Fractional Jet Primer: Navigating the Contracts

James Butler Offers Halogen Guides’ Readers Food for Thought When Negotiating Fractional Contracts

Bethesda, Maryland • March 2008

In his debut contribution to Halogen Guides’ new Jets feature, Shaircraft CEO, James Butler, discusses the most vital components of a fractional contract.

“Your salesperson will do his best to convince you that everyone signs the same simple contract,” says Butler. “Don’t be fooled.”

Butler lists the following “critically important documents,” which should be reviewed and well-negotiated prior to signing:

  • Binder/Deposit Agreement – If your provider is awaiting delivery of your aircraft, this is the document through which you put up a deposit to hold your share.
  • Purchase Agreement – This is the document through which you purchase your share from the provider.
  • Master Dry Lease Exchange Agreement – This is the document that governs the relationship among all fractional owners in the program.
  • Management Agreement – This is the document that governs the core issues of your investment; it tells you when you can fly, how many hours you can fly and what costs you’ll incur when you fly.

Butler concludes, “These documents, and not that beautiful brochure, will govern your rights and obligations. The contracts may look simple, but if you don’t read and negotiate them carefully, you may make a million dollar mistake.”

Halogen Guides Jets: “Fractional Jet Primer: Navigating the Contracts”

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