a month -- and THEY CAN DO IT.

Signing a lease with no amount is the same as signing a blank check. It's a bad idea, and should not be done -- period. The other problem is more subtle, and would be hard to see unless you looked at the original contract. In this case, the contract said to make checks payable to the City Municipal Airport. The problem is simple: the airport is not a legal business entity, and is not incorporated. While a fine point in legal terms, you are writing a check to an unknown and unregistered business.

Here is another chestnut of wisdom in the contract:

"At no time shall LESSEE cause to be stored or located within the confines of the airport hangar or on the airport property, any flammable liquid or explosive materials."

Got Fuel? Is your airplane in the hangar? Guess what! You're in violation of this contract! By the letter of the contract, you can't have a 1 gallon gas can in your hangar, a single firecracker that blew in with the wind, or the 40-gallons of AvGas in your wings. All of them are flammable or explosive materials, and as insane as it sounds, having fuel in your airplane's tanks and placing the plane into the hangar is storing flammable liquid within the confines of the airport hangar.

STRATEGY - When dealing with contract issues, the best place to start (and don't shoot me for saying this) is with a good lawyer. The problem with many legal terms, such as indemnify, discharge, and other terms, are not within the standard understanding of most pilots. Unless you know exactly what the words mean (i.e., you are a lawyer), then a lawyer is needed to assure you don't get taken to the cleaners by your airport's lease. Take the issue to the City Council if necessary to have your voice heard.

REMEMBER - THIS IS A CONTRACT BETWEEN YOU AND THE AIRPORT that is enforceable in court. Airport operators like to cover their tails in the contract, and then claim you are being unreasonable when you have your attorney look at the instrument, and then ask about what it means. Important -- courts sometimes don't look at what is reasonable, they look at what the contract states and what you did. You don't need to be militant -- you just need a contract that you can live with to avoid getting hangar rash from your contract for your hangar!

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