First, a disclaimer:Horse Journal believes that most horse sellers are honest individuals who understand the value of maintaining a professional, ethical reputation. (Yes, word does get around!). However, just as in any business, there are those who engage in dishonest horse selling practices.
You know the kind. They’ll try to sell you a horse they tell you is named “Cupcake” but which around the barn is known with fear and trepidation as “Spawn of Satan.” In short, if the horse was a car, it would be considered a “lemon.”
The legal world of caveat emptor (“Let the buyer beware”), which once left buyers harmed by dishonest horse sellers with little recourse, is changing. As the Florida Supreme Court articulated in the equine case Besett v. Basnett, “[a] person guilty of fraudulent misrepresentation should not be permitted to hide behind the doctrine of caveat emptor.” There now are laws to protect you from the unscrupulous horse seller.
It Can Happen to Anyone:Actor Tom Selleck became famous for his portrayal of a private investigator par excellence in his role in the television show Magnum, P.I. Unfortunately for Mr. Selleck, his detective skills failed him in real life when he paid $120,000 for a 10 year-old show horse named Zorro for his daughter. A few weeks after the Sellecks took possession, Zorro went lame and became unsuitable for competition. Zorro was a lemon. It came to light that Zorro had received a steroid injection a week prior to the veterinary pre-purchase exam, a fact which was not disclosed to the Sellecks by the seller.
Selleck’s lawyer George Knopfler said, “If we had known that the horse had been injected a week before the veterinary exam, we would have postponed the examination for at least 30 days.” Long story short, the Sellecks sued the seller for fraud and the court awarded them $187,000 ($120,000 for the cost of the horse plus $67,000 to compensate them for the costs of the boarding and veterinary expenses they incurred while Zorro was in their possession). The seller was also required to pay an additional $75,000 in punitive damages. If Magnum, P.I. could fall victim to purchasing a lemon horse, it can happen to anyone.
Start with Doing it the Nice Way:Lemon horses can come in many categories. The horse may become lame or ill shortly after you have bought it. The horse, which seemed so well-behaved and trained at the seller’s farm, may turn out to be rank, dangerous or unable to perform in the discipline in which it was represented to you by the seller.
So what legal recourse do you have if you buy a lemon horse? First, we cannot underscore enough the need for a written sales contract that spells out the rights and duties of buyer and seller. This contract will prove invaluable should the horse turn out to be a lemon.
If you’ve had the misfortune of buying one of these horses, there are steps you should take. As soon as possible, contact the seller and have a firm, honest discussion with them about the horse and request to return it with a full refund of the purchase price along with compensation for any additional expenses you may have incurred as a result of the horse. In many instances, a seller will do the right thing by taking the horse back and refunding your money.
If the seller ignores your request or refuses to return your money and take the horse back by a set date (preferably, the sooner the better, lest the horse cause personal injury or property damage or the horse becomes injured or ill while in your possession causing you to incur untoward expenses), the next step is to contact a trial lawyer who understands the horse business and have a certified, legal demand letter sent to the seller stating that should the seller not comply with your request for a monetary refund and return of the horse, further legal action will be taken. In the meantime, document everything with videos, photos, receipts and the bills you may incur. You may need these later if you have to go to court.
If the Nice Way Doesn’t Work...If your lemon horse problem can’t be resolved through non-litigation means, you may need to hire a lawyer to bring a lawsuit against the dishonest horse seller. (Note: we said, “Hire a lawyer.” While you may think you have a slam dunk case that you can handle on your own, representing yourself in court is rarely a wise idea.)
Depending on the facts of your case, your lawyer can sue under the legal actions of fraud, negligent misrepresentation or breach of contract. In addition, there are also several state laws under which you may obtain legal relief.
1. Horse Lemon Laws: In most states, if you buy a motor vehicle that turns out to be a lemon, there is an Automobile Lemon Law to protect you and to help you recover from financial loss. Not so with horses unless you live in or bought your horse in Florida which is the only state that has an actual Equine Lemon Law.
In 2008, Florida passed its Equine Lemon Law (Section 535.16 of Florida Statutes Chapter 535), which charges the Florida Department of Agriculture and Consumer Services to evaluate the “conditions surrounding the sale and purchase of horses” and promulgate rules to prevent unfair and deceptive trade practices in the horse sales business.
Florida’s Equine Lemon Law (FELL) requires a written bill of sale to the buyer which includes the name, address and signatures of the purchaser and owner or their duly authorized agents, the name of the horse, its sire and dam, its breed registry status and age if known. The bill of sale must also state the date of the sale and the purchase price along with a statement by the seller attesting to ownership and the right to convey legal title. The Florida Equine Lemon Law prohibits a person from acting as a dual agent (representing the buyer and the seller is usually a conflict of interest) in the horse sales transaction unless both sides have prior knowledge and attest to their knowledge of the dual agency in writing.
Additionally, the FELL requires that the sales contract contain a statement by the buyer or agent acknowledging awareness that any warranties or representations have been stated in writing. This includes the horse’s age, medical condition, prior medical problems and treatments, as well as any liens or encumbrances. In an auction sale for licensed Thoroughbreds, the issuance of an auction receipt may substitute for a bill of sale. However, it must state the horse’s identification, date of purchase, the purchase price and contain the signatures of the buyer or buyer’s agent. Additionally, the receipt must state or incorporate by reference all conditions of the sale including any warranty terms. The FELL also gives buyers the right to inspect the horse’s veterinary records. Horse sales made through claiming races at licensed pari-mutual facilities are exempt from the Florida Equine Lemon Law. Failure to comply with the provisions of the Florida Equine Lemon Law will be considered deceptive and unfair trade practices.
2. Uniform Commercial Code (UCC): Another law often used in equine lemon cases is the Uniform Commercial Code. The UCC has been enacted in various forms in all 50 states, and its Article 2 grants certain rights and protections for buyers and sellers who have entered into contracts (there’s that word again!) for the “sale of goods.” In most courts, horses are considered “goods” under the UCC. Thus, a buyer who has entered into a horse sales contract with a dishonest seller may find the UCC to be a valuable legal tool.
In order for a horse sale to fall under UCC enforcement, the horse must be valued at $500 or more, the sale must be in writing and signed by the person against whom enforcement is sought (the seller in the event of a lemon horse lawsuit). The UCC can also be used if there is an oral contract as long as one side has performed their side of the bargain without objection from the other party to the sale. The UCC’s provision regarding a good’s “fitness for a particular purpose” is most often applied to lemon horse cases. This provision of the law basically says that where the seller knows the purpose for which the buyer is purchasing the horse and the buyer is relying on the seller’s skill or judgment to select or furnish a horse suitable for that purpose, there is an implied warranty that the horse is indeed suitable for that purpose unless the seller and buyer have agreed to exclude or modify that warranty.
An important catch to this provision is that the buyer must be relying on the seller’s “skill or judgment.” If the horse shows an obvious defect at the time of purchase (i.e. a horse that is noticeably lame), then the buyer is considered to be equally as capable as the seller in having knowledge of the defect. Additionally, a buyer’s lawsuit under the UCC may fail if the buyer is equally as knowledgeable as the seller about the horse’s suitability, or lack of it, for a specific use. One important caveat to be aware of is that many courts have held that the refusal of a buyer to have a horse undergo a pre-purchase veterinary examination is considered a waiver of the buyer to the implied warranty of fitness for a particular purpose. Have your vet perform the examination before and not after money has changed hands.
The UCC is widely applied in lawsuits involving horse sales. Its specific provisions and caveats, which also impose certain duties on the buyer as well as the seller, are the subject of an entire law school course and beyond the purview of this article.
Generally speaking, the UCC and its provisions concerning “warranty of fitness for a particular purpose” when applied to equine lemon law cases can result in outcomes that may be favorable to the buyer. In a successful lawsuit brought under the UCC, a buyer may be entitled to reject or revoke acceptance of the lemon horse. Additionally, the buyer may be able to recover for the consequential financial damages incurred as a result of the bad deal. These damages may include expenses incurred with veterinary care, transportation, care and custody expenses, personal injury or property damage and any other expenses associated with the purchase of the lemon horse.
3. Consumer Protection Acts (CPA): Modeled after the Federal Trade Commission Act, which prohibits unfair or deceptive trade practices, state Consumer Protection Acts (and every state has one) provide another way of getting justice against dishonest horse sellers. Unlike the U.C.C., which has as its goal to regulate contractual relationships and expand freedom of commerce, CPAs are not as dependent on legal contract principles and are intended to address unfair and deceptive trade practices, in particular practices that harm unsophisticated buyers (i.e, your first time horse buyer).
Most CPAs require a buyer to send a demand letter before filing a lawsuit to give the seller an opportunity to remedy the situation, and some courts may not allow a lawsuit under a CPA if the seller is not actually in the horse business. CPA claims fall into two categories: automatic violations and unfair and deceptive practice violations.
Automatic CPA violations are acts that are specifically spelled out as prohibited under your state CPA. Unfair and deceptive practice violations are those which could mislead or deceive even the most unsophisticated buyer. It’s important to note that CPAs generally don’t require proof that a buyer was actually deceived. They only require a showing that the practice has the capacity or tendency to deceive. Furthermore, most CPAs do not require proof that the seller intended to deceive or that the seller knew that a representation was false. Additionally, in some courts, a seller’s failure to disclose an important fact is tantamount to a deceptive practice in violation of a CPA.
CPAs also prohibit “unfair practices” that maybe deceitful and that are likely to be repeated on other customers. Taking unfair advantage of a purchaser’s inexperience or contracts that are unethical, unscrupulous or unconscionable could be considered unfair trade practices. Unlike the U.C.C., a seller’s defenses that a buyer signed a contract with an “as is” provision or disclaimer of warranties, or if the seller failed to inspect the horse prior to purchase will not defend a dishonest horse seller being sued under a CPA.
Depending on your state’s particular consumer protection act, a horse buyer who has been dealt with in a deceptive or unfair manner may recover their out-of-pocket costs (some state CPAs allow for an award that triples the amount of financial loss), attorney’s fees and punitive damages. Punitive damages can be substantial if a court finds that a seller acted maliciously, willfully or recklessly.
In general, duped horse buyers may be more likely to prevail and to receive greater financial recovery when bringing a lawsuit under a state consumer protection act rather than under the Uniform Commercial Code (U.C.C.). Under a U.C.C. claim, courts typically base their rulings on the terms of the contract, and there is an assumption that both parties were on an equal footing in the bargaining. That assumption may be valid when both parties are experienced in the horse business, but for the uninitiated, unsophisticated horse buyer, that assumption may not be fair. CPAs place less importance on contract provisions and more importance on whether unfairness or deception were present in the transaction.
3. Equine Liability Laws: Finally, some horse buyers may look to their state’s equine liability laws for relief when they find themselves stuck with a lemon horse. Generally, state equine liability laws are written to limit all or most liability for an injury to or death of a participant that results from dangers inherent in an equine activity. These laws carry a presumption that absent due care by the owner, the person riding the horse has assumed the risk and the owner is immune from liability. These laws typically do not address horse sales. Thus, most equine liability laws are not a good way to go if you’re looking to recover from injury from buying a lemon horse. However, your attorney should consult their relevant equine liability law for potential application in a lemon horse case.
An Ounce of Prevention (or How to Beat a Dishonest Horse Seller):No one enjoys being a victim and when the victim is a horse buyer who has discovered that they’ve been duped into buying a lemon horse, the misery can be great. As we said earlier, most horse sellers who care about their reputations want to be honest, but unfortunately there are some bad apples out there. Here are some tips and some red warning flags to watch for so that you can avoid falling victim:
1. Before you buy a horse of your own, take lessons from an experienced, reputable riding instructor. Do not undertake buying a horse on your own without the advice and assistance of your instructor. Many mistakes in horse buying are made by “newbies” who think they know more than they do. See the Prepurchase Agreement.
2. Watch out for ads that describe a horse as 100% bomb-proof or child-safe. While a horse may be very docile and well-behaved, no horse can ever be considered 100% safe. Furthermore, be honest with yourself as to your own riding ability. If you are just starting out, avoid young horses or horses advertised as “green broke” “halter broke,” “needing an experienced, confident rider” or stallions. Who needs the emergency room bills?
3. Watch out for dirty horse-selling tricks. The horse that is already saddled, bridled or sweaty when you arrive at the farm may have just had a work-out to tire it and make it appear calmer than it really is. If possible, arrive a few minutes earlier than your appointment time. Observe the horse in its pasture or stall and while being handled, groomed and tacked. Look at the horse’s overall physical and mental condition. An overly relaxed horse may have been drugged. Inspect the horse’s living conditions and the conditions of other horses in the barn (look in trash cans for syringes or pill bottles).
4. Have the horse’s owner or trainer ride the horse before you do. Be suspicious if the horse is only ridden in a round pen and not in an arena or on a trail away from the barn. Ask to see the horse perform in the discipline for which you intend to use it. Again, it’s a good idea to bring your instructor or trainer along to help you evaluate the horse. If that’s not possible, videotape the horse and have your instructor view it prior to purchasing the horse.
5. Be suspicious if the seller wants to meet you somewhere other than the horse’s usual place of boarding to show you the horse.
6. Beware of the “Bait and Switch” where a seller says the horse you had intended to look at is no longer available but wants to show you another one.
7. Always get a pre-purchase veterinary exam performed by your vet. We also advise obtaining a drug test on the horse. See Prepurchase Exams.
8. Ask to inspect all of the horse’s veterinary records (including a current Coggins). Consider it a big red flag if the seller refuses to let you see them or claims to not have them.
9. Ask to see the horse’s registration papers to confirm that the horse’s breeding is as it has been represented.
10. Be suspicious of high-pressure sales tactics such as telling you that someone else is about to buy the horse if you don’t act quickly.
9. If possible, take the horse on a trial basis prior to buying it. See Escrow Accounts.
10. Always use a thorough written contract signed by both parties when buying a horse. If the seller refuses to sign a contract, walk away from the deal.
11. Be a private investigator yourself! Verify as much information as you can. Check equine databases. The USEF and Centerlinescores.com have searchable databases that allow you to research a horse and verify its age, owner, rider and performance results. Check social media such as Facebook. You may be surprised to read posts from the seller about the horse you are considering to buy (Red flag Facebook post: “My horse is lame again. I sure hope I can get rid of this nag as soon as possible!” Or... “That darn horse refused every jump and dumped me in the show ring today.”). Ask people who may know the horse or the horse seller or who have seen the horse at shows for their opinion.
Buying a horse is a serious undertaking that should be done with great care. While there are laws that can protect you from dishonest horse dealers, you have a duty to protect yourself from becoming one of their victims in the first place. Do your homework by investigating and finding out all you can about the horse before you buy. Don’t ignore the red flags. Verify everything you can and commit it to writing in a signed contract. Ask for the advice and counsel of a reputable trainer/instructor to guide you. If you do end up a victim, stand up for yourself and consult a lawyer who can help you.
Article by Contributing Writer Susan Quinn, Esq.