Many people would not dream of buying a horse without the assistance of a “horse professional” — this person may be an experienced instructor or trainer, but can be anyone we trust to act for us and advise us regarding our horses. Using their contacts, the horse professional can often locate a good horse and determine whether that horse is a good fit for the prospective buyer. Many people also hire a horse professional to help them sell their horse. But once you’ve hired a horse professional, how accountable is that person to you?
What Is an Agent?
An agent is someone employed by a person to negotiate a deal with a third party; the person who employs the agent is called the principal. If your trainer or horse pro helps find you a horse or helps you to sell your horse by introducing contacts and negotiating the sale or purchase with another pro or owner on your behalf, they are acting as your agent and you are the owner and principal.
The agent negotiates on the principal’s behalf; in general, contracts are negotiated between the agent and a third party. In some cases, an agent may even sign contracts on behalf of the principal. However, once the contract comes into existence, the agent is out of the picture, leaving a contract between the principal and the third party. It is only the principal and the third party who should obtain the benefits of any contract negotiated by the agent, and it is only the principal and third party who will be on the hook for any liabilities.
In the purchase or sale of a horse, the agent is the go-between between the purchaser and the seller. In many cases, the agent is the instructor or trainer of one of the parties to the sale. A common mistake in this situation is making the assumption that the agent is working for your interests. While the agent may work with both parties to broker a deal, the agent cannot work for both. Ask yourself — who is paying this agent’s commission — you? No? Then you may be on your own.
What Your Agent Is Permitted to Do on Your Behalf
An agency relationship is about the delegation of authority (a “grant” of authority) flowing from the principal to their agent. The principal gives their agent authority to make a deal on behalf of the principal, within parameters specified by the principal (the “scope” of authority). How much authority your agent is given and, consequently, how much you (as the principal) will be bound by the acts of your agent, is entirely up to you — you can give your agent as little or as much permission to act on your behalf as you like.
However much authority you decide to grant to your agent, make sure that your intentions are clear, as trouble may arise when a principal does not clearly outline the boundaries of the authority being given to their agent — especially if the agent makes a deal with which the principal is not happy. If the agent acts within the scope of authority granted by the principal, the agent’s act will bind the principal as a party to the contract (but remember — this act will not bind the agent, as the agent is a go-between, not a party to the contract). However, if the agent’s act is outside the scope of authority granted by the principal, the agent’s act will not bind the principal.
A Review of the Rules when Using an Agent to Buy or Sell a Horse
Rule 1: Be clear on your instructions to an agent, preferably in writing
To clarify your instructions to your agent and avoid any misunderstandings about what you expect, sit down and write a list of expectations that both of you review and sign. The more certain you and your agent can be about the scope of their authority, what you expect from your agent and the deal they are brokering for you (and what your agent expects from you by way of payment), the less likely your agent will be to exceed, misunderstand, or misuse that authority.
You won’t sell your horse for less than a certain price? Put that on the list. You want to be paid in cash or certified cheque only? Write that down, too. Don’t forget to deal with the remuneration of your agent —is your agent working on commission (and if so, what percentage will they receive), or will they be paid a flat fee for their efforts? Does your agent get a bonus if they sell your horse for more than the asking price?
Write it all down. That little bit of effort now may save you a big headache later.
Rule 2: Use a written Agreement of Purchase and Sale
To provide yourself with some protection against unauthorized representations made by your agent to a third party without your knowledge, use a written agreement of purchase and sale. List in the agreement those statements or representations about the horse that the purchaser requires and the seller is prepared to confirm as true. Include a paragraph indicating that any statements or representations made about the horse which are not listed in the agreement are not valid and should be disregarded by the purchaser. If the statement is not in the agreement, it was not made.
Rule 3: Contract directly with the other party when buying or selling
Another way to ensure that you are getting the full benefit of the bargain made by the agent on your behalf is to make sure that the purchase and sale agreement is signed by you and the actual vendor (or purchaser, as the case may be), and not by the agent working on your behalf. This way, both sides of the bargain will be able to see what the other is paying for or earning from the sale — and it will be much more difficult for an unscrupulous agent to hide any of the sale proceeds or costs.
Rule 4: Find an agent you trust
As noted earlier, the fiduciary relationship is one that is based on trust. If you have had success with a horse pro in the past, build on that relationship. If you are in the market for a new horse pro, or one who is familiar with a geographical market new to you, do your homework. Ask around for recommendations from people whose opinions you trust, or ask those you know who have a reputation in the industry for professional and honest dealings — if they can’t work with you, chances are they know someone good who will.
Rule 5: Remember who is paying the agent’s fee
When buying or selling a horse through an agent, it is important to remember for whom the agent is working. The agent may come across as your best friend, and may be a delightful and honest person, but if you have not hired the agent, then the agent is working for the other side — you must remember where the agent’s interests lie, and that the agent wants to make the sale.
A better understanding of the agency relationship and a clear agreement with your agent will ensure successful horse deals and avoid problems.
Order your copy of Canadian Equine Law: A Guide for Anyone Working with Horses in Canada here.