Horses and the Law
Private Sales - Let the Buyer Beware!

Disclaimer - This article is intended as general discussion and information on the topic covered, and is not to be construed as rendering legal advice. If legal advice is needed, you should contact an attorney. This article may not be reprinted or reproduced in any manner without prior written permission of the author.

“The buyer needs a hundred eyes, the seller not one.” George Herbert, 1633.

Herbert’s quote some 370 years ago is still appropriate with some modification. I’d say, with the advent of consumer protection laws and the development of the common law, “the buyer needs fifty eyes, the seller only one.” Case law has clearly established the legal maxim of caveat emptor or “let the buyer beware.”

Absent verbal or written representations the seller is not required to disclose problems with a horse unless specifically asked or the seller is obligated under the Uniform Commercial Code (UCC) of the state of sale. The UCC has some applicability to horse sales and the code essentially establishes two implied warranties; 1) an implied warranty of merchantability and 2) an implied warranty for fitness of purpose. The first warranty only comes into play if the seller fits the definition of merchant. Essentially that means that one is in the business of selling horses. An occasional sale does not qualify. The second warranty is usually satisfied when a buyer “tries the horse” for the purpose intended (driving, riding, etc.).

Thus, a buyer must ask questions of the seller and the seller is legally obligated to answer the questions truthfully. By answering questions the seller is now representing certain aspects of the horse which will hopefully make the sale. If any of these representations prove to be false, the buyer has a case for misrepresentation and the legal cause of action is for rescission of the contract or return of the horse and a refund of the purchase price.

All sale contracts should be in writing, but who has the time? Many horse sales (at least draft) are made without a sales agreement and on a handshake after a short discussion and demonstration of the horse’s ability. Many people, including myself, have even purchased a horse over the phone–sight unseen. In these cases, where there is no written contract and little or no sales talk the only cause of action a buyer has is if the horse is simply unable to carry out its function. Obviously, if you bought a horse and it arrived lame you would have a case for misrepresentation. But, what if you bought the horse and hitched him a time or two then the horse became lame from a pre-existing condition? What if the horse is a cribber or stallwalker? What if the horse is windy? What about a runaway? (How many times must a horse runaway to be considered a runaway?) Must all of the above defects be disclosed?

If no questions were asked concerning these matters you essentially bought the horse “as is” which means without any representation. The seller and buyer are bound only by the representations given by the seller. Honesty and truthfulness take center stage and become the moral compass of the transaction.

A simple sales contract can resolve all of the above problems. If you are a buyer you want the contract to require the seller to disclose all known defects of the horse. If you are a seller you will either sell with some sort of warranty or guarantee or without a guarantee which is known as a sale “as is.” However, in either event, the buyer can make a more informed decision and this is the only way to avoid potential lawsuits.

There is, however, a major exception to the “buyer beware” rule. That is fraud. For example, if the buyer wants to purchase a stud foal for breeding in the future and the seller knows of the buyer’s stated purpose and also knows the colt had an injury at birth which will render him impotent, the seller must disclose this to the buyer or the buyer could sue for fraud. Simply defined, when one knows the specific purpose that a buyer wants–any knowledge the seller has concerning that specific purpose must be communicated or a potential lawsuit for fraud is possible.

ýIf you are considering a private sale you should have a written contract or bill of sale clearly defining any representations and warranties and you should also give the horse a thorough testing before you complete the transaction. Speaking of testingÐwhat about a trial period? More and more buyers are asking the seller for a week or two trial period to see if they “get along with the horse.” Assuming the seller agrees, and many will not, this is great for the buyer. However, what happens if the horse gets hurt or sick in the buyer’s care? What if the horse hurts a third person in the buyer’s care? What if the horse is hurt in transit? What if the horse is brought back by the buyer lame or sick?

The above problems are simply handled in a written contract. Generally all risks of loss, for whatever reason, pass to the buyer the moment the horse leaves the seller’s property. Thus, if the horse colics and dies while at the buyer’s during a “trial period” the buyer is liable for the purchase price of the horse regardless of fault. The same would hold true of injury to persons which occur during the trial period and would further apply if a horse is brought back to the seller in a sick or lame condition. The contract would clearly place the risk of loss on the buyer under these circumstances.

Now for the tougher question–what if there is no contract or agreement for responsibility between the parties? The same horse colics and dies–who bears the risk of loss and, therefore, the financial burden? The answer is not strictly whoever has possession. The seller is the owner of the horse and therefore still responsible to protect against such risk or be liable for the loss unless the owner can prove that it was the neglect of the buyer that caused the horse’s death. In the above example it would be the burden of the owner to prove that the buyer fed the horse bad hay or feed, or didn’t water properly or let the horse eat while overheated or did some other act or omission that caused the colic other than “mother nature.” Without such proof, the seller will bear the loss. The same is true of bringing the horse back to the seller injured or sick. Proof of negligence on the part of the buyer is required to hold him liable without a written contract.

I strongly advise that if you are a seller and agree to a trial period you only do so if you have a risk of loss clause in writing signed and dated by the buyer.

Now you finally bought the horse. The trial period is over, everyone is living, the check cleared and the horse is yours. However, the seller refuses to transfer the registration papers. Again, with a written contract this would not happen. Our contracts require payment in full only after the seller has signed and sent the registration papers to the breed’s registry organization. But what if there is no contract? You do have legal options, but they involve contacting an attorney and suing the seller. This process could take time and money but with the unfair trade practice laws currently in effect you could recover treble damages or three times your actual damages plus attorney’s fees.

Your attorney can sue the seller to force him to sign the papers, this is known as an equity action for specific performance, but you also have a right to file an action at law under the state’s Unfair Trade Practice Law. You could also file a formal complaint with the state’s Attorney General alleging consumer fraud which provides for strict penalties. If the full power of the law is brought on the seller he will curse the day he simply didn’t sign the papers and pay the transfer fee.

Purchasing a horse and then attempting to revoke the purchase where there is no written agreement can be a long and difficult process. Many of these cases turn on the specific facts of the case and thus are difficult to predict in terms of outcome. It is difficult, if not impossible, to pin down every aspect of a horse sale. We simply cannot predict every action or reaction of the horse to situations beyond our control, however, a written contract can help and I would suggest same if you are buying a horse.

I acknowledge from personal experience that there exist a few wise sages with such a keen eye and feel for the horse that a written contract is not necessary. However, these few individuals are the exception not the rule. Consider yourself fortunate to rub elbows with one, otherwise, the rest of us need a written contract.

Enough legal talk–it’s time to hitch horses!

Ken is a practicing attorney in Myerstown, Pennsylvania, where a good bit of hispracticein-volves negligence cases. Ken and his wife, Karen, own Sunny Hill Farm Belgians, and they have been exhibiting their six-horse hitch for the past few years at most major shows in the east.