The recent publication of the British Equestrian Trade Association’s 2011 National Equestrian Survey reminds us that whether as a hobby or profession, buying a horse will inevitably be a significant investment, both financially and emotionally.
According to the survey the average purchase value of a horse is £2,160. It estimates that direct expenditure for the upkeep and care of horses stands at £2.8 billion (£3,105 per horse, per annum). This highlights the importance of thoroughly researching a horse before purchasing it to make sure it is suitable and the need for buyers to protect themselves legally. It is with this in mind that we have set out below some of the legal aspects of buying a horse that purchasers should be aware of.
Once satisfied that the horse is what you have been looking for it is vital to record the terms on which you have agreed to make the purchase in a written contract. Whilst the industry does operate to a large extent on the basis of verbal agreements and these are legally binding, should you get the horse home and find out that it is not as you expected, whether physically or in terms of its temperament, then you will have difficulty proving what was verbally agreed and may have limited options (if any) available to you to resolve the situation.
The rights available to a purchaser who is not satisfied with the horse that they have bought will vary dependent upon whether the purchase was made from someone acting in the course of a business or as a private seller. In most cases this will be self-evident, but there may be cases where things are not quite so clear-cut and legal advice should be sought. A good indication is whether the seller regularly deals in or produces horses. If the advert placed by the seller has a ‘T’ by it, this indicates that the seller is a ‘trader’ acting in the course of business (i.e. it is a ‘trade advert’).
Rights against a Trader
The law affords persons buying from a trader significantly more protections than it does as against a private seller. Where someone purchases a horse from a seller acting in the course of their business, section 14 of the Sale of Goods Act 1979 will impose implied terms into the agreement for sale, such as that the horse is of satisfactory quality and fit for the purpose it was bought for. This will give the purchaser the right to rescind the contract and return the horse in the event it is not in compliance with these terms. For example, if the horse has a behavioural problem that was present prior to the date of purchase, but which the buyer only discovers once the sale is complete. The buyer will be entitled to a full refund of the purchase price. If you rightfully reject the horse because it is not fit for purpose or of satisfactory quality you are not obliged to transport the horse back to the seller. It is for the seller to arrange for the horse to be collected at his or her own expense. However, if the seller will not pick the horse up, you must still ensure that the horse is properly looked after. This may mean that you have to continue to pay a third party to keep the horse on livery until it is collected. The seller will be legally obliged to reimburse you any expenses you reasonably incur in connection with the purchase, including those necessary to properly look after the horse whilst it awaits collection. As soon as possible after you discover that the horse does not comply with the implied terms as to quality and/or fitness for purpose, you should notify the seller. This is because the right to reject the horse under those implied terms can be lost if the buyer does something inconsistent with the seller’s ownership or retains the horse beyond a reasonable period of time.
Rights against a Private Seller
The implied terms that the horse will be of satisfactory quality and fit for purpose will not apply where the purchase is made from a private seller. The legal maxim “Let the Buyer Beware” applies, which means that the buyer is to undertake his own investigations to satisfy himself that the horse is of satisfactory quality and fit for purpose. The buyer may be able to rely on section 13 of the Sale of Goods Act 1979 by proving that the horse does not correspond with the description given by the seller (if any). There may also be a claim for misrepresentation. To prove that there has been a misrepresentation the buyer will have to show that there was a false statement of fact made by the seller which induced him to enter into the contract. The false statement must be objectively material and have been relied on by the buyer. Provided that the buyer can make out a successful claim that the horse does not correspond with the description given by the seller or that there was a misrepresentation then the buyer will be entitled to rescind the contract and in certain circumstances receive damages in respect of the losses caused by entering into the sale contract. It may be the case that the description given by the seller of the horse cannot be found or otherwise substantiated. For example, the advert that was placed for the horse’s sale may have been lost or the verbal description given by the seller forgotten or denied. This would make it difficult to make a successful claim that the horse does not comply with its description as the court could not be sure of the description it is to compare the horse against. Further, as referred to above, there are more elements to satisfy in relation to a claim in misrepresentation than for a claim under the terms implied as to fitness for purpose and satisfactory quality as against a trader. If the buyer is unable to prove a breach of section 13 of the Sales of Goods Act 1979 or misrepresentation then they are unlikely to have a remedy against the private seller if they find out the horse has a vice or any other problem. This emphasises the importance of recording the agreement for sale in a written contract which will expressly provide the buyer with extra protections.
This article has highlighted the importance of having a formal contract drafted so as to afford the buyer such degree of protection as reflects the significance of the purchase being made. Leathes Prior is able to draft a contract tailored to the individual needs of those purchasing a horse, whether for business or pleasure. Amongst other things, the agreement should:
- Record the terms of the purchase in a written contract which should be signed by both the buyer and seller before the purchase price is paid.
- Always view the horse before buying it to make sure it is really what you are looking for and suits your needs.
- Have the horse vetted prior to agreeing to buy it. In the event that a physical defect is discovered that ought to have been revealed by the vetting, the buyer should have a course of action against the vet for the loss caused. However, for this to be the case, it is important that the vetting is paid for by the buyer so that there is a binding contract with the vet that the buyer can rely on. It is a false economy not to get a horse vetted, whilst it may save money in the short term, it could end up costing far more in the long term.
- If paying in cash, ensure that the seller gives you a signed receipt for the amount of money that has been handed over in full payment for the horse.
- If you bought the horse in response to an advert placed by the seller, ensure that you keep a copy. This may be helpful if a dispute arises as to what representations were made by the seller.
- identify the parties to the agreement (i.e. include the name and address of the buyer and seller);
- state the price being paid for the horse;
- clearly identify the horse being sold by description. This could include reference to an identification diagram/photograph attached to the agreement. If the horse is registered with a studbook reference could be made to the number the horse is registered under or if micro-chipped, to the microchip number;
- state the purpose(s) for which the horse is being bought, for example, show jumping, hacking, eventing, hunting etc;
- contain an express clause stating that the horse is free of vices and defects, is of satisfactory quality and fit for purpose subject to those matters disclosed by the seller in the agreement. The agreement should then contain an exhaustive list of any physical defects, vices or behavioural problems that the seller is aware of. It is in an honest seller’s advantage to give full disclosure of the horse’s vices as it will be difficult for the buyer to claim against a seller who has forewarned of the vice in question; and
- make clear when ownership of the horse transfers to the buyer and the time at which risk in the horse passes. For example, it would be prudent for risk that the horse damages itself whilst being transported to the buyer’s yard to remain with the seller. It is not uncommon for horses to be harmed whilst being transported and this risk is increased when the buyer is not aware of how good the horse is to load and transport. Even if the seller insists on the buyer bearing the risk of the horse being transported, at least the buyer is aware and can consider whether they want to take out insurance.
Importance of Taking Legal Advice
Please be aware that every purchase of a horse is different and reliance should not be placed on this article in substitution for the taking of legal advice specific to your circumstances. If you would like a contract drafted for a horse you are thinking of buying or have any questions concerning the purchase of a horse, our Equine/Bloodstock team would be delighted to hear from you. Should you have any questions contact Polly Langford on 01603 610911.