Equine Law: ‘Buying & Selling,’ Equestrian Edition

When it comes to selling horses both the buyer and the seller have certain legal rights and duties. Do you know what they are? Attorney Kjirsten Lee, J.D. gives it to us straight.

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One of my favorite television shows is Buying & Selling on HGTV. The stars of the show help homeowners renovate their homes to receive top-dollar, while also seeking a new home. Sometimes horse trainers can be seen as having similar roles: maximizing a horse’s potential for a sale, and searching for a new, more appropriate horse for the owner.

Buying and selling horses is one way for professionals to get their name into the market and make a profit. The ability to make a profit frequently depends on the trainer’s ability to identify potential and draw it out. However, the trainer should also be aware of their legal rights and duties when buying and selling.

Buyers

There is an old saying: caveat emptor, or buyer beware. This basically means that a buyer assumes the risk that what they are purchasing may fail to meet expectations, or may be defective in some way. Buyers can protect themselves by doing their research and having a carefully worded sales contract.

Research

Horse searching can be a long, stressful process. It is sometimes tempting to cut corners – buy a horse sight unseen, buy without a pre-purchase exam, and so on. For amateurs buying their first horse, it is a good idea to work with a trainer who has connections and knows where to find appropriate horses.

A buyer’s research should cover both the horse in question and the seller. As to the horse, the buyer should see the horse go and, ideally, ride the horse. The buyer may also want to look up the horse’s show record, if possible, and look into the pedigree, being on the lookout for a history of unsoundness or training difficulties. It is always a good idea to have a pre-purchase exam performed so as to be aware of the horse’s physical condition (for more legal advice with regard to pre-purchase exams, check out Kjisten’s article here). The exam should be performed by the buyer’s veterinarian or by a neutral vet who has never seen or treated the horse, and preferably has not treated other horses at the seller’s barn if possible. This avoids any claims of conflict of interest.

As to the seller, it is worth considering a professional’s reputation when deciding to purchase a horse from them. A professional with a reputation for honesty and trustworthiness can be easier to deal with than someone who has a reputation for “horse dealing” or being “fast and loose with the truth.” If you are purchasing from someone who falls into the latter category, it is even more important to have a well-written sales contract, approved by an attorney. This can help a buyer avoid heartache and financial loss if there is a disagreement regarding the horse sold or the terms of the sale.

Sales contract

Having just noted the importance of a well-written sales contract, I have to say that buyers are frequently at the mercy of sellers when it comes to contracts used in a sale. The seller usually presents the buyer with a contract, and the buyer has a few minutes to read and sign – with no opportunity to consult an attorney. Keeping this in mind, buyers might want to familiarize themselves with basic horse sale contracts and talk to an attorney about any terms or clauses to beware of. When you are presented with the contract, be sure to read it thoroughly and ask about any clauses or terms that you do not understand.

Sellers

As sellers, horse owners want to find the best new home for their horse. While you can pull basic sales contracts off the internet, it is always a good idea to have an attorney review and customize a contract for your own use. The attorney can tell you whether certain clauses are unnecessary and make sure that all of your concerns are covered by the contract.

Sellers should also be aware of the buyer’s interests and needs. As an equine professional, don’t be afraid to tell a potential buyer (tactfully) that you don’t think a particular horse is a good match. Some ruffled feathers at the time are preferable to a lawsuit down the road and a bad reputation when the buyer decides the seller knowingly sold an unsuitable horse!

Common clauses in sales contracts

• Right of first refusal. This clause gives the seller the right to have the first option to buy the horse back if the buyer decides to sell the horse. This right MUST be in writing to be enforceable, and even then the original seller may not be entitled to have the horse back if the initial buyer sells the horse without disclosing the original seller’s interest.
• “As-is” clause. This clause states that the buyer takes the horse as-is, with no guarantees of future performance. This is an important clause for sellers, and one that buyers must be aware of.
• Deposit. Buyers may put a deposit down, with the remainder of the purchase price to be paid upon successful completion of a pre-purchase exam. The terms of this deposit should be expressed clearly in the contract.
• Venue. In the event of a lawsuit, this clause states where the buyer can be sued and what state’s law will govern. In today’s era of interstate and international sales, a venue clause is particularly important.
• Risk of loss. Particularly if the horse will be transported from the seller to the buyer – i.e., the sale is not between people at the same barn – this clause states who bears the risk of the horse being injured between the time that the sales contract is signed and the horse arrives at its new home.

Questions about buying and selling? Contact an equine attorney! Equine attorneys understand the particular challenges involved in buying and selling horses and can advise buyers and sellers on best practices.

Kjirsten Lee, J.D., is an attorney in Memphis, TN. She has written on topics such as the Horse Protection Act and use of drugs in racehorses. Kjirsten and her OTTB, Gobain, compete in dressage and eventing.