We’re excited to announce the addition of Erin Prutow, Esq. to the Yolofsky Law family. Erin focuses her practice on equine law. She has extensive experience in the horse industry and is ready to help owners, trainers, buyers, and support personnel. Erin was a national level equestrian competitor at her alma mater, Oklahoma State University. As you probably guessed, she loves horses too. Erin is taking over this week’s blog with a short overview of important terms in equestrian contracts.
Transaction Tips for Equine Sales and Lease Agreements: Winter Horse Show Series
The winter equestrian series are upon us and for many, that means HORSE SHOPPING! Many horse sales happen within a day. The quick sale leaves clients playing catch-up with their trainers and their veterinarians to have the horse evaluated. It also leaves little time to have your insurance agent bind your policy and your lawyer to draft an agreement.
The most frequent mistake with horse sales is that sellers recycle old sales agreements. Old agreements usually fail to incorporate and account for the specific needs for each horse. These agreements are often out of date and may not protect either party in the event of a breach of contract. The more that can be addressed and documented up front, the less likely a dispute arises later.
Buying or leasing a horse is a huge investment and deserves the same care as any other large business investment. There are simple precautions every buyer and seller should abide by when negotiating a sale or lease. Be diligent with asking questions and taking good notes on the horse’s history.
Here are 4 transaction tips you can apply to ensure protection all around and more time for you to enjoy your new horse!
- BILL OF SALE: Make sure the contract includes a bill of sale to transfer title of the horse. The bill of sale will account for the basic terms of the agreement, buyer and seller’s full names, horse’s breed, sire, dam, and registration number. The purchase price and when it should be tendered, etc. It may seem simple but often times these areas are overlooked.
- TRIAL PERIOD: It is common practice and a good idea to take the horse on trial prior to purchase to ensure suitability of horse and rider. Make sure a trial agreement is in placed in the event of injury and colic. Injuries to horses during trial periods are one of the most legal contested contract battles. Make sure the horse is insured during the trial period.
- PRE-PURCHASE EXAM: Request a full medical history from the seller, his veterinary and speak with his farrier. Do your homework, the professionals that regularly work with the horse will know far more that you can glean from a sales video. Pay to have your own vet review the records and complete a pre-purchase evaluation.
- COMMISSION: Often times, trainers take a commission on the sale for acting as an agent to the transaction, contract in the specific amount of commission, who is responsible for paying it and what the trainer is responsible for to earn the commission.
- WARRANTIES: equine sales are governed by the Uniform Commercial Code, as a seller be wary of contract provisions that expressly warrant a horse will perform at a certain level for an undefined period of time. If sellers make express warranties that a horse is “bomb proof” and the horse is actually extremely spooky, this could amount to negligent misrepresentation and give rise to legal action.
Pay Attention to Logistical Details
“The line between disorder and order lies in logistics.” – Sun Tzu
The details of a sales or lease agreement may seem to be much less interesting than interesting than the horse itself. However, skipping over these items may result in a much dirtier barn than you intended. The logistics of housing, maintaining, feeding, and caring for your horse are key items to detail in the agreement. When creating an agreement, it is important to establish and account for the shipping, insurance premiums, farrier requirements, and veterinary expenses. This is especially important in lease agreements and “free leases” due to the temporary nature of the lease term which could lead to hasty contract drafting.
In addition to describing the expenses that will be incurred, you must include which party is responsible for payment of these expenses. Be sure to also include if there are any requirements for the horse to use a particular farrier, vet or insurance company, or other obligations that a buyer or lessee would otherwise be unaware of.
Many trainers encourage their clients to lease potential horses for one or two weeks of winter series shows. Due to the short-term duration of these leases, many owners fail to properly identify the rights and obligations for each party. Remember, even if you are only responsible for the horse for the week you show, any injury, illness or mishap can land you in a legal battle. Even if shipping, stabling, and pre-purchase evaluation are not on the horizon for the show lease, spend the time to work out the remaining basic terms in a written lease agreement paying particular attention to liability, illness, injury and insurance.
Put it in Writing
Now that we have gone through the minute details that must be included, but are often forgotten, we have to make sure that all negotiated terms end up in the contract. Many trainers negotiate payments and commissions outside of the written terms of the sales contract making it difficult to prove in a later dispute. If provisions of the sale or lease were unaccounted for in the initial agreement, consult with your trusted attorney to draft an amended agreement to act in concert with or to supersede the original contract.
Recently, I settled a case in which the pre-lease medical evaluation revealed tendon issues. The seller made a verbal warranty to the buyer that if the tendon injuries cause soundness injuries during the lease term, the buyer would be able to terminate the lease. These verbal warranties were left out of the contract terms and sure enough, two weeks into the lease term the horse went lame due to the pre-existing tendon issues. The seller refused to terminate the lease agreement and attempted to hold the buyer responsible for the full purchase price of the horse. The heartache and legal expenses could have easily been avoided had the buyer reviewed the contract with an equine attorney prior to executing the agreement.
Injury and illness provisions are one of the most important items in a purchase or lease agreement. Does the agreement sell the horse “as is” limiting your legal remedies should the horse turn up lame down the line? Make sure any concerns of your veterinarian after the pre-purchase or pre-lease evaluation are drafted into the contract. As a buyer or lessees, you should not accept a sales agreement that stipulates a “break it you buy it” provision on a horse with soundness issues. It may seem difficult at the time to let your potential dream horse go when a seller refuses to budge on the injury terms, but these risk management tactics are well-worth the potential heartache of buying a horse that may be unable to do the job you purchased it for. A well-negotiated agreement will find a middle ground to mitigate equine injury risks for both the buyer and the seller. Having an equine attorney review and negotiate these terms ensures that the concerns of the veterinarian, trainer, and rider are accounted for and reflected in the sales terms.
The winter equestrian show series are some of the most rewarding times for horse transactions. There is a higher probability a buyer will find a potential match with a larger market of sale horses concentrated to a regional area. Take advantage of this time as a seller to do your research and consider having an attorney help negotiate the sale or lease of your horse and prepare a well drafted sales agreements. Consult with an equine attorney to draft an agreement that will lay out the obligations of each party and will protect your interests in the event of breach. Doing the work beforehand can save you thousands of dollars, time, and heartache when planning a large purchase.
Author: Erin Prutow, Esq.