16 POLO PLAYERS EDIT ION

To avoid misunderstandings, put horse deals in writing

WRITTEN CONTRACTS

There is a strong preference forinformality in the horse business. Many

deals are conducted on the basis of ahandshake or a phone call. That is not allbad because it fosters a degree of reciprocaltrust not many communities have. But, andthere is always a “but,” making a horse dealwithout a written contract, agreement ordocument of some sort does open up aPandora’s Box of issues and leaves the buyerand the seller both exposed and powerless tofix problems with the deal, should theycome up later.

I do not intend or expect to stop thehandshake deal here. Rather, this articlewill give you a few thoughts to ponderbefore you do your next deal. If theconcerns you read about are that importantto you, or the money or horses at stake aregreat, then perhaps you should err on theside of documenting the deal. You mayrecall my last article on pro-patroncontracts, which noted that “good contractsmake for good friends.” The same is truehere. If you write down the specifics of thedeal, then later there is going to be muchless confusion and much less animosity ifsomeone suffers a memory lapse as to thespecifics of that deal.

I. Put the deal in some sort of writing.You may be surprised to learn that all

states, Florida included, require writtenagreements for most sales transactions of$500 or more. Such a law is called a“statute of fraud” and its purpose is todefine a specific type of transaction thatrequires a writing for the agreement in thetransaction to be enforceable. The idea issimple—avoid fraud by requiring writtenevidence of the deal. Using Florida as anexample, Florida’s Uniform CommercialCode, F.S. § 672.201

2, provides several

statute of frauds, each dealing with adifferent type of commercial transaction.Any agreement for the sale of goods formore than $500, for the sale of personalproperty other than goods for a price ofmore than $5,000, or for the lease ofgoods for lease payments in excess of$1,000, must be in writing to beenforceable. By the way, a horse isconsidered goods.

Why the amount limits? The commonsense answer is that our lawmakers havedecided that a transaction above a certainamount is important enough to require awritten agreement. Below that, well, not toomuch is at stake, and it would be impossibleto enforce written agreements to sell a $2chicken. You get the point. Under our laws,then, once you have a horse deal worth morethan $500, you should have a writtenagreement, signed by both parties. Noticethat I do not say “formal contract” becausealmost any writing that has the following: 1)price; 2) identification of animal; 3) time toinspect; 4) warranties and guarantees(whether you make them or expresslydisclaim them); and 5) purchaser and selleridentification should be sufficient. Thatdoes not mean that a more formal contract,with choice of venue provisions, insuranceand risk of loss issues is not sometimesnecessary, but probably not in most horsetransactions. In any event, given that strongpreference for informality I mentionedearlier, these items listed at least get the“bones” of the deal down on paper andlikely would satisfy the statute.

That does not mean to say that if you donot have a written contract, there is noenforceable contract. In fact, the exceptionto the statute of frauds provides that incases where “goods for which payment has

been made and accepted or which havebeen received and accepted,” the veryactions of the buyer and seller can proveout the existence of a contract concerningthose goods.

However, the problem lies in the details.A court will not add additional terms—guarantees, warranties, return or refundclauses or the like—withoutdocumentation. All the actions of the buyerand seller prove was that there was acontract for the purchase and sale ofsomething. This is not much to go on if youare seeking to return a horse.

II. Can you return the horse anddemand your money back?

The answer is “maybe,” and only ifyou do it in a timely manner and thecontract does not say that the sale isfinal. For example, if the writtencontract says that the horse is“guaranteed” or that your “satisfactionis guaranteed,” then you have the rightto return the horse and get your moneyback. But not forever. (I told you therewas always a “but.”) So what does“timely” mean? If you return the horse30 days or fewer, most courts willpresume the return to be timely.However, the matter of timeliness isoften a matter of measuring thecircumstances. Even if the contract issilent on whether there was a guaranteeor that the sale was final, if you hadthree weeks to try the horse before youpaid for it, including time to vet it, thenreturning it 30 days after sale wouldseem a bit of a stretch.

Consider this scenario, which actuallyhappened: A player tried a horse threetimes during the Florida season, boughtthe horse in April and sent it north. In

U S E F U L S

By Avery ChApmAn

POLO PLAYERS EDIT ION 17

October, the player calls the seller, a pro,and says he does not think the horse suitshim, that the seller orally agreed that heguaranteed satisfaction and the playertherefore wanted to send the horse backand recover his purchase price. Puttingaside issues of fairness, was this timelyrejection? No.

The seller may take the position in thatcase that the buyer failed to make a timelyrejection of the horse pursuant to F.S. §676.602 (b) after a reasonable time toinspect

3. Therefore the player is without

remedy, having accepted the horse for sixmonths and waived any defects. See, forexample, Euroworld of California Inc. vs.Blakey, S.D.Fla.1985, 613 F.Supp. 129,affirmed 794 F.2d 686 (failure to make aneffective rejection also constitutedacceptance). The player likely couldprovide no proof that an oral “satisfactionguaranteed” provision was part of anyagreement between the parties and canprovide no proof to rebut the statutorypresumption that his six-month use andpossession of the horse was not lawfulacceptance of the horse.

The player did not have any writtencontract for sale whatsoever. In thatinstance, the court will not read tealeaves to discern what was thearrangement between the parties. Floridalaw—as in most states—as embodied bythe Statute of Frauds, requires the termsof certain transactions to be enforceable.But—there it is again—the statute alsoprovides that “with respect to goods forwhich payment has been made andaccepted or which have been receivedand accepted,” then the transaction willstand whether or not there was a writing.And the court will not add other terms,such as a supposed guarantee, that arenot plainly apparent by the conduct ofbusiness between the parties.

III. What’s a buyer to do?The answer has several parts. First, and

as I mentioned earlier, put the bare bonesof price, of the deal, down in writing.Second, put the length of any post-saleinspection period down in writing. Third,put any guarantees of satisfactionspecifically down in writing. The samewith any warranties (promises) ofsoundness or fitness for a particular

purpose.Don’t want to do that? Then live by the

handshake and hope the hand you’reshaking has the same intention. And thatpro who sold the horse for six months? Hetook it back, resold it for a lower pricethan the first sale and gave the playerthose proceeds. You decide what was fair.What I do know is that relationship willnever be what it once was.

FOOTNOTES:

(2) F.S. 672.201 (Statute of Frauds),provides in pertinent part:

1) Except as otherwise provided in thissection a contract for the sale of goods forthe price of $500 or more is notenforceable by way of action or defenseunless there is some writing sufficient toindicate that a contract for sale has beenmade between the parties and signed by theparty against whom enforcement is soughtor by his or her authorized agent or broker.A writing is not insufficient because itomits or incorrectly states a term agreedupon but the contract is not enforceableunder this paragraph beyond the quantityof goods shown in such writing.

3) A contract which does not satisfy therequirements of subsection (1) but whichis valid in other respects is enforceable:

(c) With respect to goods for whichpayment has been made and accepted orwhich have been received and accepted (s.672.606).

(3) F.S. 672.606 provides in pertinentpart:

What constitutes acceptance of goods:(1) Acceptance of goods occurs when

the buyer:(a) After a reasonable opportunity to

inspect the goods signifies to the sellerthat the goods are conforming or that thebuyer will take or retain them in spite oftheir nonconformity; or

(b) Fails to make an effective rejection(s. 672.602(1) ), but such acceptance doesnot occur until the buyer has had areasonable opportunity to inspect them ...

Avery S. Chapman is with the law firmChapman and Galle. He can be reached atascesq@compuserve.com.