In the event that the airline has redelivered the aircraft late, in breach of the lease agreement, the lessor is likely to be entitled to damages in respect of its losses. But what if the lessor has lost a lucrative onward sale or lease as a result of the delay?
The traditional test for recovery of damages is that you can recover losses that are either (a) foreseeable “in the usual course of things” or (b) within the reasonable contemplation of the parties, as set out by the court in Hadley v Baxendale . However, in Pindell and o’rs v AirAsia Berhad  where a lucrative onward sale was lost as a result of late redelivery, the Court held that this loss was not recoverable.
Although the judge acknowledged that the parties would have contemplated that a late redelivery may result in the lessor losing a ‘follow on’ sale or lease, the judge held that damages for that loss were not within the reasonable contemplation of the parties as being likely to result from the breach and, significantly, this was not a type of loss for which the lessee “assumed responsibility”. This assumption of responsibility test is, however, likely to be relevant only where the general rule alone would lead to an unquantifiable, unpredictable, uncontrollable or disproportionate liability or where there is evidence that market expectations would be that this particular loss is not recoverable.
In this case the onward sale had been negotiated at the top of the market just before the collapse in 2008. The judge noted that late delivery is common, particularly if the aircraft is mature. The loss of the onward sale was in fact caused by extremely volatile market conditions, which meant that Pindell was unable to find another deal on similar terms.
In light of this analysis, the loss of an onward sale or lease is not something which the lessor will necessarily be able to recover, absent an express indemnity. It is worth noting that there was indemnity wording relating to late redelivery in the Air Asia lease agreement but it was held not to cover this type of loss.