Get it in Writing

Oral contracts are enforceable in most states depending on the subject matter of the agreement. Verbal contracts contain all of the same elements of a written contract, with the exception that the agreement has not been memorialized in a written document. In disputes over verbal agreements, because there is no writing to look to, the terms of the agreement must be figured out by testimony from the parties, the parties’ conduct, and from any witnesses or other supporting evidence to the agreement. Often, this means a substantial amount of time and costs can go into ascertaining the terms of the parties’ agreement.

These disputes often involve lengthy legal battles which can cost each party thousands in attorney fees.

Oral contracts are extremely common in the equine industry, especially between parties who have had long standing relationships and trust one another. Long-time horse show friends, trainers and their clients, and breeders and stallion owners often do not consider the likelihood of a dispute arising from their agreement or contemplate ways to avoid such a dispute at the outset of the partnership. Because oral contracts tend to flow more commonly from tight knit relationships, disputes over the terms of the agreement commonly become emotional, contentious, and typically involve a falling-out between parties. These disputes often involve lengthy legal battles which can cost each party thousands in attorney fees.

As was the case in a Pennsylvania lawsuit involving a failed oral partnership to breed and market American Saddlebred horses. A woman sent her mare to a friend for the purpose of being bred with the friend’s stallion. In turn, the friend sent a gelding to the woman to be trained and marketed. The woman’s mare gave birth to a foal, “Donna”, and was bred back to the friend’s stallion which resulted in a second foal, “King”.

The parties eventually had a falling out over the ownership of the horses and took their dispute to court. The dispute was seemingly resolved when the court ordered that Donna and King be sold and the proceeds used to satisfy the financial liabilities that each party incurred.

Fast forward 5 years, Donna and King had still not been sold, so the woman sued her friend for contempt of court for the friend’s failure to sell the offspring. The trial court found the friend was not in contempt because she had not willfully violated the original order. The woman appealed, but the appellate court agreed with the trial court’s finding, stating that the friend’s failure to sell the horses was not willful, but that the problem was a practical one because the Saddlebred industry collapsed shortly before the original order and the friend had, in fact, left the business of breeding and selling Saddlebreds.

The friend had even offered to give the woman one of the horses, but the woman refused, and the parties were unable to agree to the terms of the sale of the two horses. The woman wanted to sell them at public auction but refused to pay any of the costs of preparation for sale. The friend, on the other hand, determined that the horses were of no salable value and gave them away to avoid incurring further maintenance costs.

Ultimately, the friend was found not to be in contempt of court because the woman was unable to establish that the horses had any salable value after the original court order. This decision was handed down over 8 years after the original court ordered the parties to sell King and Donna and after both parties spent a substantial amount of money in attorneys’ fees.

The Moral of the Story

The moral of this and so many similar stories – no matter what your relationship is with the other party, it’s best to make sure your agreement is memorialized in a writing. Whether it be an equine lease agreement, boarding or training contract, breeding season agreement, an equine partnership, syndicate, or co-ownership agreement, or an equine consignment agreement, please consider contacting a knowledgeable attorney for guidance if you plan to enter into one of these or any other type of equine business agreement.