by Gabriella Cellarosi Daniel, Esq
Perfect horse buyer?
After painstakingly preparing the perfect video, then months of advertising and fielding inquiries and appointments, you have finally found the perfect buyer for your horse. The potential buyer has confirmed that the horse is just what she is looking for, but she needs the final sign-off from her trainer.
The glitch – the potential buyer wants to essentially “kick the tires” of your horse off the property. The proposal is that the horse leaves your property to travel to her trainer’s property for a period of several days in order for the trainer to assess the horse. After the trainer has approved the horse, then the sale can be finalized. You will not be present during the off-site evaluation, therefore, will be unable to weigh in on the nature and extent of the evaluation – e.g. the duration of the workouts, the height of jumps, usage of whips/spurs, and/or utilization of other training equipment.
What are the legalities of this type of proposal and how can you best protect yourself in the event of injury or loss of your horse? This type of situation is fraught with risks and the potential for accidents to occur, so consider how to best balance them and manage potential liability issues in the hopes of a successful sale. Also, consider whether the benefit of a sale outweighs the risks of a trial period.
While this type of situation differs from a typical purchase because the parties have not had a “meeting of the minds” that the horse is sold, there is no transfer of ownership, and the sale remains subject to the trainer’s approval, the situation still calls for a contract to be in place before the horse leaves the owner’s property.
Be mindful that the equine industry is a business and therefore, the majority of equine-related transactions should be considered no different than other business transactions. For example, one would not set up a mortgage on a house with the bank, buy a car, or purchase a business, without a signed contract, so why buy or sell a horse without one?
The benefit of a written contract in this type of situation is that you will not be in the position of after-the-fact attempting to discern or litigate in court about a person’s intentions and understanding of what was previously agreed upon. Failing to expend the needed time and effort to protect your horse on the front end may cost you more on the back end if the sale falls through, your horse is injured or dies, or upon return from the trainer’s barn, it can no longer perform, is unsound, and the horse’s overall value has decreased or substantially diminished.
In short, depending on the circumstances, decide what protections you need, then draft and have the parties execute a contract, such as an Equine Purchase & Trial Agreement, before your horse leaves the barn.
Horse Purchase and Trial Agreement
The following provisions should be included in a Purchase & Trial Agreement:
Consider the payment structure to incorporate into this type of trial agreement. Since the horse is not sold and no bill of sale executed, the seller still owns the horse, but the potential buyer will have custody and control of the horse so a determination of the compensation structure can be difficult and you may need to get creative depending on the facts and circumstances of your situation.
Here are a few options:
•Requiring full payment of the horse that is refundable subject to the horse’s return to owner’s property in the same condition and specified contingencies.
•A non-refundable deposit (e.g. 10%) applicable toward the full purchase price at the end of the trial period.
•A refundable but more substantial deposit, also applicable toward the full purchase price at the end of the trial period (e.g. 50%).
Requiring a non-refundable deposit can be a good option because it demonstrates a commitment to the horse regardless of whether the sale goes through. If the potential buyer wants to take your horse off the property but is not willing to lose 10%, he/she may not be that serious about purchasing the horse and appreciate the risks of taking the horse out of your control.
An alternative course of action would be to sell the horse, transfer possession and registration, and execute a Purchase Agreement which outlines purchase contingencies. For example, purchase contingencies could include, return of the horse after a period of “x” days for only “x” reasons provided that the horse is returned in the same condition. Or, that the Purchase Agreement is subject to veterinary examination. In the case of a contingency being based on a veterinary exam, the seller may wish to include in the Purchase Agreement conditions (e.g. cribbing) that might cause it to “fail” an exam but would still make the horse suitable for the buyer’s intended purpose.
Other provisions that may be wise to include are that potential buyer agrees to be financially responsible for all transportation costs to/from Seller’s Stable and reasonable vet and farrier fees incurred during the trial period.
2.Parameters of the Trial Period
As the seller, you should include a termination period (when the trial expires, generally should not be longer than a 2 week period) and language spelling out what can and cannot be done during the trial period. For example, among other things, you may want to spell out types of equipment that can be used and not used on the horse, who can ride the horse, the duration of the trial period, specifics of transport, payment of reasonable care and maintenance expenses during trial period, whether the horse can be jumped and if yes, how high, or ridden on trails, nature and duration of any workouts.
What if the horse is stolen or has a freak accident and dies during the trial period? To protect against death, theft, and/or loss of use, as a protection, consider requiring that the horse is insured and have the policy name the seller as the beneficiary. Another option is to have the potential buyer to obtain and maintain mortality, major medical and loss-of-use insurance for the full purchase amount to be in effect before hauling the horse out for trial and kept in effect until the horse is paid in full and full bill of sale is received. Alternatively, the parties can split the cost of the insurance.
4.Risk of Loss & Negligence
The trial agreement should include some language that addresses the possibility of injury or death of the horse, and potentially that the buyer is responsible if, among other things, the horse gets injured or dies while the horse is in potential buyer’s custody, care, and control. This provision should indicate that it is effective from the moment the horse leaves the seller’s property and continues until the horse’s return. Depending on whether you require the potential buyer to obtain insurance, consider adding language that the potential buyer assumes all expenses that are not covered by Seller’s Mortality, Major Medical and Loss of Use Insurance, related to an accident, illness, or other peril that may occur including death or permanent disability of horse. Further, that rider is responsible for any fees/costs stemming from its negligence.
Consider any injuries that may occur to the potential buyer and/or buyer’s trainer while riding your horse. You also may want to include language the seller is not responsible for any injuries to the potential buyer, i.e. a liability release. Consider having the trainer execute a liability release, as well. However, be mindful that a determination of negligence and liability may be subject to the specific facts and circumstances and interpretation of case law in your jurisdiction.
5.Choice of Law, Venue, Arbitration, and Attorneys’ Fees
In addition to the above-mentioned provisions, provisions to also potentially include, but are not limited to: choice of law and/or venue clause (if there comes a time when there is a dispute and a lawsuit is filed, where do you want to litigate the action); arbitration provisions (do you seek to avoid costly and time consuming court litigation and require parties to undergo arbitration); attorneys’ fees (if there is a dispute and a lawsuit follows, will each party bear their fees/costs with the lawsuit or will the prevailing party’s fees/costs paid by the losing party).
Sending your horse on trial is a big decision and one that includes some planning to ensure you and your horse are protected in case something goes awry while your horse is out of your possession.
This article does not create an attorney-client relationship between you and the article’s author. This article is not a substitute for competent legal advice from a licensed professional attorney in your state. Looking for an equine lawyer? click here