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Service Bulletins Redux

by Greg Reigel 1. April 2007 00:00
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If you follow this page on the Globalair.com site, which is quite likely if you are reading this article, you know that I have written several articles discussing service bulletin compliance. Not surprisingly, this issue has generated a significant amount of debate. And as a result, I am often asked questions about service bulletin compliance. In fact, I was recently asked my opinion regarding the following:

The Factual Scenario

Aircraft owner ("Seller") enters into an agreement with aircraft buyer ("Buyer") under which Buyer will buy Seller's aircraft following a satisfactory pre-purchase inspection. The purchase agreement states that the aircraft will be delivered "in an airworthy condition and in compliance with all airworthiness directives and manufacturer service bulletins". Buyer's pre-purchase inspection discloses a number of service bulletins with which the Seller's aircraft is not in compliance.

Buyer subsequently demands that Seller pay for compliance with the service bulletins. Since compliance with the service bulletins would cost approximately $50,000.00, Seller refuses. Seller argues that compliance with the service bulletins is not mandatory and that the aircraft is still airworthy even though the aircraft was not in compliance with all service bulletins. Who should prevail? Under the facts presented here, Buyer should prevail. Why? Because the purchase agreement states that the aircraft must be in compliance with all service bulletins.

Analysis

At the outset, it is important to note that service bulletin compliance must be viewed from three distinct, and oftentimes inconsistent, perspectives: regulatory (FAA enforcement); tort liability (getting sued based upon negligence or product liability); and contract (what two parties have agreed to). We have talked before about the implications of the regulatory and tort liability perspectives, as well as the implications of both. In this case, the contract perspective takes center-stage and dictates the obligations of the Seller.

Although the Seller is correct that the aircraft did not need to comply with the service bulletins in order to be in an airworthy condition, in this context, airworthiness is not the issue. If the purchase agreement simply stated that the aircraft needed to be in an airworthy condition, the Seller would be correct and would not need to have the service bulletin work performed.

However, since parties are free, for the most part, to enter into contracts based upon negotiated terms, the language agreed to by the Seller and Buyer results in a purchase agreement that requires more than simply the minimum airworthiness standards of FAR Part 43. Specifically, the purchase agreement states that the aircraft must also be delivered in compliance with all service bulletins. As a result, in order for Seller to fulfill its obligations under the purchase agreement, the Seller will need to have the service bulletin work performed on the aircraft or reach some alternative agreement with the Buyer.

Conclusion

Service bulletin compliance has been, and will continue to be, the subject of spirited debate among aircraft owners and aircraft maintenance professionals. However, in order for these discussions to be productive, and to accurately determine whether compliance with a service bulletin is mandatory, the issue must be viewed from the proper perspective. Depending upon whether the question is analyzed from a regulatory, tort liability or contract perspective, the answer may, and quite often will, be different.

Starting the discussion with the proper frame of reference is critical for arriving at the correct answer. However, if you apply the proper perspective and you are still unsure whether compliance with a service bulletin is mandatory in a particular situation, ask an aviation attorney. He or she should be able to help you apply the proper analysis to your circumstances and advise you whether you must comply with a particular service bulletin.

Interestingly, the repair station that performed the last several annual inspections on the aircraft, signed the logbook stating that the annual was performed "in compliance with the manufacturer's maintenance manual" which states that all service bulletins etc. issued prior to the most recent manual revision are incorporated by reference into the manual.  However, a discussion of the implications of this logbook entry and the Seller's options is best saved for another day.



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