If the horse doesn’t pass, it should be stipulated in the Purchase Agreement that the deposit is refunded in its entirety. It is not the buyer’s fault the horse failed!
Buying and selling horses is a little bit like buying and selling a house. You should follow due process. Obviously, the more expensive or valuable the horse, the more complicated these things can be, which is all the more reason to insure you have a good purchase agreement in place. Buying a horse is expensive for most people, but I assure you legal litigation surrounding a train wreck of a sale/purchase where things were not clearly spelled out is FAR more expensive.
And also noted, if someone is buying a horse for pleasure, the conditions of the Purchase might not be very detailed at all. These things are negotiable.
Before you sign anything, MAKE SURE YOU UNDERSTAND THE CONTENTS OF THE CONTRACT. Never sign something that you don’t understand. Never sign something that you haven’t read. Never, EVER sign something that does not contain all the stipulations and terms of sale to your satisfaction. It must be a negotiation that is reasonable and fair for both parties.
I cannot even begin to emphasize this enough.
A seller has a legal and moral responsibility to disclose all known facts about the horse - medical history, emotional history, show history. A Buyer needs to cover their bases by ASKING LOTS OF QUESTIONS about the horse’s history.
The contents of a Purchase Agreement should have clauses that states:
- The Sale is considered complete if horse successfully completes a pre-purchase examination by a licensed veterinarian, including x-rays if applicable, and the remaining sum of monies is to be forwarded to the Seller by X day. This clause is particularly important if the horse is a show horse or a young horse who is intended as a showing prospect. The demands required of a show horse will be much more than that for a pleasure horse and a pleasure horse most likely won’t require x-rays unless something shows up on the flexion tests.
1a) Pre-purchase breeding exam if this will be used for breeding. For stallions will include a clinical examination to assess his anatomy and a semen analysis, etc., tests for EVA, CEM, and other applicable diseases (don’t assume you got all the information from the owner!) For broodmares, a clinical exam assessing genitalia conformation, an ultrasound to assess internal anatomy, a culture, cytology and biopsy. If you’re buying the horse from a different country, check with your local government authorities about what other applicable tests are required prior to importation and have these tests included as stipulations for the completion of the sale. There is little point buying a stallion or mare in Denmark if the transmissable status of the horse prohibits you from bringing it into your country!
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The terms of the required down deposit including the terms that cause the deposit is forfeited by the buyer and, alternatively, the terms that cause the deposit to be refunded to the buyer.
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The percentage of the required down deposit. The statement that this Deposit holds the horse off the market as a Pending Purchase.
3a) The length of time in which the terms of the Purchase Agreement must be completed within.
3b) What happens to the Deposit if the buyer fails to complete the purchase within the required time frame.
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Travel Insurance, if required if the horse must travel to a vet clinic for the PPE, and what type (mortality, surgical) and amount ($$ value), with clear statement of who gets the payout (usually the seller).
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If the horse has a past medical history, the seller is legally required to disclose it and there have been several cases of litigation turned in favor of the buyer because the seller withheld a medical past. If the horse has required colic surgery, this should be disclosed. If the horse has had laminitis, again, should be disclosed. A truly honest seller will put this information in the bill of sale.
NOTE: A Bill of Sale and a Purchase Agreement are NOT the same thing.
A Purchase Agreement is a statement of intent to buy the horse if the following X, Y and Z are done and are okay. Both parties sign this.
The Bill Of Sale is completed upon final payment of the horse and has attached to it the horse’s registration papers, breeding approval papers and records, passports, signed transfer of ownership forms to be given to the registry, and is given to the purchaser so they can load the horse onto the trailer and drive away. We give 2 Bills of Sale - one that has the purchase price on it (needed if the new owner wants to insure their horse) and one without the purchase price on it (for the new owner to send to the registry for transfer of ownership. It’s none of the registry’s business how many $$ were exchanged in this transaction). Only the seller needs to sign this.
And this all sounds more scary than it really is. If the horse is a pleasure horse, the purchase agreement might be less than a page in length, very short, sweet, and to the point. It’s definitely more complicated with a really expensive horse.
