It pays to get your horse sale agreements in writing. Both buyers and sellers should pay careful attention to the "warranties" section of any agreement.
The Equine Law & Business Letter reports that a federal court in Arkansas ordered a seller to pay almost $100,000 in damages for breaching warranties in connection with the sale of 30 horses.
The court's opinion states that the owner of a riding camp in Colorado contracted with a rancher in Arkansas for the purchase of 30 trail riding horses that would be suitable for inexperienced riders and children. The camp operator reached an oral agreement with the rancher that was later reduced to writing. The written contract provided for the rancher to deliver 30 horses, all geldings, to the camp at a total cost of $30,000, and that the horses would be in excellent condition and trained as trail horses.
According to the opinion, all but four of the horses that were delivered were either unsuitably trained, too young (25 of the horses were 2 years old and one of the horses was 17 months old), or stallions. Allegedly, only 2 of the 30 horses were suitable for trail riding. The camp operator ended up selling 22 of the unsuitable horses, and one of the horses died. She sued the rancher for breach of warranties, breach of contract, deceptive trade practices, fraud and deceit.
After a two-day bench trial, the court found in favor of the camp operator. Specifically, the court concluded that at the time the contract was formed, the rancher "knew of the particular purpose for which the horses were required. He knew that [the camp operator] was relying on his skill and judgment to select and furnish suitable horses." Because the implied warranties of merchantability and suitability for a given purpose were not excluded from the written contract, the court found that the rancher breached both warranties.
The court awarded the camp operator $9,914.61 for her net loss on the sales transaction, plus $3,276.60 for incidental damages (including transportation, wormer and veterinary expenses). The camp was also awarded $71,700 in lost profits attributable to not having enough horses to operate the business at full capacity for one season. Lost profits attributable to later years were disallowed because the court reasoned that one year provided the camp operator "ample time to buy horses."
The case is Manula, et al v. Wheat, No. 4:06CV01107JLH, in the U.S. District Court for the Eastern District of Arkansas, Western Division, October 5, 2007.
For more information, see the November-December 2007 issue of Equine Law & Business Letter.