Writing an Equine Bill of Sale in Pennsylvania: a Basic Primer

Understanding the components of a good bill of sale for a horse is vital in Pennsylvania.  There are a myriad of issues both the buyer and seller need to address to protect their own interests and liabilities.  The best way to accomplish this is to have a detailed Bill of Sale.  Many times people are tempted to write up a simple document, or borrow one from a friend.  This can prove to be quite detrimental to both parties as it may not adequately protect your interests nor address the details of your specific transaction.   In agreements of sale for horses, one generic document does not apply to every situation.  Many issues must be addressed in this document, including identification, warranties, consideration and risk of loss just to name a few.  It is highly recommended that you contact an Equine Attorney that concentrates in equine law to be certain your interests are protected.  The goal of this article is to begin to educate you on the various issues which need to be addressed in writing an equine bill of sale to ensure you are properly protected.

            A. Vital Information

            The first and most rudimentary information that must be contained in the Bill of Sale are the names of the parties.  You must have the parties’ full names and addresses, and make sure to identify their capacity in the transaction (i.e. buyer, seller, agent, etc.).  Many times you will have a third party acting as an agent for the sale.  Common mistakes in drafting these agreements include: omitting the agent from the contract or mistakenly listing the agent as the owner.  In addition to correctly identifying and naming all the parties to the transaction, each named party must sign the agreement.   

            Secondly you need to properly identify the horse.  Use any and all unique identification characteristics of the horse.  Look at the horse’s Coggins, filled out by your vet, which should list the horses’ unique markings.  If the horse has a jockey club, breed association, show, or other member identification number, be sure to list that.  Also state the horses name, age, sex, height, breed and color; anything to properly identify the animal.

            Finally, after you identify the animal, you must state the purchase price.  You must state with specificity the sale price, and whether it will be in one lump sum or over time.  Also state the method of payment and whether it is required in certified funds.  The purchase price is always necessary because it is a core term of the contract.  Should any disputes arise, the document must state the purchase price and the method of payment in order to be enforceable by a court of law.

            B. Warranties

            The main purpose of including warranties in the contract is to address the intended use of the horse. Whether the intended use is as a companion horse or as a grand prix jumper, you need to decide if that use is warrantable.  Parties can decide to warranty for other things, such as soundness. However, if the parties agree on warranting the horse, the agreement must state clearly exactly what is being warranted, the length of time it is to be in effect, and what the penalty is for failure to meet the warranty.    Buyers may incorrectly rely on oral representations made by the seller prior to sale. Buyers should make sure that any promises are in writing as a term of the contract.  Take for instance, that the seller promises that the horse can be returned for a full refund if the horse for any reason becomes lame within two weeks of the sale. Unless that is specified in the agreement, it is not enforceable. On the other hand, if the contract is being written for the benefit of the seller, the seller may not want to warranty anything other than the fact that they are the owner of the horse and have free and clear title.  Many times, the sale is “as-is-where-is”, and with all faults.  The buyer is free to have a pre-purchase exam performed by a licensed vet to ascertain any physical problems with the horse.  Nevertheless, the bill of sale must state what, if any warranties are present while also affirmatively disclaiming any warranties that are not present.

            C. Indemnification

            In tying in with the warranty section above, the bill of sale should also contain indemnification language on behalf of the seller.  Riding horses is a dangerous sport, and one can not predict how a horse will react at any given time.  Therefore, assuming no fraud is present, the seller will want to be protected from the filing of legal action by the buyer.  Indemnification language does precisely that.  Assuming no fraud or misrepresentation on the part of the seller, this language will protect the seller and prevent the buyer from filing legal action against him/her.  By no means is indemnification language considered a get out of jail free card, but it does however protect the seller from frivolous lawsuits by providing a defense to the action. 

            D. Risk of Loss

            Another core term which should be stated in the contract is when risk of loss passes to the buyer.  There is a point in time when the seller is no longer responsible for the animal, and the buyer takes on the risk of anything happening to the horse. Usually, risk of loss passes when money exchanges hands and the horse leaves your property via the buyer.  However, there are circumstances when risk of loss may not pass immediately.  Suppose that money exchanges hands, but the horse is transported by a third party hired by the seller; or if the purchase price is to be paid over time; or if money changes hands and the seller delivers the horse.  These are various circumstances which could cloud the issue of when risk of loss passes.  Therefore, you should include explicit language in the contract as to the exact time risk of loss passes from the seller to the buyer.

CONCLUSION

            This article is just a glimpse into the issues which could present themselves during a sale and purchase of a horse and is no way to be considered inclusive of all clauses to be present in a bill of sale.  The terms may vary depending on the specific nature of the deal.  The key is, regardless of the transaction; take the time to adequately protect yourself.  It is strongly suggested you consult with an Equine Attorney in your area to discuss these and other issues which may be present in your individual matter.