Buying or Selling a Horse: Put Together the Right Contract

When you're buying a horse, it's not like buying a house or a car. A well-written sales contract is essential. Michael Beethe, Esq., tells you how to protect yourself.
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When you're buying a horse, it's not like buying a house or a car. A well-written sales contract is essential. Michael Beethe, Esq., tells you how to protect yourself.

Here's how to do the best job of protecting yourself.

?Kate Light.

?Kate Light.

When You're Selling a Horse
Legal case history confirms that it's up to the potential buyer to check out the horse. As the seller, you're not required to disclose known defects, conditions, or vices on your own initiative--UNLESS (and these exceptions are very important)...

  • the contract states otherwise (in legal terms, contractual obligation). It's too bad that contracts are so often not used in horse sales, because they're good to have whichever side you're on. For instance, a sales contract can protect you from future claims by the buyer if it states that the horse is sold "as is" and includes a disclaimer of warranty (that means no guarantees of future performance and soundness). But if the contract requires you, as the seller, to disclose all existing defects, then the buyer has a right to rely on your doing so.
    Example: If your horse has a history of colic and you're selling him under a contract that obliges you to disclose all defects, you must inform the buyer of the colic history; otherwise, as explained below, you could be liable to the buyer.
  • the buyer asks a direct question about a defect (express inquiry), in which case you have an obligation to answer truthfully. Example: If the potential buyer asks whether your horse has had any lameness problems, you must disclose all lamenesses of which you're aware (even if they occurred before you owned him).
  • the person to whom you're selling has a reason to put her trust in you (fiduciary duty).
    Example: When a rider buys a horse from her trainer, whom she trusts, the trainer has a fiduciary duty toward the rider that would not exist toward another buyer, and must disclose all she or he knows about the horse. If the horse has a bad habit in the show ring and the trainer knows of it but fails to inform the rider, for example, she can be held responsible for any resulting damages.
  • you realize a potential buyer incorrectly believes something to be true about your horse (known misperception). In this case, you can't stand by silently.
    Example: You're selling a show mare that you know can't successfully carry a foal. If a possible buyer mentions a plan to breed the mare next year, you're legally obligated to speak up about the problem.
  • a potential buyer tells you what your horse will be used for after purchase, and you know the horse can't or shouldn't be used for that purpose. Example: The buyer mentions that she's buying him for a young or beginning rider, and you know that he has a habit of getting strong or taking off in certain circumstances. You are obliged to inform the buyer that your horse is unsuitable for her purpose; otherwise, you could be responsible for injuries resulting from his misbehavior.When You're Buying a Horse
    It's up to you to investigate what you're buying. As you can see, in many instances you control the information the seller has a legal obligation to disclose. So don't be shy--go for it! Take another person (not a family member; a trainer or horse-knowledgeable friend is good) in case you need a legal witness later to what was said. Take a notepad, write down what you're told, and date it. The notes may not be technically admissible as evidence in the event of future legal action, but they will strengthen your testimony.
    Tell the seller your intended use. This places a duty on the seller to inform you if the horse is unsuitable for your purpose. Ask lots of direct, detailed questions--the seller is legally required to answer them accurately! Draw up and take along a list of questions tailored to your intended use of the horse. Ask about health and lameness problems; special care requirements; at-home, trail, and show-ring behavior; ease of hauling; training history; barn behavior (in crossties, for instance); and anything else that's relevant--such as whether the horse has any quirks not covered by previous questions. Warning: If the seller has owned the horse a short time, she is required to disclose only what she knows or should know (for instance, a problem with the horse about which an employee has informed her). If she really doesn't know about a problem, she has less liability. That's when your research (see below) becomes more important. Try out the horse thoroughly. As far as possible, duplicate the use you intend for him (such as jumping, dressage, or trail-riding). Your "test drive" will probably generate more questions; be sure to ask them of the seller at this time. Also, ask the seller exactly what she did (such as schooling or medicating) to prepare the horse for your tryout. Look her in the eye and ask, "Is this horse on any medication today? Is he medicated at other times? When?" Do some research. If you're considering a pricey show or breeding horse, confirm the seller's account of his breeding and history by checking pedigree and competition records and contacting previous owners or trainers. If the horse is unregistered and/or has been shown mostly at unrecognized competitions, your job will be harder, especially if he's recently come to your area from out of state. Ask the seller for the name and location of the previous owner. In my experience, this person, who no longer has a vested interest in the horse, will be truthful about him. If the seller doesn't want to disclose the previous owner, walk away--there's usually a good reason for that reluctance. Get a pre-purchase exam. Even if the horse is inexpensive, do not skip this step. By omitting the pre-purchase, you may waive any warranties of the horse's health and soundness. Again, use a contract. This clarifies your agreement with the seller and provides protection to you both. The seller usually furnishes the contract, but provide one yourself if necessary.Problems you avoid by following these guidelines range from small (such as being embarrassed by the pre-purchase exam) to very large (the necessity to initiate or defend a lawsuit). And if a buyer can prove in a lawsuit that the seller didn't disclose information as she was obliged to, liability could extend beyond a full refund for the purchase price to include the buyer's expense in purchasing and keeping the horse. In extreme cases, a finding of fraud could mean the seller's paying the buyer's legal fees, and even punitive damages. The worst consequence, however, is responsibility for personal injuries caused by a horse's undisclosed habit (rearing, for instance) that exceeds the boundaries of normally accepted "dangerous" or unpredictable behavior. This liability is even more acute when the buyer identifies herself as an inexperienced amateur--or the intended use of the horse, made clear to the seller, is for a child. Attorney Michael Beethe, who received his JD and MBA degrees from University of Missouri/Kansas City, practices equine, general-business, and corporate law. In his eighteen years' involvement with the Arabian horse industry, he has earned numerous national championships in nine different divisions. This article first appeared in the September 2000 issue of Practical Horseman magazine.