Legal Advice for Sellers at Horse Auctions

1. Avoid Undisclosed Dual Agency Problems.   Sellers should enter into written agreements with their consignors or other agents, and agree upon commissions, reserve prices, and how disputes will be handled. You should also get an agreement from the consignor that all commissions will be fully disclosed to you.  If a bloodstock agent, trainer, or someone else acting on behalf of a buyer approaches you or your consignor and asks for a commission, do not pay it.

2. Avoid Turnback. The prospective buyer has the right to ask the consignor anything relative to the horse’s condition and ownership. Be truthful and straightforward in your answers to avoid problems. Read the Conditions of Sale with your consignor. If a buyer purchases your horse and it does not pass the post-sale veterinary exam within the give time frame (24 or 48 hours), if the problem with the horse one of the conditions warrantied in the Conditions of Sale, the buyer has the right to return the horse to you (otherwise known as “turnback”), and you will not be able to keep the sales proceeds.

To avoid turnback, it is advisable to negotiate with the buyer and reach a mutually-acceptable agreement. One strategy is to reduce the price of the horse, or offer to pay for surgery if the problem is operable. A consignor might also offer to give the buyer some compensation for the risk of surgery.

3. Bidding on Your Own Horse.  Although some people view consigned bidding as unethical, the rules and the law clearly permit it. The practice of bidding on your own horse has also been approved by the Sales Integrity Program. Note, however that if you bid on your own horse and are the final bidder, you will remain the owner of the horse but still owe a commission to the sales company (generally 5% of the final bid).

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