Acceptance Certificate Precludes Claim For Damages

ACG Acquisition XX LLC v Olympic Airlines SA (in special liquidation) [2013] EWCA Civ 369

An unconditional acceptance certificate as to the condition of an aircraft prevailed even though the aircraft turned out not to be airworthy.

An aircraft lease provided that "delivery by the lessee to lessor of the certificate of acceptance will be conclusive proof... that lessee has examined and investigated the aircraft, that the aircraft and the aircraft documents are satisfactory to the lessee and that the lessee has irrevocably and unconditionally accepted the aircraft for lease without any reservations whatsoever."

Olympic leased an aircraft from ACG for five years. Under the terms of the lease, Olympic was given the opportunity to inspect the aircraft and have a test flight. Following discussion of works that needed doing following inspection, Olympic signed the certificate of acceptance. It turned out that the aircraft was not airworthy without much more extensive works being carried out. The upshot was that on delivery the aircraft was not in the contractually required condition and that the shortcomings were serious in nature.

ACG sued for rent (and maintenance payments) for the period from delivery until the aircraft was redelivered to it, plus damages for loss of rent until the end of the five years, less sums received when the aircraft was eventually re-let. Olympic (which by this time had ceased trading) counterclaimed for damages for breach of contract by ACG in failing to deliver in the aircraft in the contractual condition, i.e. the costs of hiring substitute aircraft and attempting to make the aircraft airworthy.

The Court of Appeal (upholding the High Court decision, but for different reasons) found for ACG. Whilst the decision depended on the particular wording of the acceptance certificate clause, the court considered that the wording of the...