Exam
OUTCOME OF THE CASE: WHENTHE CUFF TURNS ROUGH The answer is yes: The rider/owner has to pay the
training board bill. It is very common in the horse industry for
professionals to take horses “on the cuff.” At the start of the deal, both the owner and the professional want to optimistically believe that the horse will sell, and quickly. When the horse does sell quickly, the arrangement usually goes smoothly even if it was never documented. The problem arises when the horse does not
sell quickly. Whether the failure to sell quickly is attributable to an injury, a behavioral quirk, insufficient training, poor management or incompetent marketing, it is ultimately irrelevant: at some point either the owner wants the horse back or the professional wants the horse gone to cut his/her losses. But once the horse is taken “off the market,” does this mean that the professional is entitled to reimbursement for what they have “in” the horse? The professional will certainly think that is the case, while the owner will certainly not. An owner’s (mis)conceptions on this point probably
come from common experience in other areas. Take, for example, TV commercials for personal injury lawyers: “We don’t get paid unless you win your case.” That kind of payment arrangement is called a “contingency fee” meaning that the attorney collects a fee contingent upon a successful outcome in the case. However, contingency fee agreements are almost always in writing, and there will be a provision in the agreement that addresses costs. In most situations, any expenses the attorney has incurred during the representation are reimbursed to the attorney out of the proceeds of any award. In some cases, the agreement will provide that the injured person has to reimburse the attorney for those costs even if the case is lost or withdrawn. So if the injured person doesn’t get any money, the attorney may not earn a fee, but that doesn’t mean that the attorney has agreed to absorb all the expenses incurred in connection with the representation. But this detail doesn’t make it into the TV commercials. In a horse sale situation, the commission a
professional will collect is comparable to the attorney’s contingency fee: “I don’t get paid unless your horse sells.” But the professional is most likely assuming that if the horse sells, then the owner (now flush with money) will pay the horse’s expenses for the time the horse was for sale. Professionals tell me all the time, “Why didn’t the owner understand that I was ‘fronting’ the expenses, not offering to pay them outright? I am in business. I made a loan that was secured by the horse. Why don’t they understand that?” My answer to professionals is, “Because you didn’t
tell them.” Tell the owner upfront and do it in writing. A written agreement setting out the terms of the
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consignment does not have to be complicated. But it should clearly spell out everyone’s expectations for how the sales proceeds will be allocated (first to commission, then to expenses, net to owner, for example). I also recommend a contingency about what will happen after a certain period of time if the horse doesn’t sell or if the owner changes his/her mind about selling. The professional and the owner can agree to whatever arrangement suits them. In some cases it may be that the owner is not asked to pay expenses, but that kind of arrangement is the exception and not the rule. I had one case, years ago, where the owner’s defense
to paying the expenses was that she had not sent the horse to the professional to be sold, but that the professional was “free leasing” the horse so that she (the professional) would have a horse to show. There was nothing in writing in that case, one way or the other, to establish a lease or a consignment arrangement. That case ultimately settled because it would have been more expensive to go to trial than for the professional to simply give back the horse and walk away from the dispute. However, when the professional’s expenses are high, the professional has little or no incentive to walk away—or to let the horse walk away. As a matter of fairness, even in the absence of a written agreement, most courts will honor the professional’s right to assert a livery lien on the horse. In other words, the owner will have to pay the professional for services rendered, even if those “services” didn’t include getting the horse sold. While using contracts is a good business practice,
not all professionals are good businessmen. I encour- age owners to be careful consumers and protect their own interests. Before sending your horse to a professional to be sold, have a frank conversation with the professional and get something in writing: an actual contract that is signed by both parties, not a text or an e-mail that you send to the professional that he/she can later claim was never received! The contract should, at a minimum, include the offering sales price, how the professional’s commission will be calculated and how expenses will be handled. Once an owner crunches the numbers, he/she
shouldn’t be surprised if giving the horse away doesn’t start to look like the most financially prudent idea! After all, the true cost of horse ownership is in the upkeep, not the acquisition. So even though every owner wants to “get something out of” a horse they no longer want to own, it is important to remember two things: (1) once you own a horse, you should expect to pay for that horse until the day someone else owns it; and, (2) professionals are in the business to make money. So if you think one is willing to do you a favor that will take money out of his/ her pocket and put it into yours—you are wrong.
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