EC May/June, 2004

Dear Readers:

Five years ago I wrote an article discussing some of the most frequent disputes people in the horse industry encounter, based on the calls my office receives.  This article shares a few of the most common disputes since then as well as ways to avoid them.

Homeowner’s Insurance Policies Typically Do Not Protect Your Business Activities.

Over the years, some small business operators in the horse industry, such as boarding stables with a small number of boarders or riding instructors with a few clients, have experienced painful and expensive surprises involving their insurance.  Just like big businesses, these equine professionals can be the target of lawsuits from injured customers.  But businesses prepare themselves for this possibility by purchasing policies of commercial liability insurance.  Some equine industry professionals, on the other hand,  assume that the small size of their operations makes business liability insurance unnecessary.  This is a serious mistake.  Equine professionals often discover the mistake when their insurer declines to handle a claim based on the “business pursuits” exclusion within the standard homeowner’s insurance policy.

Careful advance planning can prevent this problem.  Equine business operators who want to insure themselves against liabilities in their business should ask their insurance agents about:

• Commercial general liability insurance

• Equine professional liability insurance

• Incidental business pursuits endorsements

Make sure your insurance agent knows about the nature of your business activities and where they take place.

An Incomplete Contract is Sometimes as Good as No Contract at All.

Another troublesome assumption equine business operators make is that they have effective contracts, when they really do not.  They sometimes learn of their contracts’ shortcomings after a dispute arises.  Examples I often see are:

• Attorney fees.  Stables often assume that when they bring suit to collect unpaid board they will win back their legal fees.  Yet, the contracts they use are often silent as to attorney fees.  Unless there is a written contract that addresses the recovery of legal fees, or unless a statute exists to this effect, people in the United States pay their own legal fees in a dispute.  If you want to preserve the chance of winning back your legal fees, make sure the contract says so.

• Interest on Unpaid Balances.  Credit cards charge interest on unpaid balances.  Stables can charge interest, too, but within limits set by the law of the state.  That is, state laws typically limit the allowable rate of interest, and the laws often obligate businesses to include the interest rate in the contract.

Unless your written contract covers the areas you believe are important, you are not as protected as you think.  Careful advance planning in an equine-related transaction, such as a boarding arrangement or a sale arrangement, can give powerful protection down the line or it can prevent the dispute altogether.

Understand Your State Stablemen’s Lien Laws

It is an unfortunate, yet frequent, occurrence in the horse industry that boarders sometimes fail to pay their boarding fees on time.

Just about every state has a law on the books that regulates what stables can do with a horse when a boarder has failed to pay the board fees on time.  These are known as “stablemen’s lien laws” or “agister’s lien laws.”  These laws can differ in many ways.  For example, these laws specify what procedures the stable must undertake before it can sell off the boarded horse, how much time has passed without payment, and what notices must be sent to the non-paying boarder.  Many of these laws address whether the horse’s owner can remove a horse from the stable when a balance is owed.

Yet, stables continue to violate these laws by selling off horses without following the procedures in the law.  This puts the stables at great risk of being sued and possibly even of committing the crime of conversion.  All of this could be prevented by learning the law of your state and following it to the letter.

Repossession Can Be More Complicated Than You Think

Installment sale arrangements often bring disputes my way.  Over the years, horse sellers have called to complain about non-payment from buyers, and the sellers want to repossess a horse and haul it back home. The problem was, people wrongly assume the process of repossession is as easy as putting a horse in a trailer.

Unfortunately, the process of repossession does not work that way.  Under the law of many states, repossession requires a carefully-written contract, court proceedings and a court order before anyone can enter private property to remove a horse.  In those states, those who try to pursue  repossession without the non-paying buyer’s permission, without paperwork, without court appearances, and without a court order could be asking for trouble.  I explain this to many well-intentioned people, who had no idea the process was so complex.

The lesson learned from this is that repossession is not as easy as you think.  The best protection is to understand how the law treats repossession rights before the transaction ever begins, and make sure the written contract adequately protects your interests.

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

About the Author

Julie I. Fershtman is an attorney and legal consultant with over 17 years of experience and an active law practice involving equine, business, and insurance law matters.  She has achieved numerous courtroom victories and has drafted hundreds of contracts.  An independent lawyer rating service gives her its highest rating.  She can be reached at (248) 851-4111, ext. 160.

Protect Your Legal Rights!

Ms. Fershtman’s articles and books educate people about the law and how to avoid legal disputes.  The book MORE Equine Law & Horse Sense, sells for $22.95 + $5 shipping and handling, and Equine Law & Horse Sense sells for $17.95 + $5 shipping and handling.  Order both books together for $42.90, shipping included.  Michigan residents add 6% sales tax.  To order, call Horses & The Law Publishing at (866) 5-EQUINE, a toll-free number.  Or, send check or money order to Horses & The Law Publishing, P.O. Box 250696 Franklin, MI 48025-0696.

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