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Express and Implied Warranties

As Featured in the Equestrian Catalog

In an equine purchase and sales agreement, there are two types of warranties, an implied warranty and an express warranty. Randy Catanese, who specializes in equine law, explained the differences to us, and gave quite a lot of important information that some might find surprising. Read and learn.

“The general rule is, when you buy an equine, there is going to be an implied warranty,” Randy said. “Those implied warranties are normally known as the implied warranty of fitness for intended use or purpose, or the implied warranty of merchantability.

“These are warranties that are going to apply when you purchase a horse or pony, unless they are excluded or waived in the Bill of Sale. There is going to be language in there from the seller (if they are sophisticated at all), that will say that you as the buyer, are waiving these implied warranties.”

We will move on to the express warranties. An express warranty is where you specifically agree in the Bill of Sale, or some other writing, that you as the seller are warranting the horse or pony.

“Normally an express warranty that you will find in Bills of Sale is a warranty that the seller has a title, or authority to sell the animal. So, you might see a warranty that says, ‘I’m the owner and I warrant that nobody else has a claim to the animal, and I warrant that I have the right to sell it to you.’

“Another thing you might see in a Bill of Sale is, ‘as is with all faults.’ And it’s usually all in capital letters. The reason people do that is that they are trying to have you agree as the buyer that you are waiving any implied warranties, that there are no express warranties (other than what is in the contract), and that literally, you are buying that animal based on what you see the day you buy it.”

That does not mean that there can be no pre-purchase examination. Most often, certainly within the United States, the Bill of Sale is agreed upon and signed after a pre-purchase exam is done. When buying in say, Europe, it might be a bit different. Before the seller takes the horse off the market, he will probably need to know that you are serious about the purchase, and want you to sign the Bill of Sale first.

“The next thing, and this is very important; when we talk about the warranties, express warranties and implied warranties are all contractual law. On the other side of it, people buy a horse, all the warranties are waived, and they find out that the horse has a preexisting medical condition or a preexisting behavioral problem. Or, believe it or not, a problem with its identity. A buyer thinks they are buying a particular horse, but the one they actually get is not what they thought they were buying.

“Then the buyer says to the seller, ‘Hey look, you didn’t do me right here, and I want to undo the transaction. I want you to take the horse back and refund my money.’ And the seller says, ‘Well, you signed this Bill of Sale, and you waived the implied warranties and you bought it AS IS, so I’m not doing anything.’ And what the law says is that if you lie to somebody, either by concealment or representation, you can’t rely on that contract to get you out of jail – it’s not like a Get Out of Jail Free card.

“What the law says,” Randy continued, “is that you fraudulently induced these people to sign this Bill of Sale, and we are not going to recognize the Bill of Sale because they wouldn’t have signed it if they had known the truth of the situation.”

Randy had one more very important point he wanted to address.

“In the horse business, there is a very standard philosophy. When I litigate these fraud cases, or breach of contract cases in horses, what the defendant, who is usually the seller, normally says is this: they (the buyer) bought the horse based on what they saw the day they tried it. They bought the horse based on the pre-purchase examination, and I didn’t do anything wrong.

“There are a lot of people who believe this is a legitimate defense, and it’s not! If you as a seller know there is a pre-existing medical condition or a behavioral issue that makes the horse or pony unsuitable, you have to disclose that to the buyer. You must disclose that, because later the buyer might say, ‘Hey, if I had known that, one, I wouldn’t have paid as much money as I did if I did buy it or two, I wouldn’t have bought it, because I wouldn’t have bought a problem.’”

He pointed out that a lot of trainers take the position that they do not have to tell the buyer about a horses’ pre-existing health condition(s), competition history, or anything else. They feel that everything a buyer needs to make their decision to buy the horse is on the day that they look at it and try it.

“I’m just saying, being an equine lawyer litigating for 40 years now, the court does not recognize that, nor do juries. What the jury will say is, ‘If I go out and buy a car, and they lie to me about the car, the dealer has to take the car back. If I buy a house, don’t they have to tell me everything about it?’ So when a horse person tries to tell a jury or a judge that they didn’t need to tell all the stuff they already knew about, the jury will think that that just doesn’t seem fair or right. They will hold the seller responsible.”

After the seller loses these types of cases, Randy has had the seller himself come up and tell him that he never thought that would happen. Randy’s response? “How could you not, when the evidence showed that you knew about these problems and you lied to the buyer about it?”

Bottom line? All of the contracts, the express warranties and the implied warranties, or the waiver of these warranties, all of that on the contractual side will help protect the seller. But if the seller commits fraud, meaning an intentional statement or they conceal, that contract is not going to help them.