Importance of Contracts

by Cathy Trope

Horse people tend to have very traditional notions about how to do business. Many prefer talking in person or on the phone to communicating by e-mail or text. It’s not at all uncommon to meet people who feel like every deal should be made on a “handshake” and that putting things in writing is a sign you don’t trust the other party.

Of course, this makes for a spectacularly difficult situation when the other side proves not to be trustworthy. It also creates situations where there are problematic misunderstandings about the agreement.

Take, for instance, hiring a groom. Your candidate has worked as a groom for several other barns and has good references. You talk on the phone, check their references and hire them, without writing up a contract or even sending an e-mail describing your expectations. It turns out the previous barns they worked for were large and well-staffed, whereas your barn is a small operation where everyone is expected to help with everything. The task list is entirely different, and the new hire balks at some of the job duties. They’ve already moved from two states away to take your job, and they’re living on your property. They ask for more money, or they flatly refuse to clean stalls, which results in you having to hire a second person – something you never planned on that is way out of budget.

You can fire them, but they’re likely to come back at you with a legal action and request reimbursement for moving costs and other expenses. They will argue the job was misrepresented and that they took their actions based upon those misrepresentations. You have nothing in writing to show otherwise. The groom has documentation – they have a detailed collection of receipts showing everything they spent to move to your farm, and everything they spent to move out when you fired them. Guess which party looks more believable to the judge?

Another example is the sale horse with a behavioral problem. You told the buyer that the horse pulls back when tied, and you even included that fact in the horse’s sale ad. However, you failed to disclose it in writing in the bill of sale. You also failed to send an email to the prospective buyer which included mention of the problem.

Now, let’s say the buyer gets hurt because the horse pulls back and sends a chain cross-tie flying into the buyer’s mouth. They have to have several broken teeth repaired – it’s a huge dental bill. The buyer gets an attorney, and both buyer and trainer deny that you mentioned this dangerous habit prior to the sale. You go online and try to pull up the ad where you mentioned it, but it is gone. You deleted it when the horse sold and the site didn’t save a backup copy. Unless you have additional witnesses, you have no way to prove that you disclosed the problem prior to the sale of the horse.

How can you prevent situations like these, which can easily cost you thousands of dollars in legal expenses?

Here are a few tips:

Use Contracts – and Read Your Contracts

Many horse people have contracts that they use without really understanding what their obligations are under that contract. Take the time to read through what you routinely sign and make sure it makes sense and is up-to-date. Was it drafted by an attorney, or cobbled together from examples online that might include terms that are not legal in your state? Are the addresses and phone numbers correct? Is there a way to edit your contracts on the fly to put in specifics? Do you have a copy machine in the barn so that both parties get a fully signed copy of the contract to keep? (Multifunction machines are down to about $100 – there is no reason not to have one handy).

A bill of sale should include not only the horse’s description but also a description of the horse’s issues, both behavioral and physical.

A release of liability should include full contact information with several phone numbers in case of an emergency and should include a place to disclose whether a rider has any known allergies or significant health conditions that medical staff would need to know about in the event of an emergency.

Memorialize Phone and In-Person Conversations With an E-Mail

Bud stopped by while you were feeding and told you his client wanted your grey mare that she had test ridden last week. You said that was great and kept on feeding. When you get a break, send Bud an email – it will serve as a way to prove the conversation took place.

Hi Bud,

Thanks for stopping by today to tell me that Suzy Rider would like to buy Fleet Foot. As we discussed last week, the sale price is $30,000, and I agreed to take $10,000 down within 7 days (so that’ll be next Thursday, March 24, 2017) and the remainder in 8 monthly payments of $2500, due by the 5th of every month starting with May 2017 until paid. I will waive the board here until 3/24/17 but thereafter it will be $15 a day until the mare is picked up. Please let me know if Suzy would like the mare to stay in training until moved. My trainer, Jenna Jumper, charges $40/ride. Suzy is welcome to have a vet come out and inspect the mare at her expense prior to 3/24/17, and our agreement is contingent upon the mare passing for the purpose of preliminary level eventing.

Thanks! Always a pleasure doing business with you.

Look at all the information in that e-mail. There is a lot there that you probably didn’t think to discuss when you were in the middle of throwing hay.

There are also things there that you assume everybody in horses knows – but in court, judges don’t consider any information to be so obvious that it is assumed. Odds are your judge will know nothing about horses or the horse business.

An e-mail like this can do a lot to protect you when Suzy drags her heels and doesn’t pick up the mare until April 13th, and then her hauler shows up without a check to pay for the board and riding in the meantime. When you put it in writing, the other party can’t claim you didn’t tell them. It keeps things clear and stops conflicts from happening before they start.

If you receive an email like this and don’t agree with its recitation of what you agreed to, immediately send a return email.

Hi Fred,

Hey, I got your e-mail about Suzy buying Fleet Foot. I’m not sure we talked about timing, but Suzy can’t pick up that mare or make the first payment until she gets home from Europe on April 1, 2017. So let me know if that’s a problem or not. She wanted the board thrown in until April 1 – is that something you can do, since she is paying your full asking price for the mare? Everything else sounds great – I’m looking forward to having such a nice mare in my barn!

Yes, you still need a traditional bill of sale – but recording your conversations promptly in e-mail can do a lot to make sure the deal is on track and both parties are in agreement, and not confused about the terms. E-mails can also serve as evidence of the parties’ understanding of the deal at the time it was made if there is a legal conflict at some later date.

Don’t Assume – Ever

Assumptions cause a lot of conflict in the horse world.

For example, I’ve been polo grooming on and off for the past thirty years. I know that it is basically a seven-day-a-week-job. Monday might be an easy day of just feeding and basic chores, but the other 6 days are full days of work. If there’s polo on a holiday, you’re working. We all know that, right?

Don’t assume that.

When you’re hiring someone, put the expectations in writing before you hire, to ensure that the prospective candidate understands the time commitment. (Also, make sure that you do a little math and are certain that you’re not offering less than minimum wage for the work. If you’re not sure if the terms you’re offering are legal in your state, it is always cheaper to pay for a consultation with an attorney than defend a lawsuit.)

Everything that you think someone should know because it is common sense ought to be put in writing. I guarantee, the person is out there who doesn’t know (or doesn’t have common sense!) The more you put in writing, the fewer headaches you will have and the more money you will save.


This is solely informative in nature and not intended as a substitute for legal advice from a licensed equine attorney in your state. This is general information intended to education horse owners about basic equine legal issues where they should seek equine legal counsel. 

 

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