Do I need a sale agreement when buying or selling a horse?

One of the best ways to ensure a smooth transaction and prevent disputes is to invest in a horse sale agreement. Sale agreements clarify what was agreed between the parties, can maximise protection for either the buyer or seller and reduces the likelihood of litigation if a dispute does arise.

Is there any better feeling than the excitement of buying a new horse? You can’t believe your luck – you somehow managed to find a 1.20m showjumping unicorn with a heart of gold and a kind eye. That giddy feeling of anticipation builds as the day of his delivery draws near. He gets off the truck and gleefully explores his new paddock. Your heart swells with pride as you watch him settle in. But then it starts to sink – he’s lame.

Horses are expensive animals to buy and maintain. The buying and selling process should be carefully navigated to avoid misunderstandings and potential legal action down the track.

One of the best ways to ensure a smooth transaction and prevent disputes is to invest in a sale and purchase agreement.

A horse sale and purchase agreement is a legally binding contract that sets out the terms of the sale. Basic terms identify the horse adequately, as well as the buyer and seller, and list the agreed purchase price along with any terms relating to payment such as payment plans. The contract sets out a clear timeline detailing what each party needs to do and when to ensure a smooth, easy transaction. Well drafted sale agreements prevent disputes and mitigate risk.

I’ve noticed that horse people are sometimes reluctant to use sale and purchase agreements, and are instead happy to rely on a handshake or a conversation. My impression is that contracts are considered unimportant, or the use of one implies there is a lack of trust between the buyer and seller. I would encourage equestrians to think of it in this way – the use of a contract demonstrates professionalism, integrity and respect for the animal. I’ll explain why.

One of the key aspects of a good sale and purchase agreement is “disclosure”.

The seller assures the buyer that any vices, health or soundness conditions have been disclosed in the contract of sale. The buyer then has the opportunity to make an informed decision about the risks involved in purchasing the horse, and can properly support the horse with any health conditions when he arrives at his new home. The contract neatly records this information and serves as a record of what was agreed between the buyer and seller. In cases where a contract has not been adopted, disputes can arise in relation to what was disclosed during conversations (“I told you when you came out to ride him that this horse had bone spurs”; “No, you did not”). This can make it difficult to prove that a buyer was informed of any issues and not misled.

Another important aspect of the sale and purchase agreement is the inclusion of “warranties”.

Warranties are promises in relation to the horse at the time of the sale. For example, a warranty clause may record the reason why the buyer is purchasing the horse (eg. showjumping at 1.20m), and that the seller confirms that the horse is fit for this purpose. If it turns out the horse cannot jump 1.20m, then the buyer could have a claim against the seller for breach of warranty. Warranties can be drafted in such a way as to favour either the buyer or the seller. An equine lawyer can maximise protection and reduce your risk through careful drafting.

Why does this matter?

If you have just paid $30,000 for your new horse and he shows up lame, you might want your money back (or at least compensation). You call your equine lawyer for advice. Unfortunately, without a clear and well drafted sale agreement, this could become an expensive litigation exercise. Having a sale and purchase agreement won’t necessarily keep you out of court. However, with an agreement in place, sometimes parties can refer to the relevant clauses and confirm what was agreed between them without the need for lawyers. If lawyers are required, a well drafted agreement can save time and money on legal fees. Even buyers who are investing a small amount of money into their new best friend benefit from using sale agreements, as it can become expensive in the long term to be saddled with a horse that requires ongoing medical treatment or special care. Simplifying and clarifying the sale process by adopting a contract is recommended for everyone.

Equine lawyers are familiar with the unique issues that arise through horse ownership and the sale process.

PURE Equine offers four types of sale and purchase agreement to suit different needs and budgets. Using a template agreement that you found on Google or borrowed from a friend is not recommended, as these generally do not cover all the issues they should for your particular sale. In the worst case, the agreements may not even be enforceable. Equine businesses, such as trainers who sell horses on behalf of clients and stud farms, should have bespoke agreements drafted to address unique risk factors.

As you’re gazing out over the paddock at your supposed showjumping unicorn, the panic begins to lift. A quick review of the sale agreement confirms that the seller did not disclose a pre-existing stifle issue. Perhaps this stable sale didn’t quite go to plan, but a call with your equine lawyer puts you at ease. With the purchase price back in your pocket, your perfect match is not far away.

*Information is general and not legal advice.

This article first appeared in Hoofbeats magazine Vol 43-6 April/May 2022.