Lemon Law: Legal Remedies for the Unsatisfied Horse Buyer

One of the most puzzling aspects of the horse business for me is the lack of paper. Across Canada, stables are full of business people, professionals, and experienced horse people paying thousands of dollars a year for their horses. Yet, if you asked them if they have paper backing up the purchase of their horses or their boarding arrangements or leasing arrangements, the answer is very often “No”!

It surprises me that people can deal in such a light-handed fashion with such an expensive hobby. If you purchase a horse that does not live up to the promises made by the seller, with no paper you have a difficult time proving what those promises were (see below), and the horse will continue to cost you money until it is sold or otherwise moves on.

Ask the Right Questions

The dominant principle when buying a horse is caveat emptor ‒ let the buyer beware! It is up to the buyer to become informed about the horse he wishes to purchase.

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Accordingly, before you start looking for a horse you should consider exactly the traits and qualities you require in the animal. Soundness is an obvious must, but also consider temperament, vices, age, conformation, and fitness for a particular purpose. Question the owner of the horse on these points. If you do not ask, you may not be told of a vice or other problem that makes the horse unsuitable for you. The seller is certainly not going to volunteer any information about the bad qualities of the horse.

It is up to you to ask the right questions and get informed so that there are no surprises after the horse is yours.

This is painfully evident in the case of Witts v. British Columbia (Attorney General), (1982). Although this related to a claiming race, the point in issue is relevant to a straight purchase. The horse in question was simply listed as a “horse”; the claimant intended to put the horse out to stud and did not realize that the horse was in fact a gelding. The buyer lost his case, because no representation had been made to him about the virility of the horse. You should make no assumptions about any quality that you require in the horse. It is up to you to ask the right questions and get informed so that there are no surprises after the horse is yours.

Importance of a Sale Contract

If information from the seller is important to your decision to buy the horse, then put it in a written sale contract. The contract becomes a record of the representations made by the seller about the horse and it can prevent misunderstandings over issues related to the sale.

If a horse deal goes sour, one or the other party may have a bout of selective amnesia. A seller may not ‘remember’ the statements made about the horse before purchase and without witnesses to the deal, how does a purchaser prove an important statement was made? If the point in issue is written down, there will be no dispute.

There will be times when you will need to demonstrate proof of purchase of an animal to indicate ownership of the horse and the purchase price. Without a sale contract, this will be difficult – especially if you paid in cash. Reasons you would require proof of purchase include tax considerations, insurance, disputes with other parties, theft, and matrimonial disputes.

What if There is No Written Sale Contract?

If you do not have a written sale agreement, you still have remedies. A contract is a contract whether in writing or not; it is just more difficult to prove the terms of the contract if not in writing. Statements, perhaps made in the arena or barn, that a purchaser considered important when buying a horse often are denied by the seller if there is a problem. It is left to the trial judge to determine who is telling the truth and by the time the matter gets to a trial, the legal costs, time, and effort expended can be prohibitive.

If there is no written sale agreement, the purchaser will have to rely on other evidence to prove its case. This evidence includes the testimony of witnesses, photographs, veterinary reports and records, videos, texts, emails, and other social media posts. One advantage to an electronic world is that many of our communications, which in the past would have been oral communications, are now recorded forever on our phones. A good paper trail, even an electronic paper trail, can prove your case without a written sale contract.

A video of a horse performing beautifully prepurchase and bucking around the arena post-purchase can do much to convince a trial judge that there was a problem.

Pursuing a Claim

If you are going to pursue a claim against the seller, the first step is to gather the evidence necessary to make your case and tell your story. If your evidence is good, it is hoped that the purchaser and the seller can come to an agreement to resolve the issue. An agreement can be obtained through negotiation or mediation with an experienced facilitator.

If the matter cannot be resolved, enforcement of a contract will usually be done through the Courts. Generally, there are three types of relief a party to a contract can request: specific performance of the contract, rescission, and damages.

A request for specific performance asks the court to order the breaching party to fulfil their side of the bargain. For example, a purchaser may obtain an order of the court requiring the seller to deliver the horse to the purchaser pursuant to the sale contract or to deliver promised tack, registration papers, etc.

Rescission is a request to put both parties back into the same position they were in before the horse sale. Usually, this will only be granted if the deal was materially different from what was understood by one or both of the parties and the horse can be returned in exchange for the purchase price.

Finally, if a seller is not upholding its side of the contract of sale, the purchaser can keep the horse and ask for damages for breach of contract. Damages could include the difference between the amount paid and the actual value of the horse. It could include board and vet bills. Usually, the purchaser will ask for an amount of money approximately equal to the expense suffered as a result of the seller’s breach.

These three remedies are not mutually exclusive, and often damages will be claimed as an alternative to specific performance or rescission in a court action. The facts of the case will determine which remedy is most suitable.

What a Sale Contract Should Include

Every contract of sale will be different, but a simple rule of thumb is the following: “If it is important, put it on paper.” Accordingly, when you are drafting the contract, list the points that you consider important in your decision to buy the horse. If you are selling a horse, ensure that the contract contains all the points you wish to include and none that you are not happy to verify.

Some common terms found in sale contracts include:

• the names of the parties to the agreement, their descriptions as seller and buyer, and their addresses;

• a brief description of the horse;

• the price and payment terms. If the full purchase price is not given upon delivery of the horse, then the seller may wish to delay transfer of ownership of the horse until full payment is received;

• the date and place of delivery. Consideration should also be given to insurance and at what point the risk passes;

• representations or guarantees that the seller is prepared to make about the horse (this includes representations as to soundness, suitability, age, etc.). As a seller, the less you promise about the horse, the better;

• information about the horse that the buyer considers crucial to his purchase of the horse, such as competition experience, age, bloodlines, fertility, soundness, etc.;

• a statement that there are no express or implied terms, conditions, or warranties relating to the sale other than those set out in the sale agreement. This is known as an “entire agreement” clause and is an attempt to limit the representations made about the horse prior to the contract.

Sellers should try to insert this clause into the contract, as it can protect them from litigation. Consideration should be given to certain obligations implied into the contract by the Sale of Goods Act. If it is the seller’s business to supply horses (and it can take very little to prove this) and the buyer, expressly or by implication, makes known to the seller the particular purpose for which the horse is required so as to show that the buyer relies on the seller’s skill or judgment, there is an implied condition that the goods will be reasonably fit for such purpose. Inserting an entire agreement clause could exclude implied conditions like this one.

and

• anything else considered important to the sale (tack, insurance, passports, etc.).

The contract should be in writing, legible, signed by each party, and dated. If the sale price is high enough, it is well worth a few hundred dollars to have a lawyer review the contract of sale before it is signed. Contracts can be signed electronically and in counterparts.

Bottom Line

Buying a horse is a big purchase, both financially and emotionally. It makes sense to well document the terms of purchase so that most disputes, if there is a problem, can be resolved quickly and easily. A written sale contract is the best way to do this. Without a written contract, and especially in today’s world, our phones and social media provide an electronic record of the terms of sale. A video of a horse performing beautifully prepurchase and bucking around the arena post-purchase can do much to convince a trial judge that there was a problem.

Enjoy the process of buying a horse – it is fun! At the same time, be cautious and make sure you gather the evidence, during the purchase process, necessary to make a claim against the seller if the horse does not live up to expectations.

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Catherine Willson is a lawyer practising in Toronto, Ontario, at the law firm Goldman Sloan Nash & Haber LLP. This article contains general information only, based on the laws of Ontario and is not intended to provide a legal opinion or advice. Readers should consult a lawyer with respect to the application of the information contained above to their particular circumstances. Readers may also contact the writer at willson@gsnh.com to discuss any specific issues they may have.