The following Banking & Finance guidance note Produced in partnership with Norton Rose Fulbright provides comprehensive and up to date legal information covering:
Residual value agreements are a tool for allocating the residual value risk in an aircraft.
A good understanding of the sequence of events that will typically lead to a claim under a residual value agreement is necessary both for negotiations and for making a successful claim.
See also Practice Note: Residual value agreements—uses and types.
There are certain features which are common to all residual value agreements. The key common features are:
an exercise date or window—the date on which, or the period of time within which, the beneficiary is entitled to make a claim
a payment date—the date on which payment to the beneficiary will be made, assuming that the conditions to a valid claim are satisfied
a cut-off date—the date on which the obligation to make a payment to the beneficiary will terminate if a valid claim has not been made
conditions to a claim—those conditions that must be satisfied for the guarantor or insurer etc to make a payment, and
termination events—those events and circumstances which will result in a termination of the residual value agreement
Residual value guarantees are the most commonly used type of residual value agreement in aviation finance. This section of the Practice Note explains the mechanics
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