Equine Law Blog

Legal Aspects of Buying a Horse from a Sales Agent

Generally speaking, it is completely legal to do business with an agent in a business transaction.  An agency relationship generally exists when one person, such as a horse seller, agrees to allow another person to act on his or her behalf in a transaction. The agent acts on behalf of the “principal.”

Risks

Those who deal with parties claiming to be agents can encounter risks, such as:

• The “agent” might have no authority to enter into the transaction. Is the agent really carrying out the principal’s request to sell a horse?  What if the horse owner never authorized the agent to sell the horse?
• The agent might be exceeding restrictions. What if the seller gave the “agent” restrictions on the horse’s minimum sale price, but the agent violated those restrictions by selling for less than the permitted price range?

Protect Yourself

Protect yourself when you are dealing with someone who calls himself an agent, or when somebody purports to act on behalf of another. Here are a few suggestions:

• Confirm the authority of the agent or seller. Under the law of some states, you (the buyer) may have a legal duty to determine the agent’s authority.  This puts the burden on you to ask questions, and the law might hold little protection for you if you fail to do so.
• Use a carefully worded contract. Ask the agent to specify, and possibly even promise and warrant, that he has authority to enter into the transaction and to bind the seller for whom he is acting.
• Contact the principal(s). Get contact information for everyone whom the agent is representing in your transaction. Confirm the agent’s role with them.  Insist that all of the horse’s sellers, not just the agent, sign the sale contract.
• Pay the principal. Over the years, some equine sales agents have been accused of pocketing a disproportionate amount of the sale proceeds and concealing the true price from unsuspecting sellers (principals). Contributing to the problem is the horse industry’s long-standing reluctance to use written contracts.  Buyers and sellers can protect themselves from these abuses by requiring the buyer to pay the seller directly and specifying in the contract which party will pay the agent’s commission for the sale.

Matters involving agency relationships can be very complex. Consider hiring a lawyer to protect your interests.

This article does not constitute legal advice. When questions arise based on specific situations, direct them to a knowledgeable attorney.

Categories: Sales/Disputes