A horse sale, like any sale, is a contract governed by state law. There are a few special laws governing horse sales, but for the most part the law of contracts is pretty much uniform throughout the country.
Some states require that a horse have a recent Coggins test or be sold with a halter, but violations of these provisions result in penalties under state laws and do not necessarily constitute breach of contract in the horse sale.
In most situations the horse is sold “as is,” with no warranty of soundness or fitness for intended purpose. If you want the seller to guarantee something about the horse (e.g., that the horse is in sound breeding condition), this should be spelled out in writing.
Even if a horse is sold “as is” and with no sales contract, there are still legal obligations that the buyer has. One of them pertains to making an intentional false representation in order to make the sale. For example, if the seller tells the buyer that the horse is “totally sound,” but knows that the horse has navicular, this could constitute fraud. If the seller promises to do something in the future, such as to “throw in” a saddle or equipment if you buy the horse, and never intends to do so, that could be a basis for voiding the contract. If the seller lies about the disposition of the horse, saying, “This horse is safe for children,” but the seller knows or should know that the horse has a tendency to bolt at the slightest provocation, this could constitute breach of the contract.
There is a fine line between sales puffery and legal representations stated in advertisements. Some specific statements in ads can be interpreted to constitute legal representations. A claim that “this horse is 100% sound” could be evidence to prove fraud if the horse turns out to be less than advertised. Or, if the ad said that the horse has “no vices,” and turns out to be a vigorous cribber, there is likely some legal recourse.
It is important to have a written sales contract or at least a simple bill of sale so that there can be no uncertainty about the terms. Three states—Kentucky, Florida, and California—have laws that require a written bill of sale signed by the parties and stating the price. These laws also prohibit dual agency (interest) in horse sales unless disclosed in writing in advance and agreed upon by the parties in writing.
These laws apply if you sell a horse to a buyer in one of these states; buy a horse from a seller in one of these states; act as an agent for a buyer or seller from one of these states; or receive a commission in connection with a horse sale or purchase that took place in one of these states.
In Kentucky and California, the old practice of collecting from both sides without full disclosure has been done away with. In fact, it is unlawful for an agent to accept payment or any item of value worth more than $500 from anyone other than the principal (the buyer or seller who hires the agent) unless (a) the agent and the person making the payment disclose the compensation in writing to both parties and (b) the agent’s principal consents in writing to the payment. For example, if you wish to buy a horse through a bloodstock agent, and the agent has an arrangement for a commission greater than $500 from the owner who is selling the horse, this arrangement must be disclosed and approved of in writing.
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