Fjordonomics 8 - The Written Sales Contract

An opinion series based on more than 25 years of personal experience breeding, buying, and selling Fjord horses.

In previous articles, I discussed the economics of breeding and selling horses. This installment takes a closer look at one of the most important parts of any sale: the written contract.

This article is based on my experience selling more than 100 Fjords over a 25-year period. It is not intended as legal advice or as a comprehensive guide to contract law. I made plenty of mistakes over the years and learned from them.

In Fjordonomics, Part 7, I discussed the importance of preparing your horse for sale. Now let’s assume you have an interested buyer. What happens next?

The Offer

An offer is the first step in forming a contract. Once an offer is made, the other party may accept it, reject it, or make a counteroffer. If the offer is accepted and consideration is exchanged (something of value), a binding contract is created.

In a horse sale, the offer can originate from either the buyer or the seller. Usually, it begins with a conversation expressing interest in purchasing a horse. However, among breeders, it is not unusual for the seller to initiate the discussion.

The offer stage is where the details of the sale are worked out and a mutual understanding is reached. It is not simply an agreement on price. The parties also need to agree on how the sale will be handled.

The Sales Contract

Always have a written sales contract.

If an agreement is made to purchase a horse, a contract exists whether it is written down or not. I do not make handshake deals or verbal commitments. I want the terms of the sale in writing.

I say “potential sale” because there may be contingencies that could cancel the transaction. A written contract protects both buyer and seller by clearly setting expectations and timelines.

Even when I buy or sell a horse with someone I have known for decades, there is still a written contract.

Here are some of the questions that should be addressed:

a. Deposit and Payment Terms

Is a deposit required? Is it refundable? Under what circumstances? When is final payment due? Does the seller accept checks, wire transfers, or cash only?

b. Installment Payments

Does the sale involve installment payments? If so, when can the horse leave the property? Is board charged while the horse remains on the farm? Under what conditions can the installment agreement be canceled?

c. Prepurchase Examination (PPE)

Is a prepurchase examination required?

I always encourage a PPE, even for a weanling, because there are things a veterinarian may identify that I cannot. I will accept a PPE from any licensed veterinarian as long as it is performed on my farm. Hauling the horse off-site is possible, but at the buyer’s expense.

The contract should specify:

the timeframe for performing the PPE,

the timeframe for the buyer to review the results, and

the timeframe for deciding whether to proceed with the purchase.

Buyers should have a reasonable amount of time to evaluate the results.

d. Length of Stay on the Farm

How long will the horse remain on the seller’s farm?

If I sell a foal before weaning and accept a deposit, I require mortality insurance for the value of the sale. This is the buyer’s responsibility and typically costs about 3% of the horse’s value, depending on the insurance carrier.

Sadly, foals sometimes die unexpectedly. Field accidents and sudden medical issues do happen. Most of the time everything is fine, but there is always some risk.

As a seller, I want the buyer to be able to honor the contract without facing the financial burden of paying for a deceased foal out of pocket.

e. Registration

How will registration be handled?

Registration matters, and I believe the seller should help manage that process. Depending on where the horse originates, registration may involve a European registry, the Canadian registry, or the U.S. registry.

The contract should specify:

which registry will be used, and

who is responsible for registration costs.

f. Coggins and Health Certificates

In my state, I am required to provide a negative Coggins (EIA test) when selling a horse. That same test is also required if a health certificate is needed for interstate transport.

The contract should clearly state who is responsible for paying for these documents.

g. Shipping

Shipping deserves its own article, and I will cover it in the next installment. However, shipping arrangements may also be included in the contract.

I am not a commercial hauler and do not carry commercial transport insurance. On rare occasions, I may haul a horse locally for a buyer at no charge. Other breeders may provide commercial hauling services, so this is worth discussing in advance.

h. Extras

Sometimes a seller includes bonuses or incentives in the contract.

For example, if I am selling a mare and the buyer is interested in breeding to one of my stallions, I may offer a discounted or complimentary breeding.

I am not an attorney, and this article is not legal advice. I am simply sharing the practices I use when selling horses.

I also want to emphasize that I do not use an attorney to draft my contracts. Courts have long recognized that a contract reflects the agreement — the “meeting of the minds” — between the parties. My contracts are designed to clearly reflect that agreement.

Details

My contracts always include the following:

Names and addresses of all parties involved in the sale.

Description of the horse, including:

registered name and registry,

registration status if pending,

microchip number, if applicable,

date of birth,

sire and dam,

gender,

color, and

approximate height.

Financial terms, including:

purchase price,

deposit,

final payment terms, and

any required mortality insurance.

Note: I do not allow horses to leave my farm until they are paid in full, and I do not offer off-farm trial periods.

Prepurchase examination requirements, including how the sale may be canceled based on PPE results.

Personally, I prefer to allow a buyer to withdraw after a PPE for any reason. I have never been interested in forcing someone to purchase a horse they have doubts about.

Pickup arrangements, including:

how long the horse may remain on the farm,

coordination with shippers, and

when free board ends and paid board begins.

Veterinary and farrier care responsibilities while the horse remains under contract.

Registration transfer arrangements.

I almost always pay the transfer fee myself because some buyers never complete the paperwork. Maintaining accurate ownership records matters.

Coggins, health certificate, and veterinary records.

I pay for the Coggins and health certificate and authorize the buyer to obtain relevant veterinary records from my veterinarian.

Requirements for terminating the contract.

Jurisdiction for disputes.

Any disputes are generally handled in the county and state where the seller is located.

Effective date of the contract.

Signatures and dates for all parties.