For
most horse enthusiasts, buying a new horse is a fun and exciting
opportunity. However for some,
what starts as a pleasant experience can quickly turn into a disaster. The old adage “caveat emptor” or “buyer
beware” applies to horse sales perhaps more than any other.
To protect themselves, buyers need to exercise
due diligence and have a carefully written purchase agreement. Of all the most common mistakes made by
buyers, perhaps the biggest
mistake of all, is not having a written purchase agreement. Regardless of the purchase price, the
person you bought the horse from, whatever the reason, GET IT IN WRITING!
Written contracts, I believe, are important in these
arrangements for two key reasons.
First, the parties in equine-related transactions always
benefit when a written contract fairly, accurately, and thoroughly sets forth
their arrangement. Purchase agreements are no exception. Second, whether you know it or not, the
applicable state law probably requires a written contract. For example,
most states have a “statute of frauds” on the books. These laws generally
require that certain types of contracts must be in writing before they can be
enforced. One type of contract governed by the statute of frauds is a
contract for the sale of goods with a purchase price of $500 or more.
All
purchase agreements should require certain express warranties. The agreement
should state the registered name, age, sex and sale price of the horse being
purchased. The agreement should require the seller to disclose any material health
or soundness issues, past or present.
The seller should also warrant that the horse has no dangerous or bad habits
(such as biting, kicking, rearing, bucking, cribbing, weaving, etc.) or
alternatively disclose such habits to the buyer. Some warranties are implied unless otherwise disclaimed, for
example, that the horse is fit for a particular purpose. However it is still a
good idea to have the seller warrant that the horse is fit for the particular
purpose as advertised. This means
that if the seller is advertising the horse as a finished and experienced youth
show horse, that the horse actually has the training and characteristics of a
finished show horse and is not green-broke with no show experience. The same applies if the horse is being
sold as breeding stock. Beware of
any “AS IS” language in the agreement if you don’t have any express warranties
mentioned above.
If you are taking the horse on a trial
period or making payments, there are additional terms you should cover in the
written agreement. For a trial
period, make sure the agreement covers the terms of the sale, including under what circumstances you can return
the horse to the seller and what restrictions are in place during the trial
period. Otherwise, you may find
yourself in a situation where you don’t want the horse and the seller won’t
take him back. If you are going to
make payments, make sure you understand how and when the payments are to be
made, and what recourse the seller has for taking the horse back if you miss or
make a late payment.
A
good purchase agreement should also state when the transfer of ownership and
possession will occur, and who will bear the risk of loss. For buyers that are conducting business
across state lines, it is important to have the agreement explain which state’s
laws will apply if there is a dispute, and where the lawsuit (or arbitration)
will be handled. Without this
clause, a buyer from New York might be forced to go to court in the seller’s
home state of California, making the buyer less likely to pursue a claim. Additionally, a good agreement will
state who is responsible for attorneys’ fees if a dispute arises.
This article does not
constitute legal advice. When questions arise based on specific
situations, direct them to a knowledgeable attorney.
Carrie Russom Quraishi has been active in the equine
industry for many years. She is a member of AQHA, NSBA, and NRHA and is
an AQHA World Champion and multiple AQHA national high point champion.
She has a B.S. in Finance and is a graduate of Southern Methodist University
Dedman School of Law. Carrie has recently joined the Dallas, Texas law firm of Sharp and Peterchuck and she strives to bring strategic
solutions to the unique needs of the equine community.
Carrie can be reached at (214) 800-2203 or via email at [email protected]
