Austrian Airlines Oesterreichische Luftverkehrs AG v. UT Finance Corp.

567 F. Supp. 2d 579 (2008)

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Austrian Airlines Oesterreichische Luftverkehrs AG v. UT Finance Corp.

United States District Court for the Southern District of New York
567 F. Supp. 2d 579 (2008)

SC
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Facts

UT Finance Corporation (UTF) (defendant) signed a contract to purchase used airplanes from Austrian Airlines (Austrian) (plaintiff). The sales contract provided that UTF could reject the planes for any nonconformance to delivery conditions in the contract, no matter how minor. This provision was different from the industry custom claimed by Austrian, under which buyers customarily accepted used planes with minor flaws. The planes Austrian tendered had auxiliary center fuel tanks that were unapproved by the Federal Aviation Administration (FAA). UTF rejected the tender due to these nonconformities. Austrian brought suit, alleging that UTF’s rejection was in bad faith. The market for used airplanes had declined since the contract was signed, and Austrian alleged that UTF’s rejection of the tender was due to this market decline as opposed to the fuel tank issues. UTF filed a motion to dismiss.

Rule of Law

Issue

Holding and Reasoning (Kaplan, J.)

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