What is the Horse Purchase Agreement?
A horse purchase agreement is a contract that lays out the specific terms of a sale of a horse. This document covers a wide range of important details that will affect both the buyer and the seller down the line. A horse purchase agreement will typically cover information such as: This document serves a number of purposes for both the buyer and the seller. First, it makes sure all necessary information has been collected on the horse. This helps make sure nothing has been left out of the transaction, which could be used to dispute the legal ownership of the horse at some point down the line . If something was left out of the bill of sale, for instance, the buyer might use it to claim he or she does not own the animal anymore and is not responsible for the care costs, or to claim the sale was never valid. It protects the buyer against fraud on behalf of the seller. Clarifying terms such as "good health" or "insured" ensures that the buyer is not blind to any defects or other issues with the horse. Conversely, it protects the seller from being liable for defects that the buyer chooses to overlook. A horse purchase agreement is essentially a great way to make sure both parties are starting their relationship with a clean slate. It covers all the details to which both parties have agreed in a way that minimizes future conflict and provides a framework to solve issues as they arise.
Key Components of the Horse Purchase Agreement
A horse purchase agreement is a contract between a buyer and seller to set out the expectations and liabilities of both parties related to the sale of a horse. As with all contracts, whether in plain English or in the form of a horse purchase agreement, the essential elements include:
- (1) Buyer
- (2) Seller
- (3) Description of Animal
- (4) Price
- (5) Warranties
- (6) Contingency Clauses
These essential elements are common regardless of the subject matter and are often incorporated into all types of contracts.
It is important to note that when you sign a purchase agreement for the sale of a horse or pony, you are signing a contract and you are obligated to uphold your end of the deal which can include liability for veterinary bills, transportation costs and the purchase price. Therefore, we encourage all clients to fully read the purchase agreement carefully and to consider legal counsel prior to signing a horse purchase agreement.
There are a number of common warranties often included in a horse purchase agreement such as a warranty of ownership, a warranty that the animal is free from encumbrances, a warranty of title or a warranty that the horse has no health or behavioral issues. It is important to know that in Kentucky, a horse owner has a duty to disclose known diseases. It is very important to know that in Kentucky, disease such as Cushing’s, heaves, ringbone, navicular disease, arthritis, and certain types of lameness are considered "silent" diseases. This means that these conditions or diseases do not necessarily produce signs or symptoms which can be observed, detectable, or diagnosed by an independent veterinarian. Therefore, these conditions or diseases must be disclosed by the seller to the buyer if the owner is aware of and actually "knows" of the existence of the condition. Remember that a buyer will not be able to bring claims against the seller if the buyer does not specifically ask about the conditions or diseases listed above to see if the seller does "know" of the condition – because otherwise, the buyer has no reason to know about the silent diseases.
Warranties against these issues may not be in the horse purchase agreement. At the closing of the sale, both the seller and buyer must sign a certificate stating that neither party is aware of any legal problems the horse has related health or behavior.
Critical Legal Clauses and Common Provisions
When it comes to the purchase of a horse, most buyers and sellers seem to be more worried about their vet inspections than the contract itself. However, the relationship between the buyer and seller should not stop after the purchase agreement is signed and the money changes hands. Breaches by either party can happen long after closing or the delivery of the horse. So how do you protect yourself and your investment from the unforeseen events that may cause future disputes? Having a rock solid purchase agreement that clearly lays out the obligations of both parties is crucial.
The vast majority of equine related lawsuits end up in the state or federal courts of the buyer’s choosing. In any lawsuit, however, there are four essential points that will need to be addressed: (1) which state will the dispute be tried in, (2) which court will hear the case, (3) which state’s substantive law the court will apply, and (4) what will the parties do if a dispute arises between them.
Typically disputes can be narrowed down for trial with each party’s worst fears in mind. The "mutual agree" clause gives parties the chance to try to reach an agreement before going to trial. A jury trial can usually be avoided with a simple "not to exceed clause."
The majority of purchases are made "as is," but a horse purchase agreement often contains a host of intricate clauses to ensure parties are protected from one another.
Breach of Contract and Disputes
A breach of contract is a violation of any written or spoken contract, agreement or duty that is either implied by law or contained in the law. There are several types of breaches of contract that can be committed either intentionally, negligently or by accident.
Procedural Breach of Contract A breach of contract can happen before the actual transaction takes place, when the seller refuses to perform their obligations under the contract, or after the party has violated the contract. Principles outlined in the contract pertain to obligations to one another, the dispute resolution clause offers important information to both parties as well.
Parties have a responsibility to ensure that any specific provisions they negotiate are explicitly stated in the contract to avoid misunderstandings and potentially damaging disputes.
Common Pitfalls in Horse Purchase Agreements
Often there are many areas in which the buyer and seller can overlook some things that might come back to harm them later. In the ownership of a horse, both parties need to make sure that they cover every possible item in the purchase agreement, so it is not going to harm you later down the road. Some things that most people would think would be included after purchasing a horse are: What happens if the health of the horse changes drastically? What if you have to take the horse to a vet, can you charge the seller for that? If it turns out things were not disclosed in the agreement, can you get your money back? Other mistakes when signing a horse purchase agreement can be that people do not disclose any issues they have with the horse to the seller, issues such as being kicked or thrown too often . You also should make sure that there are no other horse agreements already on the horse you are going to purchase that you might not be aware of. Another mistake that can be easily forgiven if overlooked is naming the horse in the agreement, however, if the agreement is too specific on that name, the sale of the horse may be voided for any horse with a different name even though it was the same horse.
Tailoring Your Agreement for Specific Situations
Not only are horse purchase agreements recommended, they are essential when dealing with potential problems and misunderstandings after the sale. Horse purchase agreements should almost always be used to formalize an ownership interest in a horse. Horses bought and sold for tens of thousands of dollars and expenses (including shipping) can be costly. A written contract detailing the agreement is paramount. However, there are many different circumstances that can lead to a horse purchase agreements. Each horse purchase agreement may need to be tailored to fit the situation. For example, a horse purchase agreement may be used where a sale is contingent on a pre-purchase exam, for example, or perhaps a buyer wants to purchase a horse on a trial basis or make payments to ultimately buy the horse rather than buying outright. In these cases, it is important to include specific language that addresses the contingencies or recitals that are the basis for the agreement.
When to Seek Professional Assistance
There are many excellent reasons for consulting with a professional who regularly drafts horse bills of sale. For example, drafters of horse bills of sale understand the relevant laws, are aware of common pitfalls that could allow a buyer or a seller to breach the contract, and can suggest additional provisions if necessary. In particular, consulting with an equine lawyer when drafting a bill of sale is extremely advisable if the horse has been used for specific purposes, will be used for specific purposes, or will be purchased or sold for specific purposes. These may include , but are not limited to:
In these circumstances and others, the horse bill of sale may require additional provisions to protect the party with the most invested interest (financially or in terms of emotional investment) – the buyer or the seller, as applicable. A good equine lawyer can help find the best way to preserve the rights of their client if things should go badly later. The general advice to consult with an attorney before entering into any contract should be applied to the horse purchase agreement as well as any other contract.