Both buyers and sellers need to be aware of the pitfalls of transactions involving horses. Sayward Brest, our equine specialist, offers these four tips to avoid disputes.
Ensure the horse is fit for purpose
The horse needs to suit the purchaser’s needs. For buyers it is important to seek advice to make sure it is fit for your purpose instead of relying on just the advertisement from the seller. The buyer should have his or her instructor or coach assist by viewing and riding the horse, and observe the buyer riding the horse in order to determine whether the horse is appropriate. If possible a buyer should view and ride the horse on several occasions or request a trial period as the horse may not display its ‘true colours’ on the first occasion.
Sellers should ensure all riders sign an indemnity and waiver form before riding or handling horses on their property. Sellers should also be wary of selling a horse that is not appropriate for the buyer in order to avoid a dispute later about the horse – a bad sale could lead to a dispute if the buyer later wishes to return the horse, seeks to recover the purchase price back from the seller, or is later injured by the horse. A buyer may seek to claim that the horse was misrepresented by the seller. Sellers should include relevant clauses in the sale contract dealing with warranties, fitness for purpose and return of the horse.
Even if the horse appears appropriate for the rider, the buyer should have his or her veterinarian perform a pre-purchase examination before committing to the purchase. This may change the buyer’s mind about purchasing the horse, or it may allow the buyer to negotiate a better price. In addition this shows that the buyer knew about any soundness issues that are uncovered by the pre-purchase examination, which may assist the seller if a dispute develops.
Establish the terms of a trial period before the horse is taken away
Often a potential buyer will want to enter into a trial period. This means the buyer wishes to take the horse home to experience what that horse is like being handled by the buyer or other strangers in the buyer’s home environment. Whether this arrangement creates an obligation to buy may form the basis of a dispute between buyer and seller. Establishing the terms of a trial period beforehand means these expectations are addressed.
The seller should protect him or herself with an indemnity and waiver agreement in case an accident occurs during the trial period. The seller will also need contractual clauses dealing with who is responsible in the event of the horse being injured or neglected.
Formalise the sale with a signed agreement
A written agreement ensures potentially contentious issues, such as price and payment arrangements, are clearly defined. Another reason a formal agreement should be entered into is that a horse is an asset and any transaction relating to its sale and purchase must be treated as such.
Since misunderstandings amongst parties are common with verbal agreements, it is essential that a sale agreement be drafted so that each party knows what it is agreeing to do. A written agreement also tends to cover circumstances the parties may not consider as issues when they are not yet in dispute.
Seek legal advice before signing an agreement
If you are given an agreement to sign when selling or purchasing a horse, it is wise to have a lawyer review it to ensure it does not contain any onerous obligations and that it reflects the terms and arrangements you believe you have agreed to with the other party.