Overcoming Consignment Horse Challenges

Overcoming Consignment Horse Challenges

Before sending your horse on consignment

Selling a horse can be a dreaded experience for some riders who don’t have the time or required resources to get the job done on their own.

Consignment farms can be a solution, although, like anything else, not all are created equal. It is important for both parties to understand and appreciate the complexities and expectations of the horse sales process.

Horse trainers acting as agents are in business to make a living. As a horse seller, you should not expect them to take your horse “off the cuff” or absorb your horse’s expenses unless special arrangements are made.

If someone offers to sell your horse for a 10% commission and you’re not paying the bills, you should know immediately that you are about to be scammed.

“Consignments can be beneficial as long as the consignment agreement is negotiated and signed before the parties enter a transaction,” says Florida Equine Attorney, Bonnie Navin.

She says too often people make arrangements orally and when things go wrong, each side has its own perception of the agreement. The trainer may feel they invested their time, expenses, and talent to sell the horse. So they try and file a lien with the courts to prevent the owner from retrieving their horse, which clouds the title to the animal. The owner may try to remove the equine in the dark of night to avoid paying protracted bills.

Navin noted some agents have admitted hiding a horse so the owner can’t get it back. None of these are good solutions, which is why consignment agreements are important. Having a contract keeps everyone more honest.

Even with consignment agreements sometimes the parties can’t seem to stay with the program, Navin says.

Many times the terms end by contract and the parties don’t renew it and they leave themselves no legal recourse. People change the terms of the agreement orally and those agreements aren’t honored.

To prevent a painful mistake after the fact, Navin says it is best to make changes in writing as an “addendum to consignment contracted dated on _____” and be sure both parties sign again. This then becomes part of the initial agreement.

Other pitfalls to watch for include entering a consignment agreement with a business.

Most businesses protect their assets so recourse is difficult. If you consign, do so with an individual taking responsibility. Consign with actual owners of the horse and not an owner’s agent. If you do so, you will find the agent never had permission to bind the owner and the contract will be void.

Consignees also need to be careful sending horses to others to sell because the consignment agreement doesn’t allow for that third party involvement. If the horse is injured because you sent it out against the contract, you have breached the contract and will be responsible for the damages.

Navin says she is repeatedly advised that a second or third agent, not a party to the contract, sold the horse and wants a commission. She says this is impermissible. The contract only allows for the Consignor to get a commission unless the parties agree in writing to allow for multiple commissions.

We all know trainers would like to make more than the average 10-15% commission and some owners may find that acceptable if they get their asking price. Navin says that is fine as long as the consignment agreement sets forth a bottom dollar for the sale price and that the Seller/Consignee can take any and all monies above and beyond that amount.

The catch is the Consignee does not agree to be responsible for the sale price but rather the amount they received. If the sale happened at a number above the floor, the owner should only sign a bill of sale reflecting the amount they received and the amount the Consignor received says, Navin. This is full disclosure.

It is important for owners to realize the pricing of their horse is their responsibility prior to initiating the agreement.

If the Consignee evaluates your horse and tells you it is worth $25,000.00, but then sells your horse for $100,000.00 and they keep the excess funds and take a commission, you’ve been the victim of fraud. A Consignee has a fiduciary duty to you as their principal to sell your horse for the best price, and according to the contract.

Before you ship your horse to the consignment farm make sure your horse’s insurance is up to date. If the horse is injured or killed it will be your loss.

Navin says crossing state lines becomes the most difficult part of enforcing a contract. It is important that your agreement is State-specific and you should consult a contract attorney to assist you with the laws in your State. Depending on which side you are on, Consignor v. Consignee, you may want certain terms such as what State and County shall handle disputes.

In addition, as a Consignor, you may not want the Consignee to obtain contractual lien rights which allow them to keep your horse if you fail to pay your bills in a timely fashion.