No one wants to add complication and aggravation to a business or pleasure activity, and for many horse enthusiasts, the use of written boarding contracts is viewed as providing more hassle than benefit. After all, you might think, what is the worst thing that can happen to me if I continue to do business as usual, without written agreements with my boarders? For starters, you might be responsible for a hefty veterinary bill that a reluctant client refuses to pay, you might have to absorb unpaid board bills with no legal recourse, or you might face lawsuits arising from a variety of situations.
Utilizing written boarding contracts will not protect you from everything that might go wrong; nothing can do that. Proper use of well-drafted written contracts can allow you to predict the outcome when something unexpected happens. Being surprised might be a treat on your birthday, but the fewer surprises you have to face where your farm and horses are concerned, the better off you are.
A contract is nothing more than a set of promises between the parties, a promise by one person to do something in return for a second person's promise to do something else. A valid contract either can be written or oral. It can be as simple as an agreement between two people outlined on a cocktail napkin, or as complicated as a multi-page, multi-party document crammed to the four corners with incomprehensible fine-print legalese. A valid contract creates legal obligations between the parties, and allows for enforcement in court if the contract is broken.
The value of a valid, enforceable contract is that it allows the parties to avoid surprise in the event a business transaction does not proceed as planned. While even a professionally drafted contract cannot anticipate every potential problem, a well-drafted contract should cover the problems most likely to occur. Consider the following scenario:
You have been involved in the horse business for several years, as a competitor, owner, and small-scale breeder. You presently own three horses, which you keep on your small farm a few miles from town. One of your spouse's co-workers, a secretary, has just bought her first horse, a gelding intended for trail riding, and she wants to board the animal on your farm. Although you are not in the business of boarding horses, you agree, because the extra money will come in handy. You and the owner come to a mutual understanding, and she agrees that while the horse is at your farm, she will be responsible for several expenses--board, including feed and a safe stall; veterinary care; and blacksmith services. You agree to notify the horse's owner before incurring any non-emergency expenses.
You and the boarder have entered into a contract. You have promised to provide boarding services, for which the owner has promised to pay. The owner also has agreed to pay for certain out-of-pocket expenses. As we will see later, there are several other important terms that you and the boarder have not covered.
A few months later, when you are making a final check of the barn before turning in for the evening, you notice that the new horse is showing some signs of colic. He appears nervous, he is sweating, and he is nipping at his flank. The situation does not appear critical, though, and you attempt to contact the horse's owner before calling the veterinarian.
The owner is not available, and the horse's condition appears to be getting worse. You call your regular veterinarian, who diagnoses the condition as a potentially serious colic and recommends immediate surgery. Still unable to contact the horse's owner, you authorize the surgery, which saves the animal's life. The bill for the surgery and post-operative care amounts to several thousand dollars, which the veterinarian bills directly to the owner at your instruction.
At this point, one of two things will happen. Either the owner pays the veterinarian's bill (with or without attendant grumbling), or she refuses, and the veterinarian looks to you for payment.
This relatively common situation illustrates two important points about contracts. First, if everything proceeds as expected--you incur expenses on behalf of the owner in an emergency, and the owner pays the bill when it arrives--the contract will have no practical impact. Because the expectations of both parties were satisfied, neither party should have any complaints. In other words, no one is surprised by the outcome.
If, on the other hand, one of the parties fails to perform as promised, the value of a contract becomes obvious. Say, for example, that the owner balks at paying what she calls a "ridiculous" veterinary bill for unnecessary and unauthorized surgery, a not unlikely reaction from a first-time horse owner with limited disposable income. The veterinarian, naturally, looks to you for payment. You pay the bill to preserve a good relationship with the veterinarian, who happens to be the only veterinarian with equine expertise within 50 miles, then seek reimbursement from the owner.
The boarding contract between you and the owner sets out the responsibilities and obligations of both parties. In this example, your responsibility to attempt to notify the owner in an emergency situation and the owner's obligation to pay the veterinarian's bill. If you must go to court in an attempt to force the owner to reimburse you for the bill, the judge or jury will have a basis for allocating the cost of the surgery. In this case, the terms of the contract indicate that the owner of the horse is responsible for the veterinarian's bill. Without an agreement of some kind, however, your chances of forcing the reluctant owner to pay are small.
Put It In Writing
This leads to the second important principle regarding contracts. While any contract is better than no contract, a written contract is best. In the example above, the boarding contract should be valid and enforceable whether it was an oral agreement between you and the owner, or whether the agreement was memorialized in writing and signed by the parties.
The advantage of a written contract is that neither the existence of the contract nor its terms are in doubt. In the case of an oral contract, however, the first step to enforcing the agreement in court often involves simply proving that the contract actually existed, and if it did exist, that the terms of the agreement are as you claim. This can be a difficult task months, or years, after the fact, when memories have faded and interests have changed. No matter how reasonable your actions in the above example, you might find yourself on the paying end of a large veterinary bill for someone else's horse if you must rely on an oral agreement to prove that the owner really is responsible for the care you authorized on her behalf.
Horse business traditionally has been conducted with nothing more than a handshake binding the parties. That probably never was sound practice, and the following rule of thumb should be followed--if a particular outcome of a business transaction is important to you, or if the effect of an unexpected problem would be unacceptable, you should have a written contract with the other party.
There is no such thing as a "one size fits all" contract. Each contract represents a particular business transaction, and the terms of the contract should be tailored to the transaction's individual circumstances. A properly drafted boarding contract should address different concerns than a contract for leasing a competition horse, for example, and the respective contracts should be drafted with the particular transaction in mind. Even a comprehensive contract might have to be modified, based on the requirements of a particular boarding transaction.
There are a number of elements that should be included in all boarding contracts, and you should be familiar with them whether you are working with your attorney in drafting a contract, attempting to customize a generic fill-in-the-blanks contract from a book, or simply considering whether to sign a contract prepared by someone else.
Boarding contracts generally are prepared by, and for the benefit of, farm owners, but this is not always the case. Many boarding farms do not use written contracts, and in those situations it is the responsibility of the horse owner to insist on a written contract. You, as a boarder, have a right to be protected by a written agreement, and you can, and should, insist on one.
Identify The Parties
Every contract should identify by name, address, and contact number the persons or businesses that are parties to the agreement. If one, or both, of the parties is a business, the contract should also include a statement that the person executing the contract actually has authority to act on behalf of the business he or she represents.
Identify The Horse
Any time a horse is the subject of a contract, whether for boarding, leasing, sale or purchase, or breeding, the animal should be clearly identified in the written agreement. The reasons for this requirement should be obvious, because misidentifications can, and do, happen. The description should be sufficient to easily identify the horse in question, and should include color, markings, breed, sex, age, any registration number tattoos or freeze brands, and scars or other distinctive points. A photograph can be attached to the contract to make it easier to separate one "bay, no white" from another.
It also is important to record in detail the physical condition of the animal, as well as indications of previous injury. This should be done before you assume responsibility for the animal, for the same reason that prudent customers carefully examine a rental car for dents and scratches and report them to the rental agent before driving the car away from the rental lot.
Any tack or other equipment accompanying the horse also should be listed and identified to avoid later disputes about ownership of those items.
Who Pays What, When, And How Much?
Board charges can be calculated on a per day or per month basis. The latter is more common, because the monthly bill is not dependent on the number of days in the month and less bookkeeping is required. Per day charges, on the other hand, make it easier to pro rate a bill for a boarder who arrives at the farm or leaves in the middle of a month.
The contract should indicate when the farm will provide a bill to the boarder (every month is standard), and when the bill must be paid. A board bill usually becomes due on the first of every month, with a grace period of a few days before the bill becomes overdue. For the farm's protection, the contract should include a provision allowing the farm to charge interest on overdue bills. The rate, such as 1.5% per month, also should be stated.
The contract should specify which out-of-pocket expenses are the responsibility of the owner. In the example above, the owner assumed responsibility for farrier and veterinary services. For show horses, out-of-pocket expenses might include transportation to shows, instruction at the show grounds, and grooming and braiding charges. Whether out-of-pocket expenses will be paid by the farm and billed to the owner, or billed directly to the owner by the person providing the service, also should be stated in the contract.
Finally, the contract should explain the nature of each bill. For example, the bill due on May 1 could include the board charges for the coming month (requiring a boarder to pay in advance protects the farm), plus any out-of-pocket expenses that were incurred during the preceding month.
Many boarding contracts include the phrase "In consideration of $_____ ..." or something similar. In this context, "consideration" is a legal concept that refers to the money paid by the boarder to the farm owner. It represents the inducement for the farm owner to provide the promised boarding services. Consideration of some kind is necessary for a valid contract.
What Do I Get For My Money?
The contract should state that the farm will provide normal and reasonable care, and spell out in detail the services and facilities that the farm is agreeing to provide as part of the board. These can include stall or pasture board, turnout service, exercise, grooming, training, and anything else about which the parties can agree. Whether you are the farm owner or the boarder, it is important to understand what will be provided. Any special instructions relating to the horse's care also should be listed in detail.
Next month, part 2 of Boarding Contracts.
Sources of Information
An attorney with expertise in equine law is the best source of information and guidance when you need to draft a contract, whether horses are your business or your avocation. Finding such an attorney is relatively easy in certain parts of the country, but nearly impossible in other areas. Word-of-mouth recommendations--or warnings--are your best guide to locating a competent attorney. Cost also might be a factor in your decision to seek professional assistance.
If you intend to press into service an attorney with no knowledge of horses, or if you want to put together a contract yourself, you should arm yourself with as much information as possible. One of the best sources of information is Legal Aspects of Horse Farm Operations, writen by prominent Lexington, Ky., attorney James H. Newberry Jr. Available from the University of Kentucky College of Law (Office of Continuing Legal Education, Suite 260, Law Building, Lexington, Kentucky 40506-0048), the book addresses contract issues relating to boarding, standing stallions, foal sharing, and purchase and sale of horses, as well as other aspects of running a horse business. Aimed at attorneys, the book's coverage is fairly technical.
More accessible to the average horse enthusiast is The Equine Legal Handbook, written by attorney Gary Katz. Published by Half Halt Press, Inc. (6416 Burkittsville Road, Middletown, Md. 21769), the book contains numerous sample contracts, which can be adapted to your individual needs. Katz cautions readers that the form contracts in his book are generic and might not cover the circumstances of a particular situation, and he recommends that competent legal counsel review any contract before its execution. This is more than self-serving advice from an attorney seeking another fee; for the same reasons you trust your horse's health to a veterinarian, you should seek professional legal advice before signing a contract that might have far-reaching adverse effects on your business.
Finally, for general information on a variety of legal issues affecting the horse industry, the University of Kentucky College of Law conducts a two-day seminar every spring on equine law in Lexington, Ky. Registration information and proceedings books can be obtained by contacting the University of Kentucky at the above address.
Get It In Writing!
While a valid, enforceable boarding contract can be either oral or written, some kinds of business transactions require a contract in writing before a court will enforce the agreement. An agreement for the purchase of a tract of land, for example, cannot be enforced without a written contract, nor can an oral agreement for the sale of goods for the price of $600 or more be enforced. Transactions that require a written contract for enforcement are defined by the Statute of Frauds, a centuries-old doctrine of English law that has been adopted in most states and incorporated in the Uniform Commercial Code.
Sale and purchase of land and "goods" arise frequently in the horse business. If your neighbor agrees orally to sell his farm to you for a certain price, then has a change of heart and backs out of the deal, a court probably will not force him to complete the sale because there is no contract in writing. By the same token, you have no recourse if a local tack dealer agrees orally to sell you a $1,200 saddle, then balks when another buyer offers him $1,300. The Statute of Frauds also covers some "mixed" contracts, which are for a combination of goods and services. Examples would be contracts for the sale and installation of fencing or automatic watering equipment.
The Statute of Frauds is a complicated, never-ending source of litigation, far beyond the scope of this article. The bottom line is that although you should have a written contract for every transaction, you must have a contract in writing for some kinds of business deals if you hope to have the agreements enforced in court. Once again, if the outcome of a business transaction is important to you, get a contract in writing!
About the Author
Milt Toby is an author and attorney who has been writing about horses and legal issues affecting the equine industry for more than 40 years. Former Chair of the Kentucky Bar Association's Equine Law Section, Milt has written eight nonfiction books, including national award winners Dancer’s Image and Noor. He teaches Equine Commercial Law in the University of Louisville's Equine Industry Program.
POLL: Colic Surgery