The law regarding these claims is well developed by virtue of their regular occurrence in our society.  The cases generally are classified in different categories depending on where the incident occurs.  If the claim arises on property owned or controlled by a governmental entity the standard for recovery is higher than on private property.  Generally this policy reflects the ability of private entities to insure against this risk.

If the claim arises on land controlled by a municipality or other governmental body, in order to obtain a recovery, the claimant must show that there was a dangerous condition that was known to the body.  Therefore if you trip on a rise in the sidewalk it doubtful that your claim will prevail.  However if the incident occurs on a gravel road that a municipality knows will be frequented by pedestrians then the claimant is able to state a case.

The rules for private property only require that there be a foreseeable risk of danger that causes the trip.

Some attorneys are using the American Disabilities Act (ADA), when the facts allow, to create an expanded duty on by the property owner.

In summary trip and fall cases are difficult and very dependent on the circumstances of each case.

Receivables are one of the main reasons that small businesses fail.  Therefore good business practices when structuring your business collections can mean the difference between a healthy bottom line and disaster.

Most businesses take cash or credit cards immediately upon the sale of goods or services.  Many horse related businesses stick to tradition and bill after the services have been rendered.  As a result many of these businesses have problems with large receivables and bad debt.

There are a number of ways to minimize the risks associated with this business practice.  First and foremost I recommend that businesses abandon this practice.  When the client signs the contract stipulate that you receive the (first month’s) payment up front or a credit card authorization.  This practice is simply in line with modern business.

If your business does not want to charge up front then you can still takes steps to help collect debts should they arise.  First the business should have a written contract that requires the other party to provide as much personal information as possible. Driver’s license and social security numbers can help you identify assets of a debtor when you go to collect.  All possible contact information, such as telephone numbers, email addresses, emergency contacts and the like can help you track down a debtor when the need arises.

You can also keep security for the debt; including the papers on the horse you are taking care of. Finally you can refuse to do business with the individual if you find some information which leads you to question his creditworthiness.  Remember no client is still better than having to chase a client for money!

To a great extent this philosophy continues.  However there is a classic defense that is finding more and greater acceptance in the courts.  This defense is called “assumption of the risk.”  Some attorneys have argued that the defense only applies to sports such as skiing, skate boarding or the like.  However courts are also applying the doctrine beyond participants in sporting events, e.g., a patron at a baseball game who is hit by a foul ball.

The doctrine can also be applied to people who are involved in activities that pose inherent risks to those who participate in them.  Examples are the person who is injured while riding his motorcycle in a group ride or the person who is injured by a calf at a branding.  The courts have determined that people who participate in these activities are held to know the risks associated with them and, if they are unwilling to accept the risk inherent in the activity, they should not participate.

These newer rulings do not discuss with the societal issue of who will bear the cost of the injuries caused by the activities.  It appears that court have impliedly become more cognizant of the fact that health insurance is prevalent in our society or that the uninsured utilize bankruptcy protection when they incur excessive bills for which they have no insurance.

But another aspect of this trend is that the courts have decided that individuals should be held accountable for their actions.  They view society as being knowledgeable of the risks associated with individual behavior.  To what extent the courts are going to expand this defense is unknown; but it is clear that individuals can no longer jump off the bridge and then blame the bridge builder.

California law provides that a person who provides livestock services within the past year pursuant to a contract with the owner of that livestock has a lien on the livestock in his possession.

Before you allow the livestock to be delivered onto your property you must first enter into a contract with the owner or his authorized agent for the livestock services you are going to provide.  It is always preferable to have this contract in writing but you may also have an oral contract.

As your bill accrues you have a lien on the livestock for any unpaid amount. In order to maintain your lien you must retain possession of the livestock until the bill is discharged.  If the bill is paid in full then you must release possession of the livestock to the owner.

If the bill remains unpaid your lien is valid for one year.  Therefore you must either obtain the owner’s written permission to sell or allow you to retain the livestock or you must begin legal proceedings to foreclose on your lien.

Once you have a livestock servicer’s lien you will have priority over all other claimants against the livestock.  Secured and unsecured creditors will have to allow your claim to be paid before they will be entitled to recover any of the moneys generated from the sale of the livestock.

When you have a questionable debt, by having a valid livestock servicer’s lien, you may be able to collect the amount of your bill when you otherwise might not.  It is important to be cognizant of the value of the livestock in relation to the outstanding bill.  If the bill starts to approach the value you need to take action to pursue your lien rights.

The law provides for a quick method of proving that you have indeed reached a compromise.  On your check, if you write clearly that the check is being issued in full settlement of the debt, you have placed the creditor on notice that you are tendering the amount of the check to resolve all amounts asserted owing by the creditor. Language such as “paid in full” or “in full satisfaction” will be considered clear and unambiguous expressions of your intention to settle the debt and, if the check is cashed by the creditor, will result in the compromise of the claim for the amount paid.

If the creditor determines that he does not want to settle for the amount tendered, he must return the check to you un-cashed or, if the check was cashed, tender the amount of the check back to you within 90 days after payment of the check.  By doing either of these things the creditor is stating that he does not agree to the compromise and the claim is not settled.

Next time you reach an agreement to settle a debt for less than the face amount you can protect yourself from future claims regarding the same debt by writing the creditor a clear and unequivocal communication that the amount you are paying is a full settlement of his claims.

With regards to the treatment of the owner’s horse, the trainer is the ostensible agent in dealings with the veterinarian. Until that agency is revoked instructions by the trainer to the veterinarian to treat the owner’s horse are binding on the owner and the owner is liable for all charges incurred.

If the owner is unable to secure voluntary curbing of the trainer’s authorizations to the veterinarian, the owner can revoke the trainer’s agency by notifying the veterinarian in writing. Once revoked any acts by the veterinarian to treat the horse without first obtaining the express authority of the owner cannot result in a charge to the owner except under certain very limited circumstances.

So when can a trainer instruct a veterinarian to treat the horse and the owner be liable despite having instructed the veterinarian that the trainer is not authorized to act on his behalf?

The first instance would be those types of treatment that are excepted by the owner when he revoked the agency.

Another situation, somewhat less clear, occurs when the horse requires treatment and the owner is unavailable to grant the veterinarian authority to treat the horse. California law imposes on persons such as trainers the duty to provide animals with necessary and prompt veterinary care or be liable for civil damages. Certainly where emergency treatment is required the trainer has statutory authorization to act on the owner’s behalf.

WHY HAVE A CONTRACT?

It is so important for the parties to begin their relationship with a mutual understanding. Business men and women have certain expectations in their business relations. They are used to entering into contracts and, if a contract is presented to them at the outset, the facility portrays professionalism that begins to build a bond with the client.

Written contracts are preferential to oral understandings. The terms within a written contract help the owner understand the potential issues that may arise during the course of business dealings. If problems arise later in the relationship the parties can resort to the written word as opposed to trying to recollect their discussions.

In most cases the parties maintain a cordial relationship thorough performance of the contract. The contract is the road map for the parties when issues arise. If and when the parties need guidance they can utilize the terms of the contract to resolve conflicts. The certainty provided by the terms of a contract can restore a relationship that might otherwise be irrevocably destroyed.

In certain instances the parties are unable to resolve their conflicts without court intervention. In those instances the court, by virtue of the expression of the parties’ intentions via the contract, has the tools to adjudicate the conflict in a fair and just manner.

WHAT SHOULD THE CONTRACT SAY?

There is no one contract that will cover every situation. Boarding, breeding, training or agent contracts must address different issues unique to each particular situation. But in every contract there is a meeting of the minds concerning the subject matter of that contract.

Contracts at a minimum define (1) price, (2) performance, (3) breach, (4) termination and (5) recourse. While I have seen contracts containing so much “legalese” that it takes numerous pages and a bank of lawyers to decipher the terms, the best contracts are written in language largely understandable to non professionals. They deal with the salient issues in a concise manner.

Since the entry into a contract represents a time when the owner is focusing on the relationship it is a great time, either within the contract or in an attachment to the contract, to get specific information concerning the owner (e.g., detailed contact information) and the horse (e.g., description, pedigree, registration number, etc.).

It is important to seek the advice of a professional when drafting a contract. A well written contract with the horse owner, entered into at the outset of the relationship, will in most instances foster confidence between owner and care provider. When necessary it will serve to resolve differences that arise within that relationship.

Agency Issues

Auction companies are dual agents in the conduct of their business. Horses are consigned to them to sell so they owe a duty to the seller. The purchaser buys the horse from them so there is a duty owed to him also. This can be a precarious position when a controversy arises concerning the sale. Therefore it is of paramount importance that the sales company utilize contracts with each of the parties that make clear the sales company’s duties in the variety of situations that can arise.

When a buyer makes a warranty claim concerning a purchase he almost invariably includes the sales company as a party to the controversy. The sales company will be liable only if it breached an independent duty. For example a court found liability against a sales company when it did not use ordinary care to insure that its sales catalogue was accurate and comprehensive. On the other hand another court refused to require a sales company to inspect a horse for defects prior to the auction.

Disclosure Issues

If the seller of a horse knows or has reason to know that a horse has a significant physical or behavioral problem, that is not apparent upon typical presale inspection, he has a duty to disclose that defect to the potential purchaser. Not to do so gives rise to a claim for breach of contract and fraud.

While this type of issue does not arise often, when it does it can be a huge one. Fraud is a difficult claim to prove; one must show an intent to deceive. A verdict of fraud also carries with it the specter of an award of punitive damages. In a Kentucky case a seller was aware for many months before the consignment to the sale that the mare had a profound defect which made her unsound for breeding purposes. He suppressed the information so that the mare’s breeding record was not accurately stated in the sales catalogue. When it was proven that the consignor had deceived the buyer he was adjudged liable for fraud.

Warranty Claims

More often the claims that arise in the sales context are the result of a claim of breach of warranty. If you read the Conditions of Sale in the sales catalogue you will find an extensive rendering of the warranties that are being made part of the transaction and those which are being disclaimed. In view of the number of warranties included in modern sales, the traditional saying, “caveat emptor” (buyer beware) is no longer applicable.

Auctions involve transactions governed by the Uniform Commercial Code (UCC). This law, which governs the sale of personal property, specifies that, upon fall of the hammer at an auction, the risk of loss transfers from the seller to buyer. A warranty defines a set of conditions where the risk of certain presale problems remain with the seller. For instance, in every auction there is a warranty that the buyer will receive title to the animal. If the seller is unable to deliver clear title then the buyer will be entitled to return the animal and receive his money and expenses back.

Other warranties concerning “wobblers” and “cribbers” are generally included in warranties. These and other warranties give the buyer the right to check the horse for these types of problems after the sale. Warranties will be used to rescind a sale if the problem existed prior to the sale and the sales company is notified of the problem in a certain manner and within a certain time. Generally if there is a significant defect, which is covered by the warranty, the claim will be allowed regardless of whether or not the notification guidelines were followed to the letter.

The UCC also allows for certain implied warranties such as “fitness for a particular purpose.” This type of warranty can be and is generally disclaimed by the sales company. However the effectiveness and adequacy of the disclaimer is often a hotly contested issue when a controversy arises. One of the most notable cases involved a colt sold at a select auction which was later discovered to have a heart murmur. The court agreed that it was not against public policy to disclaim implied warranties but got around the disclaimer by finding that the failure to disclose the murmur violated a section in the state’s Consumer Protection Act.

The horse industry has taken steps to deal with warranty concerns. The CHRB, which has jurisdiction over horse auctions held on racetrack grounds, requires that all medications be reported and posted. Sales companies are pushing consignors to provide x-rays of the horses in select sales. Veterinarians have packaged a reasonably priced post sale evaluation designed to screen the horse for major problems. Finally some sales companies have adopted policies which facilitate the return of the animal when a buyer has a legitimate dissatisfaction. In so doing they place the burden on the consignor to stand by his product. These adaptations help to create confidence in the marketplace and to reduce litigation or negative sentiments and publicity.

Payment Issues

Unless a buyer has pre-arranged payment by credit the full sales price is due upon fall of the hammer. This rule is intended to protect both the seller and the sales company, because, if payment is not forthcoming, the consignor has the option of reselling the horse at the same sale. The horse may be reintroduced into the sales ring and buyers, who have already had the opportunity to inspect the horse, will be given the opportunity to bid.

As a practical matter, due to the amount of moneys involved and the mentality of buyers, credit sales are a staple at horse auctions. Credit sales are often fraught with issues. In order to protect themselves auction companies receive the consignor’s permission in the consignment contract to grant credit to potential buyers. Auction companies do not guarantee the debt or its successful collection in case of default. However if the sales company has granted a buyer credit and the buyer defaults on payment of the purchase price, the sales company may be liable for the debt if it has breached its duty to verify creditworthiness when it granted the credit. Therefore the auction company must employ stringent standards in approving credit requests.

When there is a default in payment the auction company may have a duty to collect the money at the consignor’s expense. The UCC provides several remedies in the event of default. In the most extreme circumstances the creditor can repossess the horse without notice to the debtor so long as the repossession does not involve a breach of the peace. When the debtor is cooperative he can be requested to deliver the horse to the creditor. In either case the horse must then be sold in a commercially reasonable manner and the net proceeds applied to the debt. The defaulting buyer is liable for any deficiency.

Successful collection of these debts involve close communications between the auction company, the consignor, their attorney(s) and, in some instances, the debtor. It is really difficult to recoup the original sales price (plus added expenses) when the horse is resold at a later time. However if the parties cooperate and communicate with each other the deficit can be minimized.

Conclusion

In whatever capacity an individual is involved in a horse auction he should look closely at the contract which will bind him. He should also pay close attention to the conditions of the sale. It helps to evaluate the professionalism of the sales company conducting the auction. In this way surprises can be minimized and the individual can concentrate on the horses in the sale.