RideCamp@endurance.net
Lesson in Contracts
Dear Ridecampers,
The following was prepare when the debate was hot but due to the "CRASH"
of my email program, you didn't receive it as planned:
Hi Ridecampers,
Leave the personal issues behind because we have already learned that
Ridecamp will never have enough of the first hand facts for you to play
judge and jury in any specific incident reported here. Instead, let's
talk about how to avoid situations that can cause conflict in the
purchase and sale of horses.
I would really like to use an example from my own experience--to show
you that all the training in the world will still not protect you if you
don't use that training and take steps to protect yourself!
When I was first looking for my "real" endurance arab to replace my
beloved Thumper: The Quarter Horse with an Attitude, I used every source
I could find to look for and evaluate horses. A particularly
outstanding CMK mare was available in central California and was
recommended to me by several endurance friends. I communicated with the
Seller and made an appointment to fly to California to actually inspect
the mare. Before spending $300 to buy the ticket, I confirmed the
horse's availability. The seller never requested a deposit nor
indicated any problem with my arrival date in one week. My ability to
pay for the horse, either in cash or by check, was verified.
For you sellers, I would not have paid a nonrefundable deposit for a
horse I had never seen and if you had requested it, I would have looked
for another horse. Even for a world champion, I figure that my cost in
traveling to you to see your horse is substantial consideration and if
you let me rely on your representations that the horse is available, you
may be legally obligated to keep it that way long enough for me to
complete the scheduled travel plans. In most cases, I would not have
spent the money to buy the airline ticket if the owner had told me that
she might sell the horse before I arrived. ON THE OTHER HAND, I am a
trusting sole (yes even we lawyers can be trusting and I do most of my
personal business on a handshake). I did not get an express written
agreement from the Seller in California before I bought the ticket
either. When I arrived for my appointment with a cashier's check for the
full asking price in my pocket and the name of a vet who was prepared to
do an immediate prepurchased exam, I was advised that the horse was just
sold.
Was I mad? Very! Did I take legal action? No--not cost effective and
I still didn't know if I even wanted the horse as it was not there.
Did I handle things differently next time? WEEEEELLLLL. . . . Instead,
I enjoyed my trip, visited friends and desparately looked at every other
endurance horse I could see while I was there.
Let's make a checklist of the issues that should be discussed before
anyone spends any time or money evaluating a prospect. Sellers please
add to the list from your experience and needs. Assume that your basic
questions about the horse are already answered to your satifaction and
now you're concentrating on the basics of the bargain:
1. Get a basic Option agreement in writing before you spend any
significant sums on travel or vetting. This does not have to be
difficult or detailed but it should agree on the purchase price, the
length of the option for the buyer to inspect the horse, a possible
separate fee for same if the animal is in big demand and a method of
payment. It should also clearly provide that if either party breaches
the agreement, they shall pay all cost and attorney's fees in enforcing
the contract. That language is essential in most states if you expect to
use any legal methods to recover your damages. As pointed out by Rhonda
and Kirsten, your damages may not be high enough to justify spending
your own money but if you have a good case, this clause will make it
very risky for a breaching party to risk the outcome of a trial which
could cost several thousand dollars. This type of simple agreement can
be done over a fax machine before you go out and buy plane tickets or
hire vets and its presents tends to avoid litigation. It is bad enough
to pay your own costs but the possibility of having to pay the other
sides also makes people very amiable to settlement.
2. Prepurchase Exam. Whoever hires the vet is going to pay for the
services unless you reach a prior agreement which includes the vet! You
can agree to anything as long as it is a mutual agreement but don't
expect a professional to render services and then wait to see who is
going to pay the bill. When I have a prepurchase exam done, I want to
select the vet and pay that vet to protect my interests. I ask
questions about their involvement with the seller to determine if I am
comfortable about the neutrality of the doctor. I would also clearly
require and also agree to mutual confidentiality of the opinion and
report in order to encourage the doctor to give me all of the thoughts
he/she might have about the horse. On a major purchase, I would usually
ask to talk to the horse's regular vet before I ever made an appointment
to see the horse. Most seller's are happy to refer you to the horse's
normal vet as a reference. After that, I want the prepurchase vet to be
solely concerned with my interests as buyer and I feel I should pay for
that service.
3. Get warranties in writing. If the condition or temperment of the
horse is warrantied, you really need that type of understanding in a
formal purchase agreement. I would encourage you to seek appropriate
forms and legal advice for the final purchase if there is a lot of money
involved or if there are issues that will go on after the sale. My Case
of The Sterile Stud is the classic example. My client bought an 18
month old cremello stallion "guaranteed breeding sound and guaranteed to
throw color". Two years later, we are in a law suit over what those
words, written by the buyer and seller, really mean. The contract was
written by the parties on the kitchen table and didn't provide for costs
of litigation to be taxed against the defaulting party. Most sale
agreements are final at closing or shortly thereafter. In those cases,
formality is not as important; but in cases of warranties, formality is
essential.
4. Know when you have a contract! An offer which is open to the public
is subject to acceptance as Rhonda pointed out. If you agreed to sell
me the horse and I deposited my personal check in the mail and the offer
didn't require anything more, an enforceable contract probably exists in
most states. Most states deem deposit, postage paid, into the US mail
an acceptance of an offer of sale from the moment of postmark! If I was
a seller and then sold the horse while the check was in the mail, I
would be very concerned about my liability. I personally think that a
court would consider "specific performance" of the contract as the only
appropriate remedy for an injured buyer since horses are so individual.
As long as the intervening buyer could be put on notice immediately or
had notice of the prior claim, I believe a strong argument could be made
for enforcing the original contract. BUT without a cost of litigation
clause OR state consumer protection statues that award costs, You could
only afford to take legal action if the horse was such an incredible
deal that you could pay the purchase price and the costs of litigation
and still have a horse you could afford.
Now, after all this, I must tell you that there are wonderful seller's
out there too. Knowing the reputation of the people you are dealing
with is very important. Even after my "California experience" I turned
right around 6 months later, purchased tickets for hubby and me and flew
all the way to Edmonton, Canada to test drive my CC. No written
agreements, no time limits other than our plane schedule. Just the very
detailed and accurate description of CC and Christy Janzen's word that
CC would be waiting for me to ride her when I got there! When in doubt,
I get it in writing and I always tell my clients to get it in writing,
but I still ignore my own advice and go with my instincts and in the
endurance world, the "California experience" is my only negative in 6
purchases.
Joane Pappas White
Attorney at Law
Price, Utah
Lyoness@Castlenet.com
---- Begin included message ----
Hi Ridecampers,
Leave the personal issues behind because we have already learned that
Ridecamp will never have enough of the first hand facts for you to play
judge and jury in any specific incident reported here. Instead, let's
talk about how to avoid situations that can cause conflict in the
purchase and sale of horses.
I would really like to use an example from my own experience--to show
you that all the training in the world will still not protect you if you
don't use that training and take steps to protect yourself!
When I was first looking for my "real" endurance arab to replace my
beloved Thumper: The Quarter Horse with an Attitude, I used every source
I could find to look for and evaluate horses. A particularly
outstanding CMK mare was available in central California and was
recommended to me by several endurance friends. I communicated with the
Seller and made an appointment to fly to California to actually inspect
the mare. Before spending $300 to buy the ticket, I confirmed the
horse's availability. The seller never requested a deposit nor
indicated any problem with my arrival date in one week. My ability to
pay for the horse, either in cash or by check, was verified.
For you sellers, I would not have paid a nonrefundable deposit for a
horse I had never seen and if you had requested it, I would have looked
for another horse. Even for a world champion, I figure that my cost in
traveling to you to see your horse is substantial consideration and if
you let me rely on your representations that the horse is available, you
may be legally obligated to keep it that way long enough for me to
complete the scheduled travel plans. In most cases, I would not have
spent the money to buy the airline ticket if the owner had told me that
she might sell the horse before I arrived. ON THE OTHER HAND, I am a
trusting sole (yes even we lawyers can be trusting and I do most of my
personal business on a handshake). I did not get an express written
agreement from the Seller in California before I bought the ticket
either. When I arrived for my appointment with a cashier's check for the
full asking price in my pocket and the name of a vet who was prepared to
do an immediate prepurchased exam, I was advised that the horse was just
sold.
Was I mad? Very! Did I take legal action? No--not cost effective and
I still didn't know if I even wanted the horse as it was not there.
Did I handle things differently next time? WEEEEELLLLL. . . . Instead,
I enjoyed my trip, visited friends and desparately looked at every other
endurance horse I could see while I was there.
Let's make a checklist of the issues that should be discussed before
anyone spends any time or money evaluating a prospect. Sellers please
add to the list from your experience and needs. Assume that your basic
questions about the horse are already answered to your satifaction and
now you're concentrating on the basics of the bargain:
1. Get a basic Option agreement in writing before you spend any
significant sums on travel or vetting. This does not have to be
difficult or detailed but it should agree on the purchase price, the
length of the option for the buyer to inspect the horse, a possible
separate fee for same if the animal is in big demand and a method of
payment. It should also clearly provide that if either party breaches
the agreement, they shall pay all cost and attorney's fees in enforcing
the contract. That language is essential in most states if you expect to
use any legal methods to recover your damages. As pointed out by Rhonda
and Kirsten, your damages may not be high enough to justify spending
your own money but if you have a good case, this clause will make it
very risky for a breaching party to risk the outcome of a trial which
could cost several thousand dollars. This type of simple agreement can
be done over a fax machine before you go out and buy plane tickets or
hire vets and its presents tends to avoid litigation. It is bad enough
to pay your own costs but the possibility of having to pay the other
sides also makes people very amiable to settlement.
2. Prepurchase Exam. Whoever hires the vet is going to pay for the
services unless you reach a prior agreement which includes the vet! You
can agree to anything as long as it is a mutual agreement but don't
expect a professional to render services and then wait to see who is
going to pay the bill. When I have a prepurchase exam done, I want to
select the vet and pay that vet to protect my interests. I ask
questions about their involvement with the seller to determine if I am
comfortable about the neutrality of the doctor. I would also clearly
require and also agree to mutual confidentiality of the opinion and
report in order to encourage the doctor to give me all of the thoughts
he/she might have about the horse. On a major purchase, I would usually
ask to talk to the horse's regular vet before I ever made an appointment
to see the horse. Most seller's are happy to refer you to the horse's
normal vet as a reference. After that, I want the prepurchase vet to be
solely concerned with my interests as buyer and I feel I should pay for
that service.
3. Get warranties in writing. If the condition or temperment of the
horse is warrantied, you really need that type of understanding in a
formal purchase agreement. I would encourage you to seek appropriate
forms and legal advice for the final purchase if there is a lot of money
involved or if there are issues that will go on after the sale. My Case
of The Sterile Stud is the classic example. My client bought an 18
month old cremello stallion "guaranteed breeding sound and guaranteed to
throw color". Two years later, we are in a law suit over what those
words, written by the buyer and seller, really mean. The contract was
written by the parties on the kitchen table and didn't provide for costs
of litigation to be taxed against the defaulting party. Most sale
agreements are final at closing or shortly thereafter. In those cases,
formality is not as important; but in cases of warranties, formality is
essential.
4. Know when you have a contract! An offer which is open to the public
is subject to acceptance as Rhonda pointed out. If you agreed to sell
me the horse and I deposited my personal check in the mail and the offer
didn't require anything more, an enforceable contract probably exists in
most states. Most states deem deposit, postage paid, into the US mail
an acceptance of an offer of sale from the moment of postmark! If I was
a seller and then sold the horse while the check was in the mail, I
would be very concerned about my liability. I personally think that a
court would consider "specific performance" of the contract as the only
appropriate remedy for an injured buyer since horses are so individual.
As long as the intervening buyer could be put on notice immediately or
had notice of the prior claim, I believe a strong argument could be made
for enforcing the original contract. BUT without a cost of litigation
clause OR state consumer protection statues that award costs, You could
only afford to take legal action if the horse was such an incredible
deal that you could pay the purchase price and the costs of litigation
and still have a horse you could afford.
Now, after all this, I must tell you that there are wonderful seller's
out there too. Knowing the reputation of the people you are dealing
with is very important. Even after my "California experience" I turned
right around 6 months later, purchased tickets for hubby and me and flew
all the way to Edmonton, Canada to test drive my CC. No written
agreements, no time limits other than our plane schedule. Just the very
detailed and accurate description of CC and Christy Janzen's word that
CC would be waiting for me to ride her when I got there! When in doubt,
I get it in writing and I always tell my clients to get it in writing,
but I still ignore my own advice and go with my instincts and in the
endurance world, the "California experience" is my only negative in 6
purchases.
Joane Pappas White
Attorney at Law
Price, Utah
Lyoness@Castlenet.com
---- End included message ----
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