Boarding Contracts Part 2

Many attorneys recommend including in boarding contracts an exculpatory clause in which the boarder agrees to a waiver of the farm's liability for personal injuries or injuries to the horse. This is important due to the nature of a boarding transaction. When one party (in this case the horse owner, or bailor) delivers property to another (the farm owner, or bailee), a bailment is created. A bailment generally does not create a fiduciary relationship between the parties, such as that of a trustee or guardian, in which a duty to act for the benefit of the horse owner would be imposed by law on the owner of the farm. A bailment does impose upon the person accepting the property (the farm owner) the duty to exercise ordinary care.

The common law rule is that when a bailment is created, the farm owner into whose care the boarding horse is entrusted is presumed to be responsible for any harm suffered by the horse. If a lawsuit arises, the presumption that the farm was at fault can be overcome by evidence that, more likely than not, the farm exercised ordinary care. A few states have adopted statutes that shift the responsibility for loss to the owner of a boarded horse, and in recent years, many states have imposed limitations on liability (often for personal injury) for harm suffered while engaging in equine activities. An attorney familiar with the laws of your state can advise you whether such statutes should affect the decision to include an exculpatory clause in your boarding contract

There is no required wording for an exculpatory clause. The parties should agree that so long as the contract is in force, the owner of the horse assumes all risk of loss for the animal. The owner also should agree to hold the farm harmless for any and all injuries to the horse.

Depending on the state in which your farm is located, such exculpatory clauses might, or might not, be strictly enforceable. Exculpatory clauses can be valuable nevertheless. Your liability insurance carrier might require such a clause as a prerequisite for coverage, and the fact that a boarder has agreed to a waiver of liability might discourage a lawsuit. (For more comprehensive coverage of liability issues, see The Horse of August 1998.)

Call 911!

Horses have a peculiar affinity for getting sick or hurt, and, paradoxically, emergencies can become almost routine. One of the most important clauses in a boarding contract deals with authorization for emergency veterinary care. The farm owner should attempt to contact the horse's owner before authorizing major veterinary procedures, but if the owner is out of reach, the contract should give the farm authority both to contact a veterinarian on the owner's behalf and to authorize appropriate veterinary care. If the boarder wishes to use a veterinarian other than one routinely employed by the farm, that veterinarian should be identified in the contract, and contact numbers should be provided by the boarder.

The farm owner and boarder also should agree on how the bill for emergency care will be paid. Will the farm owner pay, then bill the boarder, for example, or should the bill go directly to the horse owner?

Are You Insured?

Most horses are not insured. If an animal is covered by mortality or loss of use insurance, that fact should be noted by the owner in the boarding contract. Most insurance carriers require that the company be notified when an insured animal is injured or dies, and the contract should state whether the farm has a responsibility to notify the insurance company.

Statements that the farm does not carry insurance covering boarding horses (as is usually the case), and that the owner of the horse understands and agrees to board the animal under those circumstances also should be included in the contract.

A Security Interest

Dealing with unpaid bills for board and out-of-pocket expenses is one of the most frustrating tasks for the owner of a boarding farm. The obvious remedy, selling the horse to recover the bill, can be made easier if the boarding contract includes a provision granting the farm a security interest in the horse. The contract should state that the farm has a lien on the horse to secure payment for services provided by the farm and for unpaid out-of-pocket expenses, and that the farm can sell the horse at public auction or privately to recover the unpaid balance. If the horse must be sold, and the price realized is greater than the amount owed, any excess must be returned to the horse's now former owner.

A number of states have statutes that give a farm owner a security interest in a boarded horse when bills are not paid, and many farm owners prefer to rely on these agister's liens rather than ask for a security interest in a boarding contract. While statutory liens can be helpful, the procedures that must be followed are complicated, and generally require the farm owner to file a lawsuit, win a judgment, then proceed against the owner of the horse as a judgment creditor. The contract also should include a provision allowing the farm to recover attorney fees in the event legal assistance is required to recover a delinquent bill.

Obtaining a security interest through the boarding contract simplifies matters for the farm owner should a board bill go unpaid. If you choose to include a security interest provision in your boarding contract, you also should require the horse owner to identify any outstanding liens against the horse. (For a more complete discussion of liens, see The Horse of March 1997.)

Holding The Farm Harmless

A boarding contract should include a "hold harmless" clause for the farm's protection. When executing a hold harmless clause, the owner of the horse agrees to hold the farm owner without responsibility for damage or injury caused by the horse while it is being boarded. Hold harmless provisions typically also require the owner of the horse to pay any legal fees or other expenses incurred by the farm owner in defending a lawsuit based on harm caused by the boarding horse. A typical example would be a situation in which a visitor to the farm is kicked or bitten by the horse being boarded. If the injured party decides to sue the farm owner, the horse owner has agreed to be responsible for the injury, and for any legal fees that arise as a result of the litigation.

A hold harmless clause is not all-encompassing, however. Public policy concerns generally prevent a farm owner from contracting away liability for his or her own negligence. A hold harmless clause probably would not eliminate liability for a farm owner who negligently leaves a gate open, allowing a boarder's horse to escape to the highway and cause an accident.

In Sickness And In Health

A well-run farm should have in place policies regarding vaccinations, deworming, and tests for equine infectious anemia for boarders. These policies should be stated in detail in the boarding contract, and proof of required vaccinations and tests should be required before a horse is accepted for boarding.

All Good Things Must Come To An End

Finally, a boarding contract should anticipate a time when the parties no longer wish to be bound by its terms. The contract should require written notice at least 30 days in advance if either party intends to terminate the contract. The contract also should provide for termination if either party violates the terms of the agreement, and the party terminating the agreement should be allowed to recover attorney fees and court costs, if any, resulting from the default.

Objections to utilizing written boarding contracts range from "we've never done it that way before," to "the paperwork is too much trouble," to "my customers will think I don't trust them if I make them sign a contract before accepting their horses," to "attorneys are too expensive," to "my boarders will go to a farm where they don't have to sign a contract."

These all are legitimate concerns, but they are overshadowed by the protection a well-drafted contract provides to everyone involved. If you are a farm owner in the business of boarding horses, you should provide a written contract for your customers. If you are the owner of a horse which will be boarded, you should insist on a written contract, and be prepared to provide one if the owner generally does not require agreements in writing.

About the Author

Milt Toby, JD

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.

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