While a trial period can help close a horse's sale, it can also create problems. Our 10 trial tips can help negate possible legal issues before they arise.
By Rachel Kosmal McCart
In certain segments of the horse industry, it is fairly common for the buyer to take a horse home (or to a trainer’s) and try the horse out before making a final decision. Frequently, the buyer will also have a vet check performed during this trial period. Trial periods benefit the buyer by providing them with an opportunity to thoroughly evaluate a horse prior to purchase. Offering a trial period can often help the seller complete a sale.
However, trial periods can be fraught with problems. In a simple horse sale situation, the buyer pays the seller in cash at the same time the buyer takes possession of the horse. In contrast, during a trial period the seller still owns the horse, but the buyer has possession of and control over the horse. This dynamic blurs the lines of responsibility. For example, let’s suppose that during the trial period, the horse colics and dies. The seller stills owns the horse, but the buyer was taking care of the horse when it colicked. Does the buyer now have to pay the seller for the horse? How about the $500 emergency vet bill — who is responsible for that? Does the analysis change if the horse colicked because the buyer fed it moldy hay? What if no one can determine why the horse colicked?
As a seller, how can you offer a trial period to potential buyers without getting burned? Here are some tips to help minimize your risk.
1. Have a detailed written sale agreement that covers all the contingencies, and make sure the buyer signs it before taking possession of the horse.
2. Require the buyer to give you a significant cash deposit up front (e.g., 50%), and make sure your written agreement is very clear about when you can keep the deposit and when you must return it.
3. Limit the trial period to one week. If the buyer is motivated, it is certainly possible to fairly evaluate a horse and obtain a vet check within a week. The longer the horse is out of your control, the more likely it is something unfortunate will happen.
4. Insure the horse against mortality, theft and loss of use, and have the policy name you as the beneficiary. We recommend you arrange for the insurance yourself to make sure it gets done, and correctly — you have the most at stake. Often, a buyer will agree to pay the cost of the insurance or split the cost of the insurance with you.
5. Limit what the buyer can do with the horse during the trial period. Your written agreement should specify what type of equipment can and cannot be used on your horse, what types of activities are and are not permitted and who can ride the horse. For example, you might not want to have a bitting rig used on your horse, or you might not want your horse to be jumped over a certain height. Your written agreement should spell out these dos and don’ts in detail.
6. Check out the trial period environment before the horse leaves your possession. One easy way to do this is to deliver the horse personally and make sure you feel comfortable with the place where the horse will be staying. Talk to the buyer’s trainer (if applicable) and watch them work for a while. If you don’t like what you see, you can cancel the trial period, load up the horse and take it right back home with you.
7. Have the buyer sign a liability release. Your written agreement should provide that the buyer will hold you harmless if the horse injures or kills them during the trial period. Note that a liability release signed by the buyer will not protect you against claims made by third parties — for example, if your horse kicks a stall cleaner in the head. You might want to consider taking out a horse owner’s liability insurance policy to cover these contingencies.
8. Make sure your written agreement is very clear about who will be responsible if something happens to the horse during the trial period. Typically, the buyer agrees to bear the risk of loss or injury to the horse during the trial period (similar to “You broke it, you bought it”). The parties can also agree that the buyer will be responsible only if the injury or loss is the result of the buyer’s negligence.
9. Be very clear with the buyer about what will happen at the end of the trial period. For example, if the buyer declines to purchase the horse, will you have to go and pick it up? What happens if the trial period ends, and you can’t get reach the buyer to find out whether they want to buy the horse? Your written agreement should cover these circumstances.
10. Make sure you know where the horse will be at all times during the trial period. Your written agreement should specify the name, address and telephone number of the facility where the horse will be staying and should provide that the horse is not permitted to leave those premises without your prior written consent.
