The recent lawsuit in Florida over the sale of a potential grand prix horse, Vorst, to a wealthy Mexican owner provides an opportunity to discuss the responsibilities of sellers and risks to buyers in a horse deal. This case is especially interesting since all the parties appear to be knowledgeable and sophisticated participants in equine sport. However, a horse was sold and did not turn out as hoped. To coin a phrase from the financial industry: “Past performance is no guarantee of future performance.”
In this case, a horse was purchased for $250,000 and shipped to Mexico. At the first competition, the horse allegedly started stopping and went lame. The owner sued on the basis that there was misrepresentation as to the horse’s past performance and soundness. The seller denied the allegations and claimed that the new owner didn’t properly prepare the horse for competition, causing injury. The horse is now supposedly valued at $30,000.
Who’s right, and who’s wrong? Although a jury will ultimately decide who wins, the actions of the seller, the buyer, the trainer, and veterinarian will be determinative.
A seller or seller’s agent’s representations about a horse’s past performance and prior injuries are important to a purchaser’s decision. Findings by a buyer’s veterinarian on the pre-purchase examination and the trainer’s advice about the suitability of the horse for the buyer are also important to a purchasing decision. The interplay of these factors determines whether or not a seller is liable for a horse purchase gone bad.
A seller’s material misrepresentation about a horse’s past performance or lack of injury can be a basis for a purchaser to sue for monetary damages, provided the information was known to the seller, the misrepresentation was be material and it was not revealed. A material misrepresentation would be saying that the horse competed successfully in 1.50 meter classes but actually never jumped above 1.20 meters. Not disclosing that a horse was laid up for 10 months for a suspensory injury to the buyer or the buyer’s veterinarian at the time of the pre-purchase exam would also constitute a material misrepresentation that is actionable. If a purchaser relies on such false information in making the decision to purchase, a seller can be liable for fraud.
However, a seller can disavow any representations or warranties about the horse by selling the horse with a bill of sale “as is”. Selling a horse “as is” does not necessarily protect a seller from liability from all defects in the horse, such as a breach of the warrantability of merchantability. However, a bill of sale can specifically disavow a warranty of merchantability, a warranty of the horse’s fitness for the intended use and warranty of the horse’s health and soundness. Material misrepresentations by the seller that were unknowable by the purchaser, purchaser’s agent or purchaser’s veterinarian are what form the basis for a successful lawsuit against the seller.
On the other hand, a seller has a right to rely on the purchaser to perform his or her own independent pre-purchase veterinarian examination and to receive independent advice about the suitability of the horse for the intended rider. If a pre-existing injury was reasonably discoverable by the purchaser’s veterinarian but was missed, the issue may be one of veterinarian malpractice rather than seller deceit. Some horses have underlying injuries that are unknown to the seller or are in the process of developing at the time of the sale. If the horse had a history of performance problems with water jumps, and this was known to the purchaser’s trainer or agent, the seller has a right to rely on the purchaser’s knowledge and assumption of the risk that the horse may not jump the water. A trainer can confirm the horse’s competition record by checking with the USEF and FEI.
In the Florida lawsuit, a jury will have to look at the performance of the horse leading up to the sale. What representations, if any, did the seller make? What did the pre-purchase examination reveal? What did the purchaser’s trainer know about the horse? What did the purchaser do after taking possession of the horse? Was the horse treated according to the standard of care required to prepare for and ride a horse in competition? Were competition records supplied or readily available? Did the horse suffer a new injury after purchase? Was there a material misrepresentation or undisclosed condition that was known to the seller but unknowable to the purchaser?
This lawsuit should serve as a reminder that sellers and buyers both have responsibility when agreeing on a horse sale. Sellers need to disclose information known about a horse’s past that is known to them and not reasonably knowable by the purchaser. Buyers need to make sure their trainers and veterinarians examine the horse’s performance, character and soundness sufficiently to alert them to any underlying problems. Buying a horse is risky business under the best of circumstances. It is always an unpleasant situation when a new horse purchase fails to meet the buyer’s expectations. Whether legal action by a dissatisfied buyer can be successful depends on the totality of the circumstances surrounding the purchase. In the Vorst case, it is up to the jury to consider all the relevant factors and make a decision.
Update Following Original Post: Case Verdict Reached – The Florida federal judge in this case, ruled in favor of the former owner and trainer of Vorst, after the jury found that they had not misrepresented the medical history and performance of the horse. Read more here.