What are Warranties in an Equine Purchase and Sale Agreement?
Warranties are normally express or implied. Express warranties are those which are detailed by the parties in the sales agreement. Implied warranties are those which apply by application of law or by reason of a statute. When horses are sold they are deemed “goods” under the Uniform Commercial Code (“UCC”) as enacted in most states. The normal implied warranties which arise in equine sale situations occur by application of the UCC. As such the warranties specified under the UCC typically apply to an equine sale agreement unless they are “waived” or somehow excluded from the terms of the agreement.
An express warranty is typically a warranty as to a fact about the horse given in a sales contract. Facts which are usually covered are things such as the horse’s title, its lineage, its show or jumping history, and its health. A buyer will want as many express warranties as is practicable when acquiring a horse since the warranties will act to protect the buyer from later surprise unless the seller has made the warranty knowing that the true facts differ (this would be fraud) or if the seller made the warranty without any basis for so doing (this would be known as a negligent misrepresentation).
Implied warranties that normally apply to an equine sale are the warranties of “fitness for an intended use” and “merchantability”. These warranties arise under the UCC and will apply to the sale transaction unless expressly waived by the sales contract. Language that effects a waiver of these implied warranties usually includes words to the effect “ any implied warranty of fitness for an intended use or merchantability are hereby waived and the horse is sold as is with all faults.” This language is also in bold type with capital letters to ensure compliance with the notice requirements for an effective waiver of these warranties under the UCC.
The implied warranty of fitness for intended use generally means that the horse can be used as a hunter jumper if sold as such. The warranty of merchantability means that the horse can be sold in commerce as meets the customary requirements of like horses sold in the equine trade or breed.
Warranties in the Equine Sale Contract
A buyer should always seek to have as many express and implied warranties as are appropriate given the equine sale circumstances. A seller should seek to limit the application of any express warranties and to exclude any implied warranties especially if the seller is selling the horse “AS IS.”
Sample Warranty Language for Use in an Equine Sale Contract: The horse is sold with the express warranty as to breed and title. The horse is also sold with the implied warranties of fitness for intended use and for merchantability. (This warranty language can be expanded upon based upon the particulars of the sale.)
If you have read this newsletter and are interested in a sales contract form from our law firm, Catanese & Wells, please contact Erika at (818) 707-0407 or via e-mail at firstname.lastname@example.org to request a sales contract document. If you have any questions pertaining to the horse business feel free to call or write T. Randolph Catanese, Esq. at the same number and e-mail.
© T. Randolph Catanese, Esq. 2006