Equine Law Blog

• The risk of loss is whatever the parties have mutually agreed inwriting (assuming they have a well-worded sale contract).
• If there is no written agreement, the risk might be set by law, possibly by the applicable Uniform Commercial Code.
• If no written agreement exists, circumstances of the sale might help.  For example if either party bought a policy of equine insurance on the horse, and collected payment from the horse's death, it would be improper to also pocket sale money.

Risk of Loss

“Risk of loss” in a sale generally refers to the risk that the item sold could be lost or destroyed before the buyer takes possession. 

The Law of Risk of Loss

Almost every state (except Louisiana) has a Uniform Commercial Code that applies to sales in certain settings.  These laws often determine which party accepts the risk of loss, and when the risk transfers to the buyer.  These laws may not apply to all equine sale transactions.

How a Contract Can Help

A contract can specify which party - the buyer or the seller - agrees to bear the risk of loss.  For example, the contract can state:

“Buyer shall assume all risk of loss of the horse or diminution of the horse’s value as of the date a check or payment to Seller for the full purchase price clears the bank.  From that date forth, and at all times thereafter, Buyer shall assume responsibility for all arrangements and expenses involving the horse.”

A contract can also require the buyer to purchase equine insurance on the horse equal to the purchase price when full payment is made.