How do contracts play a role in my equine business? Contracts are written agreements between two or more parties that are enforceable by law. Whether you are boarding a horse for a friend, standing your stallion for breeding, or sending your horse to a trainer, contracts can be instrumental in any equine business agreement.
What Is a Contract?
A contract is:
- An agreement between two or more parties for the doing or not doing of something specified
- An agreement enforceable by law
- The written form of such an agreement
- Can involve a monetary payment or an exchange of services from both parties
What Services Should Be Contracted?
- Anything you can’t do yourself
- Anything that costs you more to do yourself than to contract
- The “headache factor” where it is more trouble for you to do something yourself than for you to hire/contract it through someone else
- When the time invested costs more than hiring someone else
- Examples: custom work, hay baling, stall cleaning, manure removal, nutrient management plan, pasture renovation, fencing, etc.
Hiring vs. Contracting:
- May terminate work relationship at any time
- You are the boss; those hired are your employees
- You may have different expectations for deadlines than the person you hire
- Can specify how the business relationship can be terminated
- You are the consumer; those contracted are not your employees
- Deadlines are specified
- Language of a contract should be reviewed by a knowledgeable attorney
- Indemnification: reimbursement for loss or damage
- Dispute resolution should be determined and agreed on by both parties
- There should be no oral agreements; everything must be in writing and signed by both parties
- Confirm authority (corporate representative): make sure the person assigned can execute the contract on the corporation’s behalf
- Releases: are waivers of liability
- Attorney’s fees/court costs can add up. Remember that it is more costly to go to court than it is to obtain an attorney to review the contracts
- Leases must discuss who maintains liability, mortality, major medical, and surgical insurance
- Boarding contracts must include the name of the horse’s insurance carrier and emergency phone numbers for the farm owner to contact in case the owner is absent
Use of Contracts in the Business:
Boarding contracts should include:
- Waiver of Liability
- This should always be item number one on the contract
- Services offered and facilities provided
- Define what is available: full board, stall board, pasture board, self care, etc.
- When payment is due
- Safety and barn rules
- Example: All mounted persons must wear helmets
- Horse trailer parking, restrooms, telephone, refrigerator, etc.
- Optional services
- Blanketing, grooming, fly spraying, booting, clipping, hold horses for farrier/vet, etc.
- Right of lien
- The farm owner’s right to retain the horse if fees are not paid
- Horse description
- Emergency care instructions
- Risk of loss
- Due to injury, sickness, death, theft of horse, etc.
- Hold harmless
- Horse owner agrees to hold the stable harmless in case the horse causes damage/injury to itself
- How the agreement can be terminated, and what happens in case of default
Leases: A contract where one person will pay for the use of the property of another. They should include:
- Beginning and ending dates
- Description of horse
- Entry fees, lease payments; should spell out how much and when payment is due for lease
- Expenses should include farrier, vet, board, training, etc.
- Horse earnings
- Insurance requirements, responsibilities, rights
- State who will pay the premiums, transportation costs, etc.
- Option to buy
- Leaser’s right to examine horse
- Return of horse
- Renewal of lease
- Care of the horse
- Special care requirements for the horse
- Purpose/use of the horse
- Risk of loss
- Hold harmless
- The lease is assuming the risk and can’t blame the leaser if injury were to happen
- Recording of lease
- Copy of original/official lease must be attached to the registration certificate with the state racing commission
Training Agreements: Very similar to a boarding contract plus the extra services. It should also include:
- Description of the horse
- Delivery date
- Trainer responsibilities, expenses
- Authority for vet care
- Horse out of training
- Name raced or shown under
- Insurance and indemnification
Other uses of contracts: All the following should include fees, payments, care of mare, and live foal guarantee
- Stud services
- Booking a breeding
- Broodmare lease
- Stallion lease
- Foal sharing (mare owner and stallion owner)
- Breeding certificate (breed registry)
- Signed by stallion owner and given to mare owner at time of breeding
Advantage of contracts:
- Minimize the unknowns
- Expectations of each party involved
- Defines expenses and who is responsible
- Protection against injury, death, etc.
- Decreases disagreements
The more money involved, the more important is it to have an attorney. People who have little experience with legal matters or contracts often forget guidelines for dealing with specific situations or problems they may encounter.
- University of Minnesota Extension- Equine Law
- Equine Legal Solutions
- How Good Is Your Purchase Contract?
Funded in part by the North Central Regional Center for Rural Development (NCRCRD)