Equine Law Blog

Equine sales are on the upswing these days, and many believe we’re now in a seller’s market, with high prices and eager buyers. As a busy lawyer with over 35 years of experience, my phone rings frequently with calls from horse buyers or sellers who are considering a lawsuit or who have been threatened with one. 

Teenagers, when they learn to drive, are sometimes cautioned that they’re actually driving five cars at once – cars in front of them, behind them, and on either side in addition to the car in which they’re seated – and must watch all of them to protect their safety. In a roughly comparable way, those who board their horses at other peoples’ stables have every incentive to be watchful of the other horses on the property. Knowing that all the horses are current on their de-wormings and vaccinations can be just as important as making sure that your own horse stays on schedule. All it takes is one horse with a contagious illness, such as strangles, to cause disastrous problems throughout the whole barn. 

For decades, this author has written articles on the importance of getting equine-related agreements in writing. Some of the articles even shared common characteristics of effective contracts. Still, people in the horse industry continue doing business with nothing in writing, and disputes have occurred. This article explores what can potentially happen when verbal contract disputes become the subject of a legal battle.

This year, I was invited to speak at the American Youth Horse Council’s Virtual Symposium on the topic of “Unique Equine Liability Risks Involving Minors - What They Are and How to Protect Yourself.” This article summarizes my remarks.

Children and horses have a strong bond. Many of us developed our passion for horses when we were young children. Those who provide horse-related activities for children, such as riding instructors and camps, face unique risks because the law looks at children differently than adults.  

A boarded horse colics severely and requires emergency surgery, but the boarding stable cannot reach the owner to consent. Days earlier, the owner left for a vacation in a remote place with no phone or internet access. Despite hours of effort, the stable cannot find the horse owner. Finally, with no way of knowing whether the owner will approve costly surgery, the stable directs the veterinarian to euthanize the suffering horse.

A week later, the owner returns from vacation, only to find that her horse is gone. Then, when she submits a claim with her equine insurer, the company denies her insurance claim because the owner violated the insurance policy's condition to give the insurer timely notice of the horse's illness and death.

Although emergencies are a foreseeable part of horse ownership, the rest of this scenario could have been avoided, as this article explains.

Before a horse sale concludes, the seller asks the buyer to sign a written sale contract that includes an “as is” disclaimer. Should the buyer sign the contract? And if the seller refuses to negotiate a removal of that disclaimer, should the buyer walk away from the transaction? Not necessarily.

Planning ahead for a successful 2018?  You might define “success” as great progress in your showing, breeding, training, racing, and riding. The fact is, however, that people in the horse industry still rely on handshake deals and incomplete contracts when they buy, sell, lease, board, train, haul, breed, and give instruction to others.

Equine-related leases have been increasingly popular. In the horse industry, lease arrangements include horse leases, pasture leases, breeding stock leases, barn or facility leases, and others.  Disputes sometimes do occur, however, generating time-consuming and expensive lawsuits.

People occasionally buy horses, sight unseen, based on an ad over the Internet or the recommendation of a friend. Many buyers are completely satisfied with their purchases. Unfortunately, some are not. Legal disputes sometimes follow from settings like these:

Because some horse breeds are known to be predisposed to certain genetic conditions, mare owners typically scrutinize the risks before making breeding decisions. They evaluate stallions’ histories, offspring, conformation, health and pedigrees. As a 2016 Texas case showed, mare owners should also pay attention to the language in the breeding contracts they sign.

The words “half lease” seem unique to the horse industry. In law school, this lawyer never heard the phrase mentioned, and the authoritative legal dictionary, Black’s Law Dictionary, nowhere mentions it. Yet, people in the horse industry, with greater frequency, are entering into arrangements they call “half leases” through which one or more persons (the “lessees”) pay a horse owner (the “lessor”) for shared use of the horse. “Half lease” arrangements might seem budget-friendly, but without careful planning, they could be quite the opposite as disputes could follow.

A backyard horse owner named Jane boards a few horses during the winter. Jane’s facility has box stalls and an indoor arena, making it desirable during the snowy winter months where Jane lives. Jane doesn’t view her activities as a business. She views herself as earning some extra money and helping friends.

What could go wrong? Plenty.

What is a Right of First Refusal?

Equine-related contracts sometimes include a “right of first refusal” clause that restricts how a horse can be re-sold. Through these clauses, a horse buyer agrees to give the seller an opportunity to buy back the horse later under certain specified conditions. For example, these clauses sometimes provide that if the buyer (after becoming the horse owner) later receives a legitimate offer to buy the horse and is inclined to sell, the former owner must first receive the opportunity to match that purchase offer and pay within a certain time frame.

Equine lease transactions have become increasingly popular. Surprisingly, some people continue to lease horses merely on a handshake or use very short lease agreements, only to encounter costly problems later. Over the years, several people who have contacted us with equine lease disputes wished their contract had been more detailed. Detailed contracts can help avoid disputes, which can save very substantial amounts of money.

Recognizing that equine lease transactions differ, here are a few items to consider:

Equine sales agreements sometimes include the words "as is" and "with all faults.” Sellers use these phrases with the hope of preventing buyers from bringing claims and lawsuits in an effort to reverse the sale. Do these words stop all sales-related lawsuits?

The answer is “no.” 

Can a horse seller repossess a horse if the buyer has failed to pay in full? We receive this question frequently, but the answer is more complicated than you might think.

Should your stable have rules? Stable rules list the various policies and regulations governing activities on the property. In developing and posting them, stables try to establish limits for customers and visitors, set expectations, and promote safety. Stables have every incentive to develop, post, use, and update rules. 

For years, we have written about the importance of liability releases used by horse owners, instructors, trainers, stables, and others in the equine industry. Stables that use boarding contracts without proper release clauses could be missing a valuable opportunity to manage their risks. Two cases help illustrate why.

We'd love to be considered as your next attorney. But we also care deeply about the continued strength and viability of the equine industry and hope that you don’t need us. Legal disputes are expensive to resolve, but careful planning can either prevent them completely or narrow them considerably. We offer some general ideas to help you plan for a dispute-free year:

Breeding season begins soon. Stallion managers and owners can plan ahead by reassessing and, where warranted, updating their contracts. How? Here are a few suggestions.

An elderly widow lives alone on the family farm. The horse barn has been empty since the children moved out. Recently, an equine professional asked to rent the horse facility to run a boarding, training, and lesson business. Should this arrangement proceed? 

You have a full-time job, or you're a student. But you also have a horse in the barn. Wouldn't it be nice to make money from the horse? What if you offered riding lessons on the weekends or did some "moonlighting" as an instructor to generate extra cash? You may think your part-time business activities are a mere hobby, but the law might say quite the opposite.

It's only a matter of time before a boarding stable encounters a legal dispute over payment of fees. In a recent Illinois lawsuit, both the boarder and the stable sued each other, but the stable won at the trial court level and later when the case was appealed. 

An online ad shows a beautiful horse for sale, and the buyer is drawn in. The ad describes the horse as a perfect show horse, unflappable trail horse, kid-friendly, easy-keeper, and free of vices. The price is low, and the buyer rushes to make the purchase. The buyer makes the purchase sight unseen and sends money to the seller, a total stranger. The buyer sought no veterinary pre-purchase examination and no drug screen. The parties had no written contract.

After the horse arrives, serious problems become apparent. The horse might show none of the characteristics that were so glowingly advertised. Registration papers might not exist. The horse might be seriously lame or ill. The horse might be downright dangerous or untrained. When the buyer complains, the seller refuses to rescind the deal.

Certainly, buyers in these situations may have options available to them for legal recourse. But most buyers will keep the horse rather than invest in legal fees. 

For years, we’ve received calls like these:

• “I ‘free leased’ my horse to a friend, but now she refuses to return my horse.”
• “A neighbor let me ‘rescue’ her horse because she could no longer take care of him. Now I want to sell him, but my neighbor says I can’t do this.”

In each situation, the parties had no written contract, and nobody was ready or able to undergo an intense and costly legal battle that might follow.

Equine transactions are ripe for a legal dispute when the parties have no written contract and a completely different understanding of the same transaction. Without a contract or agreement explaining the transaction and what the parties’ intended, these types of legal matters can become lawsuits in which the outcome is never predictable. What is a virtual guarantee is that in a court of law the dispute will never be quick, easy, or cheap to litigate. 

Imagine owning a boarding stable that had a barn fire, causing loss to some of the horses. Imagine later being sued from a disgruntled boarder whose horse perished in the fire. This happened to a Michigan stable, and the stable faced an aggressive legal challenge from the boarder. In the end, the trial court dismissed the case and the Michigan Court of Appeals affirmed the dismissal in 2014. Why did the stable win? The liability release in its boarding contract played an important part of this result.

For boarding stables, making a profit can be very difficult. Stables face increasing costs each year such as the cost of hay and employment expenses. Raising rates can be especially difficult, but some stable managers have found ways to avoid increasing their standard boarding fees. How do they do it? They require their boarders to pay extra for specific services or amenities.

Boarding, lesson, and training stables have one thing in common – they all have clients and visitors on the property. For the general safety of the facility, stable managers sometimes develop and post stable rules that everyone should follow

Benefits of Stable Rules

The greatest benefit of stable rules is that they promote safety and cleanliness. Stables have every reason to expect each person who enters the facility to follow them as a condition for being allowed on the property.

In an effort to spend time with horses, while also raising cash, some people in the horse industry develop small businesses. We have received calls from people interested in establishing an exercise riding business where they visit people’s stables, saddle up designated horses, and work the horses on tracks, trails, arenas, or fields. In many instances, exercise riders work alone and must groom and saddle each horse. Very often, the exercise rider receives little information about the horses they’re asked to work. If you are considering an exercise riding business, here are a few suggestions:

You leased out your horse to a family whose horse-crazy teenaged daughter promised to give him the best of care. After a few months passed, you paid your horse a visit but were shocked at what you saw. The horse appeared ribby, and his hooves had not been trimmed in months. It turned out that the teenager lost interest in your horse, but her parents knew little about horses to ensure that your horse received proper care. When you demanded return of your horse, the family refused and insisted that they were entitled to keep him until the lease term ended.

What can you do?

Boarding stable owners sometimes feel pressured by ever-increasing costs of hay, shavings, and feed, while their clients resist rate increases and sometimes fail to pay. What can a stable do? Many stable owners believe that non-paying boarders are a reality of the business, but boarding contracts can help the stable in these situations. For example:

• The contract can allow the stable the option of raising rates by giving each customer notice of an upcoming raise, such as thirty days or more. The contract can also allow boarders the option of giving the stable notice of termination within that time so that a boarder unhappy with the increase can plan to move out before it takes effect.

Equine leases can generate several kinds of legal disputes, many of which have been addressed elsewhere in this blog. One dispute involves this scenario: The lessee (a “lessee” is the party that is allowed to use the horse owned by the “lessor” for a certain period of time under certain terms and conditions) is accused of neglecting the leased horse, and the lessor wants the horse returned as a result.

These disputes can be more complicated than they seem. For example, the lessor and lessee might disagree over the central issue of whether the horse was abused or neglected. Also, sometimes, the lessor might demand to have the horse inspected by a veterinarian, but the lessee might refuse to allow this to occur. If the lessor tries to haul away the horse, the lessee might accuse the lessor of trespassing, or even theft. Legal expenses can be significant to resolve these disputes.

The importance of complying with an insurance policy’s notice requirements has become especially newsworthy thanks to Julie Fershtman’s courtroom victory last year in an equine insurance coverage lawsuit in an Illinois federal court. In that case, a horse owner sued the company challenging its denial of benefits under an equine insurance policy.

Julie Fershtman is the speaker for tomorrow's webinar through the Certified Horsemanship Association entitled: "Risk Management – What You Need to Know about Liability, Contracts and Releases."

Our clients have asked how to amend their contracts, especially after they hire us to draft them and want our new contracts to replace the old ones.

Amending a contract is not difficult as long as your documentation makes clear what you are trying to accomplish. In our experience, however, we've seen equine business operators draft their own contracts which are anything but clear and cause problems. Of the many ways in which a contract can be amended, here are a few examples:

We receive numerous inquiries from people who have encountered problems during their equine leases – both from lessors (the ones who own the horse and part with it subject to the lease terms) and lessees (the ones who receive use of the horse). Advance planning, and legal help, can prevent several problems. Here are some equine lease problems and suggestions for avoiding them.

We thank the many businesses and individuals who hire us to draft their equine-related contracts. The problem is, even with thorough contracts that identify rights and responsibilities, people don’t always follow their terms. What do you do when the other party to a contract has breached (violated) its terms? Certainly, every situation is different, but here are some options:

In these challenging financial times, more and more horse owners have entered into arrangements they call “free leases.” No legal dictionary, to our knowledge, recognizes the term “free lease,” but in the horse industry it has come to mean a horse that is leased to another with no lease payment to the owner (the lessor) as long as the lessee provides the horse care and attention.

In our experience, lessors (horse owners) usually enter into these arrangements to avoid costly horse care. In an effort to save money, lessors rarely insist on contracts. Not surprisingly, disputes arise. For example:

When equine business operators take legal matters into their own hands, problems can occur. Here are some of them:

• The horse seller has a sales agent that advertised the horse online and negotiated a sale to a buyer who is located out of the country. The sales agent, believing promises of the out-of-country buyer that the purchase payment was “in the mail” on the same day that the buyer’s shipper was picking up the horse,  allowed the shipper to haul away the horse. Unfortunately, the seller never sent a payment, but the horse was already out of the country before the buyer discovered the problem.

How to Avoid: In addition to insisting on a carefully worded sales agreement, the seller can insist that the buyer’s payment in full is received and clears the bank before the horse can be shipped away.

We receive numerous calls and e-mails from people in the midst of serious legal issues who are unprepared for, or unwilling to undertake, the expense involved in hiring a lawyer. For example, a trainer could be faced with a lawsuit arising out of a sales agency. An individual horse owner might want to “free-lease” her gelding to a friend and want a contract that protects her as much as possible in the situation.

How can people who cannot afford a lawyer seek legal services at low, or no cost?

Some boarding contracts specify that the boarded horse has a stated value. For example, the contract might state: “The parties agree that the horse boarded under this agreement is worth $15,000.”

Is every legal dispute appropriate for a lawsuit? Not necessarily. Sometimes the dispute can be resolved quickly and amicably – as long as the parties are willing to consider an alternative to the legal system such as arbitration or mediation.

Horse owners are, in large part, self-reliant people. They train their own horses, fix their own equipment, and some even do their own hoof trimming and routine vaccinations. When people try to take legal matters into their own hands, however, problems sometimes occur. Here are some examples taken from real cases:

You are leaving your horse with a horse trainer who comes well-recommended but has no experience working with you. Can you trust this person to give your horse humane treatment? If your horse sustains an injury during training, will the trainer keep you informed? Will your horse receive adequate turn-out?

You can leave these matters to guesswork. Or, you can insist on a training contract.

Horse trainers and their clients have every incentive to document their relationship with a contract. Horse owners could potentially bring a variety of legal challenges against the trainer, including:

Breach of contract

A lawsuit might claim that the trainer breached (broke) the terms of a contract by failing to properly train.

In March 2013, I was a speaker at an Agribusiness Conference in Sacramento, California. Members of the audience raised excellent questions, one of which was: Should minor children be permitted to sign a horse facility’s contracts, such as releases, even if the child’s parent or legal guardian also signs?

During a national teleconference on Equine Law in January 2013, I was asked: “Do you recommend pre-sale agreements regarding inspections and testing?”

Answer

Yes.  When I represent sellers in equine sale transactions, I prefer a contract that specifies that the buyer has received an opportunity to have the horse tested by veterinarians and equine professionals of the buyer's own choosing and at the buyer's sole expense.  Allowing, if not encouraging, the buyer to seek professional opinions on the horse can help break the chain of reliance on the seller. 

In January 2013, Julie was the speaker at a national teleconference on Equine Law and also spoke at continuing legal education programs on Equine Law for the Washington State Bar Association and New York State Bar Association. Attendees raised several questions, and some of them are shared on this blog.

Question

Some boarding contracts in the equine industry ask owners to give their consent for veterinary services. What is your opinion of these kinds of clauses?

On October 1, 2012, a new Michigan law went into affect that has implications for certain people or businesses who engage in selling or transporting horses and livestock in Michigan.  The law, HB 5784, was designed to control the spread of infectious diseases of livestock and animals in Michigan.  It now requires those engaged in the buying, receiving, selling, transporting, exchanging negotiating or who solicit sale, resale, exchange, or transportation of livestock to be licensed bonded by the Michigan Department of Agriculture.

Stables with non-paying boarders have several options to consider.  Proceed with caution as some options are mutually exclusive, meaning that state law might prevent the stable from pursuing two or more of them at the same time.  The stable’s options, depending on the applicable state law, could include:

Genome sequencing/DNA-mapping of horses has been under way. A research team at Texas A&M University mapped one of its University-owned Quarter Horses (an adorable bay, foundation-bred mare). The testing provided, according to a Texas A & M geneticist, triple the genetic variation normally known about horses.

Animal rescue organizations sometimes face the question of whether the “adoptee” of a rescued animal holds title to that animal and can use it for any purpose, even re-sell it.  An equine rescue in New York litigated the issue of title in Cohen v. Rostron.¹

The right contract language can help avoid disputes or reduce your expense if a dispute should arise.  Details can separate marginal contracts from effective ones. Details can also help prevent legal disputes.  A key detail to consider for a contract is attorney fees.

If you are entering into a contract with someone who claims to be signing on behalf of someone else – such as the sales agent signing for the owner, or a person claiming to be signing on behalf of a corporation or partnership –  how can you be sure that this person has the authority to bind the other person or entity to the contract?  Careful language in your contract can help.  The contract could state, for example:

The right contract language can help avoid disputes or reduce your expense if a dispute should arise.  Details can separate marginal contracts from effective ones. Details can also help prevent legal disputes.  A key detail to consider for a contract is insurance.

Different types of insurance exists for numerous horse-related activities and interests. Here are a few examples of how a contract can address insurance:

The right contract language can help avoid disputes or reduce your expense if a dispute should arise.  Details can separate marginal contracts from effective ones. Details can also help prevent legal disputes.  A key detail to consider for a contract is indemnification.

After you’ve devoted considerable time and expense to developing a good contract for your equine transaction, the last thing you can afford is for the other party to claim that your contract was somehow changed.  Disputes have arisen when parties to contracts claim the contract was canceled through a verbal agreement or somehow replaced by a claimed verbal understanding.

The right contract language can help avoid disputes or reduce your expense if a dispute should arise.  Details can separate marginal contracts from effective ones. Details can also help prevent legal disputes.  One detail to consider is alternative ways to resolve disputes.

Resolving legal disputes through the court system can be time-consuming and costly.  Alternative methods of resolving disputes, whether through arbitration or mediation, have become popular because they are generally considered quicker and cheaper than the court system.  Once parties have become embroiled in a legal dispute, it is usually too late to find them agreeing on anything – much less agreeing to settle their differences through arbitration or mediation.  Contracts, however, can plan ahead to protect the right to resolve certain matters through these methods.

The right contract language can help avoid disputes or reduce your expense if a dispute should arise.  Details can separate marginal contracts from effective ones. Details can also help prevent legal disputes.  One detail to consider in equine contracts is attention to certain laws that could impact the contract or the rights of the parties.

Examples of some contract provisions affected by state law are:

As of April 2012, 46 states (all but California, New York, Nevada, and Maryland) have passed laws that are designed to limit or control liability involving equines and equine activities.  In many states, these laws have created an important fine point for horse-related contracts. Several of the laws require special language in certain equine-related contracts or releases. 

The state-by-state requirements, based on equine activity liability law differences, can vary considerably.  For example, Ohio’s law requires a statement of inherent risks in certain contracts:

We occasionally receive calls from horse buyers who suspect that the horse delivered to them was not the horse they thought they bought.  The problem is, almost all of these buyers had no contract and no clear identification of the horse.

Everyone benefits if the contract specifies the horse involved.  To help avoid disputes, an equine-related contract can specify the horse's:

The right contract language can help avoid disputes or reduce your expense if a dispute should arise.  Details can separate marginal contracts from effective ones. Details can also help prevent legal disputes.  A key detail to consider for a contract is identifying the parties involved.

Interstate and international equine transactions are more common than ever.  The internet takes some of the credit for this.  When people do business with others across state and international lines, however, they face numerous legal risks.

When boarding stables are not paid, they sometimes ask for trouble by taking matters into their own hands without following the law.  For example, some have been known to give away the boarded horses, sell them to offset the debt, or place the horses in their lesson program without first receiving clear permission from the horses' owners.  These actions are usually illegal.

Stables that accept horses for boarding and keeping do not automatically own them when board is unpaid. To become the owner, the stable must follow the law.  Depending on state law, legal action that can include:

In these difficult economic times, boarding stables nationwide are struggling to get their clients to pay.  Stables can be asking for trouble, however, when they make their own conclusions that a horse is abandoned due to unpaid board and then take matters into their own hands without following the law.

People in the horse industry sometimes enter into arrangements through which the horse is shared by agreement between two people, while only one of them owns the horse.  People in the horse industry call these arrangements “half lease” or “share board” arrangements.  They may seem simple but, in the eyes of the law, they can be complicated and call for a carefully written contract.  Here are a few details to consider:

What happens when an equine lease ends, but the lessee refuses to return the horse?  Can the lessor (the “lessor is the one who owns the horse and leases it to another) simply enter the premises and remove it?  A lessor owns the horse, and one would expect that he or she can simply re-claim the property, even if it means entering someone else's land and taking away the horse.  Be careful!

Problems can occur, especially when a lease agreement is not in writing.  For example, what if the “lessee” (the “lessee” is the one who takes possession of the leased horse under the terms of the lease agreement) thought he bought the horse?  Or, what if the lessee thought the lease was not over?

“Get it in writing!”  No matter how often lawyers utter these cautionary words,  people in the horse industry continue to do business on a handshake.  Unfortunately, legal disputes involving verbal agreements are rarely quick, easy, or cheap to resolve.  Why? 

With nothing in writing, each party to the transaction often has a totally different understanding of what it involved.  As a result, it sometimes takes a lengthy lawsuit to prove the contract’s terms. 

Those who fail or refuse to use written agreements accept the risk that any number of problems can occur.  Here are some of them:

I receive numerous calls from people in the midst of contract disputes.  Most people thought they protected themselves by using a contract, only to discover later that the contract was either silent or unclear on an important aspect of the transaction.

Let me share with you some problems people have encountered with equine industry contracts to help you avoid them.

The buyer pays for the horse, but before delivery, the horse dies.  Who gets the money?  Three words can answer the question: "risk of loss."

Who bears the risk of loss in an equine sale if the horse dies after the transaction completes but before the buyer takes possession?  In the eyes of the law, the answer is:

There really is no set definition.  Basically, it can be defined as the practice of law that involves all types of horses, horse-related activities, horse businesses, horse organizations, and horse facilities.  Many attorneys with equine law practices serve horse owners or professionals by, for example, preparing or reviewing equine-related contracts.  Others handle disputes and litigation arising from an equine transaction.  Some attorneys work exclusively on tax or immigration issues unique to the equine industry.

The law of contracts can be more complicated than you think.  Sometimes it is simpler than you think.  This quiz might help you test what you know – and don’t know – about contracts.