[dropcap]I[/dropcap]’m all-too-often asked how important it is to conclude a written agreement when buying a new horse or pony, and the answer is simple. It’s not important at all … until something goes wrong. From a potential buyer’s perspective, buying a new horse involves a big commitment, not only in terms of the money paid out to buy the horse, but also in terms of the commitment of time and energy which that horse will require in the future. From a potential seller’s perspective, selling your horse can fall anywhere on the spectrum from a business decision to a downright traumatic experience. For these reasons, it’s best to ensure that you protect yourself as much as possible when you finally make the decision to buy or sell, and a properly drafted agreement aims to do exactly that.
Anthony Ekerold holds a Bachelor of Commerce degree (BCom), a Bachelor of Laws degree (LLB) and a Masters’ degree in Commercial Law (LLM). He is also a director of his own law firm, BDE Attorneys, and has been practicing as a specialist commercial attorney for the last 10 years.
Do I need a lawyer to draft the agreement?
While it is always preferable to have an expert prepare your agreement, it is not vital, and by following the easy steps set out in this article and by applying a certain degree of common (horse) sense, you should be well on your way to preparing a simple, legally enforceable agreement that can protect you, and more importantly your horse or pony, in the event of certain unfortunate events. It is, however, advisable to have an expert prepare your agreement if the transaction involves any unusual terms or complexities.
What should a basic written agreement include?
A fundamental requirement of a written agreement of sale is that the document reflects the fact that there is 1) a willing seller, wanting to sell 2) an identifiable horse, to 3) a willing buyer, for 4) an agreed purchase price.
While this may seem obvious, it is critical that the agreement shows that both the buyer and the seller fully understand the nature of the transaction and are in mutual agreement around the specifics of the sale. This mutual agreement around all aspects of the sale is often referred to as ‘a meeting of the minds’ and simply refers to the fact that the buyer and the seller must be in total agreement, without which a valid agreement of sale may not exist.
What are the steps I need to follow to prepare a basic written agreement?
There are certain details that must be included in your written agreement in order for it to be considered legally binding.
The ‘parties’, being the ‘buyer’ of the horse and the ‘seller’ of the horse, must be clearly and accurately described in the agreement. The description of the parties should include their full names, identity numbers and residential addresses.
The horse needs to be clearly and accurately described in the agreement. It’s important to describe the horse as fully as possible. This means using his registered name, and not the stable name that has adoringly been bestowed upon him. For example, my mare is officially called Pohlands What about Me, but everyone only ever refers to her as Wambles. It wasn’t until I bought her and concluded a written agreement that I first realised her name wasn’t actually Wambles.
In addition to using the full or registered name of the horse, a description containing the following details is also advisable:
- Passport number
- Any distinguishing marks such as socks, blazes and scars, for example, may also be included in the description.
- Purchase price
The full purchase price that you are paying, or obtaining, for your horse needs to be included in the agreement. It is also important that the agreement states that the purchase price is payable in South African rands (ZAR), and provides details of whether it is VAT exclusive or inclusive. In most simple sales, VAT won’t be applicable, however, it is recommended that you ask your accountant or attorney if you’re in doubt.
It is also important to set out the payment terms in the agreement. In most cases, the purchase price will simply be payable upon taking delivery (delivery refers to the taking of possession of the horse and not necessarily to physical delivery itself) of the horse, however, in some circumstances the seller may offer a payment plan, or a trial period before payment becomes due.
It is advisable to consult an expert in circumstances where the payment terms are not ‘cash on delivery’, as the parties may unwittingly find themselves constrained by laws they were otherwise unaware of.
An inclusion of any warranties that the seller may have given the buyer (and in limited cases where the buyer may have provided warranties to the seller) during the pre-sale negotiations, and at the conclusion of the agreement, is always a good idea. A warranty is essentially an undertaking or promise by one party (usually the seller) that something is true.
For example, the seller may warrant that the horse has never suffered from any previous persistent lameness. If it subsequently transpires that the horse has a documented history of lameness, the buyer would in all likelihood be entitled to cancel the agreement, return the horse to the seller and get a refund of the purchase price. In some circumstances, the buyer may even be entitled to claim damages based on, among other things, the seller’s breach of warranty.
Another example of a possible warranty would be a warranty given by the seller to the buyer that the horse has competed up to a certain level. If it subsequently transpires to be untrue, the buyer may be entitled to cancel the agreement of sale.
Pick up this month’s issue to find the link to a FREE downloadable properly drafted purchase agreement.
The full article appears in the November issue (116) of HQ > Shop now
Text: Anthony Ekerold