EC September/October, 2003

Dear Ms. Fershtman:

My friend is selling a mare I really like, but the mare is due to deliver a foal next year.  I have no interest in owning the resulting foal, but my friend (the seller) wants the foal.  I suppose we could just hold off on the sale until after the foal is born and weaned, but I want to own the mare now.  I am willing to keep the mare and deliver the foal to the seller upon weaning.

Do we need a written contract if the seller agrees to this arrangement?  What do these kinds of contracts tend to include?

– K.G. (Texas)

I commend you for recognizing the importance of written contracts.  This article explains some of the complexities in mare sale/foal transfer arrangements, the different interests the parties have in these arrangements, and some elements to include in contracts.

Importance of Written Contracts

Written contracts, I believe, are important in these arrangements for two key reasons.

First, the parties in equine-related transactions always benefit when a written contract fairly, accurately, and thoroughly sets forth their arrangement.  Sales agreements are no exception.

Second, whether you know it or not, the applicable state law probably requires a written contract.  For example, most states have a “statute of frauds” on the books.  These laws generally require that certain types of contracts must be in writing before they can be enforced.  One type of contract governed by the statute of frauds is a contract that cannot, by its terms, be completed within one year from the date the contract is made.

A few years ago, the “statute of frauds” was at issue in a New York case, and the court invalidated a verbal agreement.  Citing this statute, the court found that an arrangement that governed the boarding, breeding and care of mares and resulting foals would take more than a year for the contract to be performed.

The arrangement that K.G proposes is at great risk of running afoul of the statute of frauds and being unenforceable, as well, unless it is properly and timely reduced to writing.  Before the transaction concludes, the buyer will own and keep possession of a pregnant mare (remember that there’s an 11-month gestation period), involve herself in the foaling out process, tend to the mare and foal, wean the foal, and later make the foal available to the seller.  More than a year could pass before the contract is performed.  This makes a written agreement more important than ever.

Opposing Interests in the Arrangement

The risks in the mare sale/foal transfer transaction, alone, give the parties an incentive to have a written contract that protects their interests.

• The seller wants the mare well-tended with reasonable and proper pre-natal care and veterinary attention.  The seller also wants the buyer to give the same high quality of care given to the foal and wants to prevent the possibility that the buyer will grow attached to the foal and refuse to deliver it.  Also, if the mare should become injured or die in the foaling process, the seller may want to be held free of blame and to give the buyer no refunds.

• The buyer may want the seller to pay for extra veterinary care and costs associated with the foal before and after it is born, such as special feed supplements and foaling-out costs.  Maybe the buyer, especially if she lacks experience in foal management, wants the seller to tend to the handling, creep feeding, halter breaking, and weaning of the foal.  Or maybe the buyer wants the seller to pay an equine professional to do this.

The mere process of entering into a written contract should force the parties to think about these risks and expenses and to address them in writing up front.

Basic Elements of Mare Purchase and Foal Transfer Agreements

Several elements can be included in a mare sale/foal transfer contract, such as at a minimum:

• acknowledgment of the mare’s sale and the price

• details regarding pre-natal care and who will pay for it

• board expenses, if any, of the foal and who will pay for them

• who will pay veterinary expenses related to gestation and foaling

• details of foal care and management, and who will pay for them

• whether the parties will allow re-breed rights, if no live foal results

• acknowledgment of ownership of the foal and when the seller takes possession

• registration of the foal and the buyer’s cooperation in the transfer of papers

• liability release (where allowed by law)

• who will bear the risk of loss and when

• what state’s law applies, where disputes will be handled, and arbitration or mediation (optional)

• if a dispute arises out of the arrangement, who pays attorney fees

Obviously, the buyer and seller in this arrangement will need to consider these and several other elements in their contract.  For best protection, legal counsel can be involved in the process.

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 with a law practice serving the horse industry.  In her 17 years of experience, she has achieved numerous courtroom victories and has drafted hundreds of contracts.  An independent lawyer rating service gives her its highest rating for abilities.  She can be reached at (248) 851-4111, ext. 160.

Join the thousands of people nationwide who are saving money and avoiding disputes by reading Ms. Fershtman’s two books on Equine Law.  MORE Equine Law & Horse Sense, the newest book, sells for $22.95 + $5 shipping and handling.  Equine Law & Horse Sense, the first book, sells for $17.95 + $5 shipping and handling.  Order both together and receive a discount.  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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