United States Eventing Association

Bonnie Mosser has competed at the top level of eventing for almost three decades. During that time, she has seen changes in almost every aspect of the sport, including changes in how the business of an eventing professional is run. When she recently moved her barn from Pennsylvania to Gordonsville, Virginia, she went through the process of changing and updating her contracts and liability releases to conform to her new home state. She asked Charlottesville area attorney Melissa Zeller to discuss the importance of good documentation in the business of the modern equine professional. Here is what Melissa had to say.

Doing Business on a Handshake

It is a unique tradition in the horse industry that transactions involving thousands or even tens of thousands of dollars are often conducted without benefit of written contract. Horse sales, boarding and training agreements, and sales commissions are some of the common dealings that often take place between horse people based on verbal agreement. The problem with verbal agreements is that there can be miscommunication or misunderstanding between the parties that later gives rise to disappointment, bad feelings or worse.

Although stories of horse deals gone wrong and the resultant falling out between owner and trainer or dispute between buyer and seller are as old as the horse industry itself, many horse people, including horse professionals, continue to engage in this high risk business without sufficient documentation.

The Written Contract

Contracts might seem intimidating or unnecessary to busy horse professionals who would rather spend their valuable time in the saddle than doing “paperwork.” Requiring a contract rather than relying on verbal agreement might also be perceived as unfriendly or as a signal that one party to the deal does not trust the other. Horse professionals would do well to set these concerns aside and embrace the written contract. A written contract is simply the embodiment of the parties' "meeting of the minds." In other words, it is what the parties agree to and expect from the bargain, reduced to written terms that are clear, not only to the parties, but also to anyone else who might read them.

The formalization of an agreement in a contract is beneficial in a number of ways. First, it lays out the expectations of the parties regarding the bargain. The very process of creating the contract can help the parties focus on what they expect--whether the deal goes as planned or if it goes wrong. For example, Owner Anika and Trainer Ben have an agreement that Ben will train Horse Charlie and sell him for Anika for a commission of the sales price. If the venture is successful and Charlie sells, what does Ben expect to be paid? Does Anika expect to pay Ben board and costs in addition to a commission? What if Charlie dies or is injured while in training--now what is Ben paid, if anything? Laying out these terms in writing helps ensure that owner and trainer are on the same page throughout the transaction.

Second, the existence of a written contract protects the parties in the event that there is after all a dispute. If, for example, Anika later claims that she should pay Ben nothing because Charlie died while Ben was using him to give beginner lessons without her permission, the contract provides a document upon which the parties (or a court) can rely to determine the respective rights and obligations of the parties. A contract can also provide a deterrent to bad behavior or unnecessary litigation: a dispute is less likely to arise where the terms and conditions of the deal are laid out in writing.

The Sale Agreement

One situation that often calls for more documentation is the horse sales transaction. Many horse professionals conduct the transaction almost entirely by verbal agreement and then provide a bill of sale when the horse changes hands. The better practice is to use a sale agreement together with a bill of sale. The sale agreement lays out the terms of the sale, while the bill of sale transfers legal title. Unless the sale is the simplest one day deal, combining the sale agreement and bill of sale is not recommended, as the bill of sale should only be provided when all of the terms and conditions of the sale agreement are satisfied.

A horse sale agreement should contain include at minimum a description of the horse; the terms and conditions of payment; the pre-purchase veterinary inspection or trial period, if any; when risk of loss passes from seller to buyer; the warranties, if any offered by seller to buyer; and choice of law and venue for the resolution of any dispute.

Although a form contract can be used in some situations, it is usually better to draft a contract specific to the sale. That way the contract can be tailored to fit the particulars of the agreement, spelling out, for example, whether the deposit is refundable or non-refundable, the length of the trial period, any sale contingencies, etc. Sellers who draft a sale agreement will want to disclaim as many warranties as possible. Buyers, on the other hand, will want at least a warranty of title and, if they can get it, a warranty for fitness of the horse for their intended purpose.

Choice of law and venue provisions are especially important in a sales transaction that crosses state lines, since state law governing horse matters can vary considerably. These provisions can be combined in a single paragraph along with an attorney’s fee provision. The following is an example of a paragraph that combines these provisions and is drafted to protect the seller:

This Sale Agreement shall be construed and governed by the laws of the Commonwealth of Virginia. At the option of the Seller, any legal action commenced to enforce or interpret this Sale Agreement shall be brought in the Circuit Court for the County of Albemarle, Virginia. Should the Seller be the prevailing party in any such legal action, Seller shall be entitled to recover from the Buyer reasonable attorney’s fees, costs and expenses incidental to such proceedings, including reasonable attorney’s fees incurred in collecting any judgment awarded as a result of liability established pursuant to this Sale Agreement.

In an industry where tradition is valued highly, horse professionals need to consider whether the traditional practice in some instances is necessarily the best practice. In the case of agreements involving horses, the best advice is to “get it in writing.”

Melissa Zeller is an attorney with the law firm of Morin & Barkley, LLP in Charlottesville, Virginia. Her practice includes litigation and equine law. This article is provided for educational purposes and is not intended to be legal advice. If you have a specific legal question or problem, you should consult with an experienced and knowledgeable equine law attorney.