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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.

Wednesday, December 10, 2008

Top Five Horse Selling Mistakes

Top Ten Mistakes that Even Experienced Horse Buyers Make is one of Equine Legal Solutions' most popular articles, but horse buyers aren't the only ones making mistakes. Here's a review of the top ten horse selling mistakes.

(1) Selling Without Full Disclosure

If you don't want to be sued, be honest when you sell a horse. Not only is it your legal duty as a seller, it's good business. Believe it or not, describing every last defect in excruciating detail can actually enhance the chances of a sale because the buyer will feel comfortable that they know what they are buying. There is an old saying that "every horse has a hole," and savvy buyers are well aware that there's no perfect horse. They just want to know what the horse's defects are before they buy. And, if you have listed those defects in the bill of sale (or otherwise put them in writing) and a problem occurs post-sale, you can produce evidence of your full disclosure at the time of sale. For example, if your horse requires regular joint maintenance, and you disclose that fact in your sale contract, you have just provided yourself with a legal defense if the buyer later complains that the horse isn't sound.

(2) Selling a Horse on a Handshake

Even in this lawsuit-happy age, there are still some horse sellers who follow the tradition of handshake sales. That is, they don't use a contract. At all. No receipt, no bill of sale, nothing except the signed transfer from the breed registry. As a result, the seller has no protection whatsoever in the event of a dispute. It will be all "he said, she said."

(3) Using Any Old Bill of Sale

Although many horse sellers now realize that it's wise to use a bill of sale when they sell a horse, they aren't necessarily as savvy about what needs to be in that sale contract. (Sale contracts and bills of sale are the same thing, by the way) Will that horse sale contract you wrote yourself really protect you? Find out by reading How Good Is Your Sale Contract? If you're not sure about the horse sale contract you have, you might want to use one of Equine Legal Solutions' sale contracts. For example, in most horse sale disputes, each party, regardless of whether they win or lose the case, has to pay their own costs and attorneys' fees, which can easily exceed the amount at stake. In contrast, if the horse sale contract contains an attorneys' fees clause (like all of ELS' contracts do), the loser will have to pay the winner's attorneys' fees and costs.

(4) Discouraging the Buyer from Getting a Prepurchase Vet Check

A prepurchase veterinary exam is one of the best forms of protection for horse sellers as well as horse buyers. If the buyer has had a prepurchase vet check and the horse later develops a physical problem, that prepurchase exam provides the seller with an automatic defense. In order to have a valid legal claim for fraud or misrepresentation against the horse seller, the buyer will have to show that the horse's condition was pre-existing and that the seller (a) knew about it and (b) didn't disclose it - see The Legal Landscape of Horse Sales.

The prepurchase exam serves as a professional evaluation of the horse's condition at the time of sale, and one performed by an agent of the horse buyer. So, if the horse's post-sale ailment turns out to be a pre-existing condition, such as navicular, there are several distinct possibilities, only one of which implicates the seller: (a) the condition was not detectable at the time of the vet check; (b) the condition was detectable, but the vet performing the prepurchase missed it; (c) the condition was detectable, but the buyer did not authorize the vet to perform the diagnostics that would have revealed the problem (e.g., X-rays); or (d) the seller successfully concealed the condition by administering painkillers, tranquilizers or other drugs to the horse. Only in the case of (d) would the buyer have a case against the horse seller, and the buyer would have to be able to prove that the seller concealed the condition.

(5) Not Providing the Buyer with Access to a Sale Horse's Vet Records

Making a sale horse's vet records available to prospective purchasers is disclosure that serves to protect the seller (as well as the buyer). Note that making the records available to the horse buyer still protects the seller even if the buyer never actually obtains the records from the seller's vet, or reads them.

For example, let's say that a performance horse has been treated for various miscellaneous lamenesses over the years, and that he receives regular hock injections to help keep him sound. The horse is sound at the time of sale, but the seller doesn't specifically mention that the horse needs hock injections, figuring that it's routine maintenance. The horse's vet records clearly show the various lamenesses, as well as the hock injections. Two months after purchase, the horse shows some hock stiffness and is no longer sound. The buyer finds out through the grapevine that the horse had been receiving hock injections and had had various lamenesses, and sues the seller for fraud and misrepresentation. There was no prepurchase exam, and no bill of sale. At the time of sale, the seller told the buyer that they were welcome to obtain a copy of the horse's vet records from the seller's vet, and the seller faxed a letter to their vet authorizing the vet to release records to the seller. Clearly, the seller would be able to defend itself by stating that it had offered the buyer the opportunity to learn about the horse's veterinary history prior to purchase, and that the problems the buyer was complaining of were clearly stated in the written record. Had the seller not offered the buyer the opportunity to see the vet records (and the seller had proof of the offer, in the form of the faxed authorization to the vet), the buyer could then subpoena the horse's vet records and use them against the seller, as evidence that the seller was aware of a problem and didn't disclose it.

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