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Protecting Your Most Valuable Asset
Those in the horse industry are a close-knit group. Breeders, trainers, vets, agistors, agents, and dealers usually consider each other mates who look after each other and seal a deal with a handshake. But that mateship needs to be balanced with some commercial certainty, where everyone is crystal clear about their rights and obligations from the outset.
A horse is valuable. Depending on the equestrian code, that value can vary from a few hundred dollars to a few hundred thousand dollars. Whether you enjoy a weekend ride on your old stock horse, or you are the owner of a large racing stable, one thing remains constant - there is a valuable asset to protect.
Yet surprisingly for an industry full of astute and disciplined players, very few take the time to put in place legal protection for their horse and equestrian activities. As a result, horror stories abound. How many times have you heard:
"I was sold a horse that was unsound. The seller told me there was nothing wrong with it";
"The Buyer pulled out on the results of a vet check and the results were minor";
"The horse I bought is unrideable (bucks or rears) and the Seller told me it was quiet";
"The foal died and the breeder says there was no live foal guarantee";
"The mare slipped and I never got my service fee back";
"I was never paid my training fees, agistment costs and maintenance fees";
"The horse got hurt while I was training it. I got sued";
"The Seller never paid me my commission but I was the one that sold the horse".
Legal protection and certainty can be found in the use of a simple agreement, which is signed by both parties. Such an agreement can be tailored to the needs of each party. For some this may not seem like "the done thing". But in an increasingly complex and litigious commercial environment it is now the only sensible thing to do.
A horse agreement does not have to be complicated. The purpose of the agreement is to set out the rules of the transaction so that there can be no misunderstanding about the obligations of each party.
Take the situation of a trainer. A trainer takes on a horse, generally because it needs specific tuition, for a term and for a fee. In taking delivery of the horse, the following types of issues need to be addressed in the interests of both parties:
- How long the horse is to be trained;
- When and how is the fee is to be paid;
- What the fee includes;
- The authority to train the horse;
- What to do in the event that the horse gets hurt/sick;
- Whether the horse is insured or whether it should be);
- Whether the Trainer can hold the horse as security until all fees are paid (right of lien);
- Who is liable for the damage caused to a horse if it is injured or dies?
- Who is liable for any damage or injury the horse might cause whilst being trained?
- When the horse to be collected?
- What the Trainer can do if the horse is not collected.
The only way to fully protect the interests of both parties is to have a specific agreement in writing, entered into at the beginning of the relationship. Insurance policies do not provide the level of protection necessary to address all the issues - a quick scan of the exclusion section of your insurance policy will usually confirm that.
It is a common misconception that it is too hard and expensive to protect your horse legally. Horse agreements are available for every facet of the horse industry. The difficulty can be in finding a lawyer who knows the industry, knows the people and knows about horses and therefore knows what a fair price for a specific horse agreement should be.
Rhett Oliver is a lawyer at Hemming + Hart Lawyers in Brisbane. He has been a showjumping rider for over 10 years and ran a performance horse-breeding farm for 10 years. In that time he has seen many people get "burnt" by horse dealings that have gone wrong and admits to having found himself in such predicaments in his early days.
Rhett now assists parties to reach agreement where the obligations are clear, interests of both parties are protected and an ongoing relationship can be preserved. Once the terms of the agreement are decided, the parties sign the document, which will give effect to a binding agreement.
Rhett has found that large-scale operations can find themselves too busy to produce and sign off agreements for each horse and owner. In this instance, he suggests a one page standardised agreement. The standardised agreement can be attached to the invoice, providing an efficient and effective means of putting an agreement in place. Specific requirements need to be discussed and incorporated into such standardised agreements, but once in place, the agreements can provide peace of mind to both parties.
The horse agreements Rhett has drafted represent exceptional value for money and range from about $60/horse - $200/horse. Depending on the size and quantity of agreements required these prices might be even lower.
Rhett says:
"When you consider some lawyers charge anywhere between $200/hr - $650/hr for a commercial transaction. The value becomes clearer when you factor in that those are the hourly rates you will pay if a transaction goes horribly wrong and a lawyer is required to address the situation.
If there is one thing that I've learned both as a showjumper and a lawyer, it's that it makes a lot of sense to put something in place before there is a problem. Your mates actually respect you for it."
