Generally speaking, it’s very common and completely legal to use a sales agent within an equine business transaction. A sales agent is defined as a person, who acts on behalf of the buyer or seller in a transaction in exchange for commission from the sale. Over the last fifty years, majority of cases related to the sales of horses have been related to an agency. Commonly, when the seller of a horse is sued by an unsatisfied buyer, any people surrounding the sale are sued as well – including the agent. Claims against the seller typically include fraud in the inducement of the sale contract, fraud against the principals of the seller, breach of contract, breach of the covenant of good faith and fair dealing, violations of the Uniform Commercial Code, negligent misrepresentation of fact, and rescission.
Many states, including Kentucky, California, and Florida have enacted state consumer protection statutes that require the disclosure of any agency relationship in an equine sales transaction – including the disclosure of commission, and disclosure of whether the agent is a “dual” agent. If any of these statutes are violated, the buyer in the transaction may be awarded substantial remedies.
Risks to Consider
- The agent might have no authority to enter into the transaction
- The agent might be exceeding restrictions
Protecting Yourself as a Buyer
- Confirm the authority of the agent or seller
- Understand the agent(s) involved and what part he or she plays
- Use a carefully worded contract
- Contact the principal(s)
- Pay the principal
Agency relationships can be complex and it’s important to hire an equine lawyer to help protect your interests.