Legal Landscape of Horse Sales

At Equine Legal Solutions, we receive calls from thousands of dissatisfied horse buyers who want to know what their legal options are. Here, we will walk you through the legal landscape of a horse purchase.

Often, ELS’ callers want to know “what law applies to horse sales.” Whether the terms of a horse sale are written or oral, the transaction is a contract. Therefore, horse sales are governed by contract law. Rather than written statutory law, contract law is mostly based upon a series of decided cases in which judicial opinions describe the legal principles used to arrive at a decision.

Other than with respect to certain limited regulation of agency and commissions in horse sales, there are no special laws governing horse sales. For example, there is no cooling off period in horse sales (i.e., no time period during which the buyer can rescind the purchase with no consequences). Although some states, such as California, have puppy lemon laws, ELS is not aware of any such laws pertaining to horses. While some state statutes or regulations might require a horse to have a recent Coggins test or be sold with a halter, a seller’s failure to provide these items only means he or she might have violated a state law and be subject to certain penalties. It does not void the sale.

In general, horse sales are understood to be “as is” and “buyer beware.” This means the buyer has a duty to examine the horse prior to purchase and, except as described below, all sales are final.

The as-is nature of a horse sale can be changed by agreement between the buyer and seller. Such agreement can be written or oral but, of course, the terms of an oral agreement are generally more difficult to prove. For example, a seller might provide a buyer with a very simple bill of sale that says, “I, John Q. Seller, sell to Suzy Q. Buyer, Mighty Temptation, a sorrel 5-year-old AQHA gelding, for the sum of $5,000.” With that bill of sale, whether the seller realizes it, they have just made the following warranties: (i) the horse being sold is actually Mighty Temptation, the horse described in the bill of sale, (ii) the horse is 5 years old; (iii) the horse is a registered Quarter Horse; (iv) the horse is sorrel; and (v) the horse is a gelding. If any of those warranties are breached, the buyer might have recourse against the seller.

Contrary to popular belief, the as-is nature of a horse sale does not give a seller carte blanche to cheat a buyer. A showing of civil fraud can overcome even a written contract containing an as-is clause. Fraud is present when a seller intentionally makes a false representation to the buyer to make the sale. False representations can take many forms. The following examples would qualify as false representations:

• The seller tells the buyer something about the horse that isn’t true when the seller says it, and the seller knows it isn’t true. For example, the seller says, “He’s totally sound,” but the seller knows the horse has navicular.
• The seller tells the buyer something about the horse, but the seller has no basis for believing it. For example, the seller says, “He’s an excellent barrel horse,” but the seller has no idea whether the horse can actually run a barrel pattern.
• The seller promises to do something in the future but doesn’t intend to keep that promise. For example, the seller tells the buyer, “If you buy the horse, I’ll throw in this pickup truck,” but the seller never intends to give the buyer the truck.
• The seller gives his opinion to the buyer, but the opinion is a lie. For example, the seller tells the buyer, “This horse is great with kids, a real babysitter,” but the seller knows the horse has a nasty habit of bolting at the slightest provocation.

While there is perhaps a fine line between sales puffery and representations, advertisements often contain specific statements that can be interpreted to be part of the deal. For example, a buyer who purchased a horse advertised as having “no vices” would likely have recourse against the seller if, upon arrival at the buyer’s, the horse revealed itself to be a vigorous cribber. Likewise, a buyer who purchased a horse advertised as “100% sound” would likely have recourse against the seller if the horse turned out to have heaves. Note that the buyer would likely still have recourse even if they signed a contract that says “as is.”

The seller might also have a special relationship with the buyer that creates its own legal duties. For example, if the seller is the buyer’s trainer, the seller has an affirmative duty to help the buyer select a suitable horse. In other words, the seller/trainer can’t sell the buyer a horse the trainer knows (or should know) is unsuitable for the buyer.

The seller might also be subject to the provisions of the Uniform Commercial Code (UCC). A person who sells horses as part of their business, such as a trainer, breeder, broker or bloodstock agent, would likely be considered a “merchant” under the UCC. The UCC provides that merchants give two implied warranties: merchantability and fitness for a particular purpose. In the context of horse sales, “merchantability” would likely be interpreted as reasonably sound and healthy with no serious behavioral issues. “Fitness for a particular purpose” means the horse is suited for the discipline or use the seller represented to the buyer. To disclaim these warranties, the seller must do so specifically, and in writing.