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The Dangers of Oral Agreements
in the Horse Industry

If you're involved in horses and make deals with a handshake and little else, you're not alone. Most of the lawsuits involving horses that actually make it into print in the courts nationwide involve sufferers such as yourself, who find out the hard way that their horse sale needed a written contract to enforce the agreement. But even where the deal involved is not a sale, but instead some sort of service contract, such as boarding or training, the courts favor written agreements and find it difficult to negotiate the horse industry's informal ways.

These cases make good reading and highlight the historic trend of the horse industry to informality, even when hundreds of thousands of dollars are at stake. The next time you're tempted to make such a "seat of the pants" deal, however, think about the dangers involved.

Nearly all states have passed a Uniform Commercial Code dealing with the sale of goods over $500. These statutes require a written document containing objective evidence of the agreement, and usually, a signature by the person against whom enforcement is sought in order for enforcement to occur. This statute is called, quaintly enough, "the Statute of Frauds. "

The name, "the Statute of Frauds" derives from its primary goal: eliminating court battles involving evidence manufactured by the plaintiff in the case. A good example of the type of evil that can otherwise occur was illustrated in a case where a gentleman who bought a racehorse in the mid 1970's in New York, mailed off a check through his secretary to the buyer, and then sued to get the horse. The seller claimed he had made no such deal, and though the secretary testified on behalf of the putative buyer, the buyer could not prove that the check had ever been deposited or accepted by the seller.

Courts do have ways to enforce oral agreements where the parties have already performed much of the contract, but the problem is that it causes the courts to have to look at the conduct of the parties to prove the deal. That is, in the case of a sale, the court examines: who took out the insurance on the horse; who took care of the horse; and who loses if the horse dies or is injured. In many such cases, however, the other side can come up with plausible explanations consistent with their version of the events. If the conduct of the parties involved does not indisputably prove the contract and its terms, then the court will not enforce the contract.

Of course, as with all contracts, the devil is in the details. Therefore, the sheer act of writing down the details and talking about them with the other side, as an exercise unto itself, will often iron out many problems beforehand and will also make the "meeting of the minds" moment much easier to pin down — this is precisely what the courts look for when they are called on to enforce a contract.

Getting good legal representation will help in making a good contract. Typically, the short money that it takes to review a proposed contract is far less than the costs of a failed transaction. Think of it as trip insurance — horse deal trip insurance — something that is very good to have when you really need it.

Kathleen A. Reagan, Esq. is an equine attorney practicing in Braintree, MA, available at www.kathleenreaganlaw.com, has developed a course in equine law at www.concordlawschool.com, and is co-founder and Vice President of QueryHorse, the largest horse information resource on the Internet.

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