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VAENGIR LTD. v. NATIONAL AERO ASSOCS.

January 21, 1977

VAENGIR LTD. AIRTRANSPORT CO., Plaintiff
v.
NATIONAL AERO ASSOCIATES, INC., Defendant



The opinion of the court was delivered by: WADDY

 This is an action in tort by the plaintiff, Vaengir Ltd. Airtransport Co., against the defendant, National Aero Associates, Inc., for alleged fraudulent misrepresentation by the defendant in connection with dealings between the parties relating to the purchase and sale of an airplane. This case is before the Court on plaintiff's motion for partial summary judgment and defendant's cross motion for summary judgment.

 Plaintiff is a corporation engaged in air transportation organized and operating under the laws of the Republic of Iceland with its principal place of business at Reykjavik, Iceland. Defendant is a corporation engaged in the sale and lease of airplanes organized and operating under the laws of the District of Columbia with its principal place of business at National Airport, Gravelly Point, Arlington, Virginia.

 The following facts are not disputed by the parties:

 (1) A meeting between representatives of the plaintiff and the defendant was held in May, 1973, at which time the plaintiff's representative was shown a twin otter airplane belonging to the Stewart Petroleum Company.

 (2) May 9, 1973 the plaintiff, Vaengir, sent a telex to the defendant, National Aero, listing specifications for a twin otter airplane, requesting serial and registration numbers of the aircraft, and including a bank reference.

 (3) May 9, 1973 National Aero sent a return telex to Vaengir, noting the specifications transmitted by Vaengir, and stating that Vaengir's wired telex acceptance and the establishment of a letter of credit irrevocable for a period of 30 days would constitute a binding agreement between plaintiff and defendant.

 (4) At the time of these transactions there existed an industry trade practice requiring a ten per cent cash deposit for the purchase of an airplane prior to any modifications by the seller to meet the specifications required by the purchaser.

 (5) Vaengir did not reply by return telex but on May 30, 1973 Vaengir obtained a letter of credit, irrevocable for thirty days, from Landsbanki Islands, an Icelandic bank, payable in the amount of $35,000 to National Aero through the Foreign Office of American Security and Trust Company in Washington, D.C. Negotiation of the letter of credit was contingent upon the fulfillment of one condition by National Aero: National Aero's certification to American Security that it has available and is prepared to deliver to Vaengir a twin otter 100/200 series aircraft with a current certificate of airworthiness, in accordance with specifications agreed to by the parties, Vaengir and National Aero.

 (6) This letter of credit was in substitution for the 10 per cent cash deposit against the purchase price of $350,000.

 (7) June 3, 1973 plaintiff's representatives inspected an airplane in Fort Lauderdale, Florida. At such time the plane did not meet the specifications set forth in plaintiff's telex of May 9, 1973, but defendant was engaged in making the necessary modifications.

 (8) June 6, 1973 National Aero certified to American Security that it had available and was prepared to deliver to Vaengir a twin otter 100/200 series aircraft with a current certificate of airworthiness, in accordance with the specifications agreed to by the parties.

 (9) On June 6, 1973, at the time of defendant's certification to American Security, the aircraft was not ready for delivery, but the defendant was in the process of making the modifications required by the agreed specifications.


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