About Me

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Rachel Kosmal McCart is a lifelong horsewoman and the founder of Equine Legal Solutions, PC, an equine law firm based in the Portland, Oregon area. Rachel is a member of the New York, California, Oregon and Washington State bars and is admitted to practice before the U.S. District Court for the District of Oregon and the U.S. District Court for the Central District of California. Rachel currently competes in three-day eventing.

Friday, January 11, 2008

The Legal Landscape of Horse Sales

At Equine Legal Solutions, we receive calls from thousands of dissatisfied horse buyers who want to know what their legal options are. Here, we will walk you through the legal landscape of a horse purchase.

Often, ELS' callers want to know "what law applies to horse sales." Whether the terms of a horse sale are written or oral, the transaction is a contract. Therefore, horse sales are governed by contract law. Rather than written statutory law, contract law is mostly based upon a series of decided cases in which judicial opinions describe the legal principles used to arrive at a decision.

Other than with respect to certain limited regulation of agency and commissions in horse sales, there are no special laws governing horse sales. For example, there is no cooling off period in horse sales (i.e., no time period in which the buyer can rescind the purchase with no consequences). Although some states, such as California, have puppy lemon laws, ELS is not aware of any such laws pertaining to horses. While some state statutes or regulations may require that a horse have a recent Coggins test or be sold with a halter, a seller's failure to provide these items only means that he may have violated a state law and be subject to certain penalties. It does not void the sale.

In general, horse sales are understood to be "as is" and "buyer beware." This means that the buyer has a duty to examine the horse prior to purchase and except as described below, all sales are final.

The as is nature of a horse sale can be changed by agreement between the buyer and seller. Such agreement can be written or oral, but of course the terms of an oral agreement are generally more difficult to prove. For example, a seller might provide a buyer with a very simple bill of sale that says, "I, John Q. Seller, sell to Suzy Q. Buyer, Mighty Temptation, a sorrel 5-year-old AQHA gelding, for the sum of $5,000." With that bill of sale, whether the seller realizes it or not, they have just made the following warranties: (i) the horse being sold is actually Mighty Temptation, the horse described in the bill of sale, (ii) the horse is five years old; (iii) the horse is a registered Quarter Horse; (iv) the horse is sorrel; and (v) the horse is a gelding. If any one of those warranties are breached, the buyer may have recourse against the seller.

Contrary to popular belief, the as is nature of a horse sale does not give a seller carte blanche to cheat a buyer. A showing of civil fraud can overcome even a written contract containing an as is clause. Fraud is present when a seller intentionally makes a false representation to the buyer in order to make the sale. False representations can take many forms. The following examples would qualify as false representations:

-The seller tells the buyer something about the horse that isn't true when the seller says it, and the seller knows it isn't true. For example, the seller says, "He's totally sound," but the seller knows that the horse has navicular.

-The seller tells the buyer something about the horse, but the seller has no basis for believing it. For example, the seller says, "He's an excellent barrel horse," but the seller has no idea whether the horse can actually run a barrel pattern or not.

-The seller promises to do something in the future, but doesn't ever intend to keep that promise. For example, the seller tells the buyer, "If you buy the horse, I'll throw in this pickup truck," but the seller never intends to give the buyer the truck.

-The seller gives his opinion to the buyer, but the opinion is a lie. For example, the seller tells the buyer, "This horse is great with kids, a real babysitter," but the seller knows the horse has a nasty habit of bolting at the slightest provocation.

While there is perhaps a fine line between sales puffery and representations, advertisements often contain specific statements that can be interpreted to be part of the deal. For example, a buyer who purchased a horse advertised as having "no vices" would likely have recourse against the seller if, upon arrival at the buyer's, the horse revealed itself to be a vigorous cribber. Likewise, a buyer who purchased a horse advertised as "100% sound" would likely have recourse against the seller if the horse turned out to have heaves. Note that the buyer would likely still have recourse even if they signed a contract that says "as is."

The seller may also have a special relationship with the buyer that creates its own legal duties. For example, if the seller is also the buyer's trainer, the seller has an affirmative duty to help the buyer select a horse that is suitable for the buyer. In other words, the seller/trainer can't sell the buyer a horse that the trainer knows (or should know) is unsuitable for the buyer.

The seller may also be subject to the provisions of the Uniform Commercial Code (UCC). A person earning substantial income from the relatively frequent sale of horses, such as a breeder, broker or bloodstock agent, would likely be considered a "merchant" under the UCC. (A person who sells one or two horses a year would probably not be a merchant.) The UCC provides that merchants give two implied warranties: merchantability and fitness for a particular purpose. In the context of horse sales, "merchantability" would likely be interpreted as reasonably sound and healthy with no serious behavioral issues. "Fitness for a particular purpose" means that the horse is suited for the discipline or use that the seller represented to the buyer. To disclaim these warranties, the seller must do so in writing.

4 comments:

Scott said...

Hi Rachel,

Great resource you have for horse owners. I linked to your post at NickerIt.com a new equestrian social bookmarking site.

Laverne said...

Hey Rachel,

Wonderful information however; you did not touch on selling of pregnant mare(s). I recently purchased a mare, at first glance I looked at her and asked " Is she pregnant"? the seller replied no that's a haybelly. My reply was "WOW she is really fat". I asked the question three other times and got the same reply "nope it's a haybelly and sweetfeed". Well, after having her home for a month and lower her fat intake and exercising her, we realized her body was trimming down but not that heybelly. The vet came out this morning and yes she's with foal and due in a couple of months. Any advice would be more than welcome.

Rachel McCart, Equine Legal Solutions said...

Hi, Laverne. That sounds like a good topic for my next blog post. The pregnant mare question comes up a lot.

creidgsa said...

I have looked all over the internet for information on horse sales. It is funny that there are lemon laws regarding puppies and dogs but nothing for horses. I recently bought a horse who was very very quiet under saddle. I did not tack it up myself which was a very big mistake. I realized he was a bit thin but didnt realize exactly how thin until I went to pick him up. Upon getting the horse home, which was represented as a kid safe family horse. I spoke to the original owner to find out the horse was only 3, I was told 4 almost 5, and had just been backed for the first time at the end of May. The horse has no manners and clearly no training on the ground. He has attempted to kick me as well as another person when his back legs are handled. The seller has accused me of creating his behavior issues. I have only had him 1 week and have only led him in and out with the exception of attempting to do some grooming on 2 different occasions. Kid safe? Yeah right! He would flatten them if they got near him. Additionally I am not allowed to turn the horse out in any viewable field as he is so thin, the manager is afraid someone will report him as a starvation case. I would give him a 3 on the Henneke chart but I am not trained on it. Anyway, I am in a bad spot. I guess partially due to my own stupidity at not handling the horse outside of riding him, however this woman should not be allowed to get away with dishonesty. I had no reason to believe that she was not telling me the absolute truth and am shocked she would tell such outright lies! It's hard to justify getting a lawyer for a $2k horse, I wish there were some sort of consumer protection laws regarding horse sales.