Equine Law Blog

Legal Aspects of the Trial Period: Three Foreseeable Problems and Ways to Avoid Them

"Try out my horse for few weeks.  See if you get along with him." 

These were the words of a sincere, well-intentioned seller who only wanted a satisfied buyer.  Could anything possibly go wrong with this trial period arrangement?   Let’s explore three possible problems and ways to avoid them.

Problem One: The "Buyer" Steals the Horse, Without Payment

This situation is rare but preventable.  The seller can:

• Require Full Payment Up Front.  As an alternative to the trial period, the parties can finish the sale now, giving the buyer the option of returning the horse for a refund if the horse comes back within a certain number of days in good condition.
• Retain the Registration Papers Until The Last Payment Clears.  If the "buyer" wants to steal the horse, papers may be meaningless.  But a buyer who needs the papers for breeding, racing, or showing purposes will more likely come through if the seller holds papers during the trail period and provides them after the buyer makes full payment.

Problem Two: Your Horse Injures the "Buyer" During the Trial Period

Liability during the trial period is a major concern.  After all, the seller retains ownership of the horse, but there is no telling what the buyer will do to “test out” the horse.  Some ideas for addressing the matter are:

• Release of Liability (Where Allowed By Law).  The seller would be wise to require the buyer to sign, in addition to the trial period contract, a well-written release of liability.  Where allowed by law, a release of liability is a powerful protection for the seller.  A release (sometimes called a "waiver") is someone's agreement to sign away what would otherwise be a legal right sue for a variety of claims (state law determines what, if any, claims can be released away).  Sellers seeking the best protection should consider consulting with an attorney.
• Insurance.  Although courts in most states have enforced properly worded and presented liability releases, having a release does not eliminate the need for good insurance.  A cautious seller can make sure that his or her insurance is up to date as to types and amounts of coverage and that the insurance will cover injuries that may occur during the trial period.
• Make the Transaction a Sale.  The seller can request that the parties complete a sale of the horse, with the buyer entitled to a refund under certain conditions. 

Problem Three: Your Horse Injures Someone Else During the Trial Period

The seller, simply because he or she owns the horse, is at risk of being named a party in a liability lawsuit if the horse kicks, bites, throws, or injures someone else during the trial period.  Certainly, many of the same suggestions found in problem two, above, can apply.  In addition:

• Indemnification.  In its most basic sense, indemnification is an arrangement in which someone agrees to compensate another for an anticipated loss or liability.  As an example, an indemnification provision between the seller and buyer can provide: if a loss or liability is asserted against the seller, then the buyer will pay the seller’s legal fees any liabilities or judgments asserted against the seller.  Indemnification agreements can be complicated, and laws vary.

Trial periods and arrangements involving them can be complex and risky.  Direct your questions to a knowledgeable attorney.

Categories: Insurance, Liability, Sales/Disputes