Understanding Equine Contracts: What Horse Owners Should Know

Equine Contracts 101

Equine contracts make up a vital part of the horse industry. Equine contracts are agreements typically between a horse "owner" and a horse "buyer", "breeder", or "trainer". Typically contracts will be in writing with various terms and conditions (such the price, date of payment, delivery date, etc.) Unless both parties are familiar with the laws of contracts, it is usually best for such contracts to be written down.
Some equine contracts can be quite simple. For example, leasing contracts can simply state what the horse owner is leasing, who the lessee (the person leasing) is, what is included in the lease (e.g . insurance, supplies, etc.), and what the leasing price per month will be. Contracts related to selling horses can be more detail oriented (especially when considering transportation to new owner, boarding rights, etc.). Sometimes contracts are necessary to prevent future disputes.
Common types of equine contracts include buying and selling contracts, breeding contracts, boarding contracts, and pet sit contracts. Its important , however, to consider that these contracts constitute a small part of the horse industry. A thorough understanding of the nuances of these contracts would benefit any person involved in the horse industry.

Basic Elements of Equine Contracts

As any experienced horse owner knows, when it comes to horses the unexpected is always expected. But, if you have a plan and a firm but fair agreement between you and the other people involved, there is less chance that the unexpected is going to turn into an expensive problem. This is where a good equine contract comes in handy. While some contracts are simple and basic, a good horse contract can have all the parties well informed about their responsibilities, so no horse person or other party will be exposed to unnecessary risk; and they will have some level of protection against the possibility of loss or injury, when to the best of everyone’s knowledge, nothing is wrong or could go wrong. Having said that, there are no guarantees in horse ownership, but a good equine contract can go a long way toward avoiding heartache.
Below are some of the key components that should be included in any equine contract. Specific wording and additional provisions may be necessary according to each horse transaction and the individuals involved.
Identify the parties to the agreement.
Identify the horse(s) being discussed and sold.
Disclose who is responsible for veterinary care, board and any other expenses related to the purchase, sale or lease.
Outline payment terms (if any).
Include a description of the prospective buyer’s intent with respect to the horse (breeder, rescuer, trainer, show horse, companion, broodmare).
If terms are for a sale, does the agreement state when the seller is to receive full payment for the horse?
What happens if full payment is not made?
Who is expected to pay the sales tax on the sale?
What happens if the horse is injured or dies before closing?
Who is liable for expenses incurred before closing?
What happens if the horse is injured or dies after closing and prior to exchange of funds?
Extinguishment of liability – i.e. limitations and exclusions of liability for any injury or damage to any person and/or property.
Indemnification – an agreement that one party will hold the other harmless against any and all claims of liability.
Choice of law – which state law applies to construction of the contract.
Equine Inherent Risk – to the extent permissible under state law, may be included to exclude liability for any injury to the horse.
Arbitration clause – where both parties agree to binding arbitration.

Types of Equine Contracts

A variety of agreements govern the business of horse ownership, breeding, training, boarding, and leasing. "Equine contracts are used to memorialize each of these transactions, and some require specific considerations depending on local laws," explains Pamela D. Sumerell, an attorney at the law firm of Sherrard, German & Kelly, P.C. "Other, less formal, types of equine contracts – such as waivers of liability, releases and boarding agreements – are often used, depending on state and federal laws."
Sale agreements are the most common equine contract used in horse sales. These define the transaction, spell out the terms of the sale, and set the expectations before, during, and after the sale. There is no statutory language required for a sale agreement. A horse sale contract is simply a bill of sale confirming the sale of one horse for a certain amount of money. The buyer may want to have a pre-purchase exam done prior to purchase, as well as try the horse to see if it is a good fit for them.
Lease agreements are appropriate in several situations. One common situation for a lease agreement would be a situation where a horse is too young or inexperienced to sell and the owner wants some experience on that horse. Another situation where a lease agreement is appropriate is when you have a high quality horse, and someone only wants to ride it without the responsibility of ownership. If the horse is a juvenile, the lease agreement should spell out who is employing the care for the majority of the time.
Many horses are bred to finish the result whether it’s for conformation, race, show, etc. When using a stallion, a stallion service agreement is often used. This is a simple agreement between the stallion owner and the mare owner, which indicates that the stallion owner will allow the use of their horse and they will be paid an agreed upon fee. However, there can also be other terms in a stallion service agreement, including:
Another type of breeding contract is a Mare Care Contract. This is an agreement between the mare owner and the farm that will be caring for the mare. These types of contracts can also be complex, depending on the size of the farm and the number of mares being bred. It may just be an agreement with that specific mare, or it may be with the foal, where the mare will care for the foal for a specific amount of time (3 months, 6 months, etc.). If the mare is bred to a stallion, the mare care agreement should say who is responsible for which costs (the breeding/scanning of the mare; care of mare and foal, etc.).

Legal Issues in Equine Contracts

When it comes to equine contracts, it is important to understand the applicable state laws. Generally, these laws will dictate the enforceability or voidability of a contract or provision. State laws also determine the length of any required notice for a breach and the duration of representations and warranties. The various states can differ widely in their contract law, even when it appears that they would be the same.
Contracts that are enforced are most often given full weight and effect to all of the provisions contained in a contract. It is, therefore, important to thoroughly review all contracts and ensure that you fully understand what you are signing. If the provisions are found to be contradictory, vague or ambiguous, a court will attempt to ascertain the intent of the parties by reviewing the contract as a whole.
A contract is not automatically deemed to be enforceable. A court will consider whether there was a properly intended exchange of good and valuable consideration (money or an exchange of acts). The performance or promise of performance by one party must benefit the other party. Generally, if one part has fully performed , even a unilateral promise can be enforced. The unilateral promise of performance in exchange for money to be paid in the future is a valid form of consideration if the party communicating the offer intends to be bound. A later act (contract formation) does not necessarily upend the earlier agreement if the contract is not expressly stated to be conditional. A promise made in exchange for a conditional promise that satisfies statutory requirements is sufficient consideration to justify modifiying a contract.
The statute of frauds requires certain agreements to be in writing in order to be enforceable. These agreements include those that relate to an interest in land or involve the sale of goods for valuue in excess of $500. However, even if a contract can be formed in the oral or implied exchange of agreement, those provisions that contract with the statute of frauds are voidable. Specific jurisdictional rules and procedural requirements apply to all contracts. These laws control when and where a lawsuit can be brought to seek damages for breach of contract. They may also control the forum or court that has authority over the adjudication.
If a dispute arises over a contract, it is important to get legal advice if you intend to enforce the contract. A lawyer can provide an opinion as to the strengths and weaknesses of the case. An attorney can inform you whether you have a probable recovery. Due to the legal formalities inherent in contracts, it is best to have any ambiguities resolved prior to formation to avoid misunderstanding or later disputes.

Preventing Problems with Equine Contracts

By entering into a contract with those who you come into contact with in the equine industry, it can avoid or sharply reduce the chances of a dispute between you and that party. An example of this is if you buy a horse and after the sale discover the horse has a serious medical condition. If you have a purchase agreement in place and that medical condition was not disclosed during the purchase, you may have a solid breach of contract case against the seller to receive some form of compensation or remedy.
Many equine contracts will contain sections that address the potential for disagreements on whether a horse was healthy at the time of sale, issues regarding the maintenance of boarding facilities, and other potential issues that could arise with the ownership of a horse. In most equine transactions, some type of contract or bill of sale will be used. The use of contracts trickles down to other parts of the horse industry as well, including leases, boarding, medical care and training, among other things.
Even if you think you have a good relationship with someone, it is important to put things in writing when it comes to any agreements, especially if it is for a substantial amount of money. Sometimes an individual may be rectifying a serious issue with your horse, and they may agree to provide these services in exchange for you breeding the horse to one of their sires. Or it may be a situation where your horse was boarded at said facility. Even something that seems very informal should be recorded in writing to protect yourself in case that relationship suddenly goes awry.
There are some specific issues that are commonly seen as causing disputes in the equine industry. These include:
Vet fees – who pays them and how much will the owner owe?
Hay, grain & supplements – who provides these?
When you enter into an agreement with someone to create a contract, make sure you are very specific and clear in defining what the person is agreeing to do and what the other party is giving in return to avoid many of these disputes. Otherwise, you run the risk of leaving it open to quite a bit of interpretation, which can lead to serious disagreements.

Creating an Equine Contract in Steps

A good equine contract can be the difference between a smooth relationship and an expensive lawsuit. Before any matter is discussed, be sure to do research into each party’s expectations for the horse or service, history of the horse, and any applicable federal and state guidelines. Only then should an attorney draft up a contract that is best suited for the relationship between the parties.
In order to create a binding contract between horses and their owners, both parties must be clear on the material terms of the agreement. The most basic requirements for a contract are:
(a) nature of the agreement
(b) price
(c) delivery
(d) payment
(e) default
If there is an oral agreement or understanding, it becomes imperative for the parties to put everything in writing. Keep in mind that a party may be estopped from denying or making an inconsistent position from a prior position, including an oral understanding. Further, if a dispute should arise, each party’s recollection as to the agreements, terms and conditions may differ. It is for the Court to interpret the contract and decide what the agreement’s terms should be. Your oral understanding may not be adhered to by the Court. In order to avoid litigation, it is best for every contract to be in writing.
Another reason to ensure that all agreements are in writing is the statute of frauds. Under the statute of frauds, a contract for the sale of goods, including horses, is unenforceable unless there is some evidence of the agreement in writing. Once evidence of an agreement, including the quantity of the goods, exists in writing a quote from the internet or a statement of the price can serve as a sufficient writing under the Uniform Commercial Code ("UCC") to satisfy the Statute of Frauds. In order for a contract to be enforceable under the UCC the following must be satisfied:
§2-201. Formal requirements; statute of frauds.

(1) Except as otherwise provided in subsection (2), a contract for the sale of goods for the price of $500 or more is not enforceable by way of action unless there is some writing sufficient to indicate that a contract for sale has been made) signed by the party against whom enforcement is sought or by his authorized agent or broker . )

It is for this reason that it is vital to ensure that when selling or purchasing a horse that a contract is made and that you are protected under the Statute of Fraud.
The United States Court of Appeals for the First Circuit states that "the primary goal of contract construction is to discern the contracting parties’ intent." The goal of a contract when selling or purchasing a horse is to avoid dispute as to any costs associated with the horse after it has been sold and transferred. A contract should be reasonably precise and should set forth the entire agreement. A contract between parties should be easily understood and be somewhat readable. The draft should not have extraneous language that could create confusion as to the terms of the agreement. Any ambiguity in the terms will be construed against the drafter. Further, if any terms are missing, the Court might construe them into the contract, even if they were never agreed to.
If parties have signed the contract, they are estopped from denying its validity. This means that once an individual signs an agreement and accepts the benefit, they cannot later seek refuge from the provisions of the agreement. A party is also estopped from claiming that the contract has been altered. Specifically, if there is an omission in the contract, the Court might fill in that omission for the purpose of enforcing the provisions of the contract. It is important for each party to review the document to ensure they understand it and that it is precisely what they bargained for. If they do not understand the document, or if it is too confusing, it is important to ask questions. If there are missing terms, it is important to inquire as to their absence. Without adequate questioning, an individual is stuck with what is in the contract.
Finally, a contract can be terminated only if I. by the parties’ agreement; II. by the discharge of a condition or III. by breach. If the other party breaches, the aggrieved party can:
➢ terminate contract and recover restitution; or
➢ continue performance and recover damages
It is important to ensure that all remedies are set forth in the contract. A party to a contract should refrain from facilitating the breach of any contract or producing a condition of breach. A party should act in good faith, especially when dealing with the sale of a horse.