Are you looking for ways to part with more of your hard-earned
money and to create disruption in your life and business? Would
you like to increase your chances of getting involved in a costly
legal dispute? Where equine-related contracts are involved, here
are six ways to help ensure that these things happen:
- Leaving everything to a verbal understanding and nothing
to writing. These are just some of the issues that verbal contracts
have failed to resolve, and many of these issues have become
part of legal disputes: What was the total sale price of the
horse? When must the buyer make payment? Was the transaction
a lease or a sale? Can the buyer receive a refund of his purchase
deposit if the horse fails a vet check? Did the breeding come
with a "live foal guarantee," and, if so, what does
that mean? Disputes involving verbal contracts usually become
costly and time-consuming legal battles. Why? Because these
disputes often become a "shouting match" when each
party to the unwritten contract has a drastically different
understanding of the same transaction.
When these disputes end up in court, they are often
resolved through expensive trials during which the credibility
of the parties becomes a key issue. Industry custom and practice
and the parties' prior dealings may also factor into the resolution
of certain verbal contract disputes. Written contracts, if they
fairly address key elements of a transaction, could eliminate
most disputes entirely. At a minimum, the written contract can
narrow these disputes significantly.
- Using form contracts without either understanding them
or knowing whether they meet the particular requirements in
your state. Form contracts, found in books and sold in stores,
are convenient and cheap. However, they are not always valid
or enforceable. People often learn this the hard way after their
form contract becomes the target of a legal challenge. Form
contracts often fail to account for important differences in
state laws. For example, 37 states (as of August 1996) now have
equine activity liability statutes on the books, many of which
require certain people or entities to include specially-worded
warning notices in their contracts and releases. A form contract
will rarely, if ever, include them. Also, some states require
certain language to be included within liability releases; form
contracts often fail to include this language.
- Losing the contract. Written contracts provide a lasting
record of the parties' understanding in a transaction. This
is critical if a dispute later develops. For this reason, keep
the contract in a safe place.
- Failing to properly execute the contract. Even the
best contract will fail if it has been improperly executed.
For example, state laws generally prevent minors from entering
into many types of contracts that do not involve the necessities
of life. Therefore, those who sell, train, or board horses should
be sure to make the minor's parent or legal guardian a party
to the contract. If your state enforces releases and if you
use releases, make sure that only the parent or legal guardian
signs on behalf of the minor -- the signature by a family friend
or relative will be legally insufficient.
- Assuming that important contracts, such as releases
or waivers of liability, are not worth the paper on which they're
printed. Before dismissing contracts and liability releases
as being unenforceable in equine activities, consult with a
knowledgeable attorney. You might be surprised to learn that
most states have enforced these contracts as long as they are
worded and executed properly.
- Failing to consider certain contract terms that could
either eliminate disputes or greatly affect the way they are
handled. Why fear details? Below are examples of some provisions
that could benefit one or more parties but are often left out
of contracts:
* A statement that the contract can only be modified
in a written document signed by all parties. In your efforts
to develop a good written contract in order to avoid the pitfalls
of verbal understandings, try to keep verbal understandings
out of the modification process. To help accomplish this,
the contract can specify that amendments will only be valid
if they are in writing and signed by all parties.
* Where can legal disputes be brought? Especially
in transactions involving parties from different states or
far-reaching areas of a state, consider including language
in the contract that identifies where legal disputes, if they
arise, must be brought.
* The right of one or both parties to submit a dispute
to a court alternative, such as binding arbitration. As this
author has explained in past articles and in her new book,
Equine Law & Horse Sense, arbitration can be a cheaper
and faster alternative to the court system. Unfortunately,
parties embroiled in a legal dispute are unlikely to agree
on anything, much less agree to submit their dispute to binding
arbitration. It makes sense to preserve lawsuit alternatives,
such as arbitration, as options now while things are civil.
* Specifying who pays the legal fees if a dispute
arises from the contract. Contracts can address this issue
by requiring, for example, the losing party in a legal dispute
arising out of the contract to pay the winning party's court
costs and attorney fees. Without this language, or without
a clearly-applicable statute or court rule that addresses
the subject, each party is virtually guaranteed to pay his
or her own legal fees.
Conclusion
In conclusion, please keep the following concepts in mind:
- Avoiding written contracts can be a costly mistake.
The cost involved in handling a verbal contract dispute through
the court system is several times more than having a knowledgeable
lawyer draft or review a contract.
- Sometimes the process of entering into a contract can
reveal the other party's sincerity. That is the buyer who promises
to make payments over time or the seller who insists that a
horse has never been sick or lame ought to put these promises
in a contract, if you so request.
- Details in a contract can make all the difference.
While in the process of developing a good contract, don't be
afraid to consider them.
This article does not constitute legal advice. Where questions
arise based on specific situations consult with a knowledgeable
attorney.
About the Author
Julie I. Fershtman, Esq.
Fink, Zausmer & Kaufman, P.C.
31700 Middlebelt, Suite 150
Farmington Hills, MI 48334-2374
(248) 851-4111
E-MAIL: Fershtman@aol.com
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