International Horse Sale

Happy Tuesday, Equine Law Blog readers!  I hope you find this guest post by my friend and colleague, Dutch equine attorney Luc Schelstraete, both interesting and informative. 

"Pursuant to European legislation, a horse that is delivered to a buyer in a horse sale transaction needs to meet up to the purchase and sale terms agreed upon between seller and buyer. For example, if the parties agreed upon specific qualities of the horse, the horse needs to have these specific qualities at the time of sale. If a buyer can prove after the sale that the horse did not have these specific qualities at the time of sale, the seller can be held liable for this shortcoming. In cases where no specific qualities are agreed upon, and/or it is not discussed that the horse needs to meet specific criteria, the horse still needs to be suitable for so-called ‘normal use’."

"What constitutes ‘normal use’ depends upon what the buyer may expect under the circumstances of each particular sale. Another factor used in Europe to determine whether a horse is suitable for ‘normal use’ is the amount of the agreed purchase price. In cases where, for instance, the horse is found to have been permanently lame at the time of sale, most courts in Europe will find that the horse was not suitable for ‘normal use’."

 "In cases where the seller has guaranteed or expressly warranted specific characteristics or qualities, the horse needs to meet up with the features that were guaranteed or expressly warranted by the seller. In cases where the horse is found to have not possessed these guaranteed characteristics or qualities at the time of sale, the seller can be held liable.  When the seller makes a guarantee or express warranty about a horse, the buyer does not have to investigate whether the horse indeed has these qualities and the buyer may rely upon the seller’s representations. In other words, in cases of express warranties, courts in Europe will not hold it against the buyer that he did not investigate the seller’s representations about the guaranteed or warranted qualities."

When does EU law apply to a horse sale?  

"EU countries are required to revise their national statutes / codes, if necessary, so that they are compliant with EU legislation. In other words: EU member countries have to implement the EU legislation into their own statutes / codes. Therefore, because national statutes must comply with EU legislation, this EU law may apply to every horse sale where EU law or the law of an EU member country governs a sale.  Note:  the implementation of EU law is a minimum requirement for EU countries. EU countries can make their national statutes more specific.  If parties explicitly agree that Dutch law, for example, will apply to a horse sale, then Dutch law will indeed apply.  But indirectly, EU law will apply as well because Dutch law is based upon on EU legislation."

About the Author

Mr. Luc Schelstraete is the founder of European Equine Lawyers and Equestes. Both entities are based in Holland. Luc and his staff (6 attorneys and 5 office staff) specialize in international equine law. They assist clients in purchase and sale documentation and litigation involving horses purchased in Europe.

For further information, see: www.europeanequinelawyers.com and www.equestes.com.

 

In addition to the terms usually included in a contract to buy a horse, a Purchase and Sale Agreement involving the shipment of a horse to another country should include the following terms:

1)                  Applicable Law: Will your country’s law, or the law of the other party’s country apply to the contract? This is important, considering that certain German-speaking countries have “minimum warranty” statutes applicable to horse sales (die Gewährsmängel). These minimum warranty statutes may make it virtually impossible for a buyer to resell a horse if it has any of the problems (such as cribbing) that do not meet the “minimum warranties” in those countries.

2)                  Terms for Delivery of Horse & Money: Your agreement should set for a specific protocol for when and where the horse, the bill of sale, registration papers and health certificates, and sales proceeds should be delivered.

3)                  Commissions: Your should specify which parties are receiving a commission (buyer’s agent, seller’s agent, or both?), the amount of the commission, and the protocol for the delivery of the commissions.

4)                  Disputes. How will disputes, if any, be decided?  Having to bring suit in another country in the case of a horse sale gone bad is time-consuming, expensive, and may be impossible. I recommend including a provision for alternative dispute resolution in international horse sales contracts, naming a reputable mediation or arbitration forum such as Equestes to settle or decide disputes.

Before you buy a horse from someone in another country or sell a horse internationally, you must have the following four items in place to help avoid disputes and headaches:

1)         Written Purchase and Sale Agreement.  An international sale is typically not one where a buyer can show up with a trailer, hand the seller a check, and load up the horse.  In addition to the usual points typically covered in ordinary sales contracts (description of horse, price, warranties or lack thereof, pre-purchase exam conditions, et cetera), your international sales contract needs to address the logistics of how and when the horse, its papers, and the money will be delivered. Stay tuned, as I will do a post next week on the items your international sales contract should include.

2)         Escrow Service. The use of an escrow service to hold sales proceeds and commissions until certain terms of your Purchase and Sale Agreement have been carried out is a huge help in avoiding disputes and confusion. 

3)         Written Bill of Sale. Your bill of sale, and not the registration papers or health certificate, is the instrument that transfers title to the horse. Your Purchase and Sale Agreement should make clear when the bill of sale should be delivered to the buyer (usually, it is delivered with the horse together with registration papers and health certificates after the escrow account is funded).

4)         Identification of Quarantine Requirements. Identify quarantine and health certificate requirements, and find a reputable quarantine facility and shipper to handle your transaction. 

The last thing anybody wants is an international lawsuit on their hands.  Having the above items in place will greatly diminish the chances that you’ll ever be involved in one.