ARE YOUR CONTRACTS FINE-TUNED?

Part Two of a Two Part Series

Do you really believe that you have the "perfect" contracts for your equine activities? Do you believe that your contracts adequately account for the unique requirements of your state's law? This conclusion of the two-part series covers more details to consider for "fine-tuning" contracts used in equine-related activities and transactions.

Detail #6 - Recognizing that "Form" Contracts found in Books and in Stores are, at Best, a Starting Point
Form contracts found in books and sold in stores are cheap and quick. At best, these contracts provide a good starting point for the development of a personalized contract. At worst, they run the risk of containing illegal or unenforceable provisions or failing to include language required by the applicable state's law.

Another problem common to form contracts, especially when a form is used with common transactions such as sales, leases, or horse training arrangements, it that they are designed to favor a middle ground. Consequently, they sometimes fail to take into account the special interests of the parties. Looking only at an installment sale contract, for example, it is clear that the parties have drastically different interests:

• Buyers in an installment sale often want lengthy grace periods for payments, the right to return the horse and receive a refund if the horse becomes unsuitable or unsound, and the potential for legal recourse against the seller if the horse should injure someone before the final payment has been made.
• Sellers often want very short grace periods, the right to immediately re-possess the horse without resorting to the court system when payments are not made, releases of liability, and indemnification provisions from the buyer.

Form contracts, rather than account for these interests, tend to avoid them altogether.

Detail #7 - Considering Fine Points for Releases of Liability
As noted in this author's book, Equine Law & Horse Sense, there is never an absolute guarantee that all courts will enforce your release of liability, but several points might help improve the chances that a release will be enforced. Here are some:

• Title. Entitling a document as a "waiver" or "release of liability" can reaffirm what the document really is and avoid claims by the signer that he or she did not understand that a release was signed.
• The Persons Released from Liability. In some form releases, for example, an equine professional must write in his or her name as the one being released from liability. However, if you are the party seeking to benefit from a release, you will likely want many people released from liability, as well. For this reason, where allowed by law, consider naming or describing others who are also being released from liability.
• Equine Liability Act Language. Equine liability laws now found in many states require that a special "WARNING" notice must be posted on signs and repeated in contracts and releases used with equine activities. Massachusetts' law, for example, requires written contracts for professional services or for the rental of an equine or equipment to include in clearly-readable print:

WARNING

Under Massachusetts law, an equine professional is not liable for an injury to, or the death of, a participant in equine activities resulting from the inherent risks of equine activities, pursuant to Section 2D of chapter 128 of the General Laws.

Detail #8 - Attention to Fine Points that May Be Dictated by State Law
Legal advice does make a difference when it comes to drafting equine-related contracts. Why? A knowledgeable lawyer can spot the need for language that may be dictated by the law in your state. For example, some contract provisions that may differ under each state's law are:

• The seller's repossession rights, after a buyer has failed to pay one or more installments. State law may determine whether a contract can allow the seller to re-possess the horse without first obtaining an order of the court.
• Interest. State law will determine the highest allowable interest rate.
• Stablemen's lien/Agister's lien laws. These laws, which vary in each state, govern when a facility can sell off a horse in order to recoup unpaid boarding fees.
• Sales or use tax. State laws may dictate whether a party to a contract, such as a sales contract or lease, must pay sales or use tax.
• Liability releases. States often vary in the language that they will enforce in liability releases (also called "waivers"). A very small number of states have statutes that make releases unenforceable. Court decisions found in the majority of states have issued rulings that, in many instances, can be useful in determining what language can and cannot be included in releases.
• Disclaimers of warranties in sales contracts. State statutes, usually commercial codes, usually specify whether and how sellers can disclaim warranties in sales transactions. For example, if the seller wants to disclaim away certain warranties, such as a warranty of the horse's fitness for a particular purpose, the laws usually require conspicuous language and sometimes provide how the language must be written in contracts.

Detail #9 - Addressing, Where Appropriate, Attorney Fees
With very few exceptions, the United States does not have a "loser pay" legal system. However, contracts can address who will pay legal fees and court costs if a dispute arises.

Detail #10 - Integrating the Elements of Insurance Into the Contract
Insurance is now available for several different types of horse activities. Contracts may contemplate insurance, too. Here are a few examples:

• Leases. A lease can specify, for example, who will maintain liability, mortality, and major medical and surgical insurance on the leased horse while the lease is in effect.
• Boarding Contracts. Stables can require customers to provide the name of their horses' mortality insurance carriers and emergency phone numbers. This might become important if the stable needs to notify the company (in the owner's absence or on the owner's behalf) that an insured horse has become injured or ill.
• Waivers/Releases of Liability. Some riding stables -- acting on the assumption (right or wrong) that uninsured people could be more likely to sue the stable -- require guests or customers to disclose that they have medical insurance.

This article does not constitute legal advice. When questions arise based on specific situations, contact a knowledgeable attorney.

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