Equine Law Blog

Certain [Non-Equine] State Laws Can Impact Your Contracts

The right contract language can help avoid disputes or reduce your expense if a dispute should arise.  Details can separate marginal contracts from effective ones. Details can also help prevent legal disputes.  One detail to consider in equine contracts is attention to certain laws that could impact the contract or the rights of the parties.

Examples of some contract provisions affected by state law are:

• Repossession.  In an installment sale, horse sellers usually want to protect their right to repossess (take back) a horse if the buyer fails to pay.  In many states, laws address how – and if – a contract can legally allow the seller to repossess the horse without first getting approval from the proper court.
• Interest on Money Owed.  State laws specify the highest allowable interest rate that individuals or businesses can charge.  Whether they know it or not, many people use contracts that ask for unlawfully high rates of interest.  When in doubt, your contract might include a rate of interest along with additional wording – for example:  “7% or the highest rate allowed under the law of this state, whichever is greater.”
• Stablemen’s Lien/Agister’s Lien Laws.  An “agister’s lien” (sometimes called a stablemen’s lien) is much like a mechanic’s lien.  These liens occur when someone leaves a vehicle (in the setting of a mechanic’s lien) or a horse (in the setting of a stablemen’s lien/agister’s lien) with someone for care and keeping.  State laws govern when the keeper can sell the item to recover unpaid fees.  These laws often provide that the item cannot be removed from the garage or stable until all fees are paid in full.  The contract can affirm this law; or, it might benefit the stable to find out whether the law can be avoided through other language.
• Sales or Use Tax.  State laws may address sales or use taxes and who must pay them.  These taxes might affect sales, breeding, or lease contracts with horses.  When in doubt, the contract can specify who should pay them.
• Disclaimers of Warranties in Sales Contracts.  State laws (usually the state’s commercial code) often specify how a seller can disclaim (cast aside) warranties in certain sales transactions.  In the horse setting, the seller may want to disclaim a warranty of the horse’s fitness for a particular purpose.  Many states allow this, as long as the seller uses conspicuous (noticeable) language in the contract.  Some state laws provide language for the disclaimer.

Discuss these and other provisions of contracts with a knowledgeable lawyer.

Categories: Contracts, Regulatory, Sales/Disputes