Loaning horses and ponies
by Roderick Ramage, solicitor, www.law-office.co.uk
first published in New Law Journal (email@example.com) on 15 July 1994 and later in Horse & Rider in May 1995
This article is not advice to any person and may not be taken as a definitive statement of the law in general or in any particular case. The author does not accept any responsibility for anything that any person does or does not do as a result of reading it.
LOANS PRIZES AND PITFALLS
There are many advantages to a loan of a horse or pony, but there are also pitfalls. The first thing to do is to decide just why you want a loan agreement. We will make two lists. The short one is of the main things wanted by the owner on the one hand and by the borrower on the other. These are the prizes. Next we will make a list of some of the things that can go wrong, so as to highlight the pitfalls. These lists do not cover absolutely every possibility, but they are a basis on which you can make your own. When you have made your lists, it should be more or less obvious what you need to put in the loan agreement.
Before we start, one thing is paramount. The welfare of the horse or pony is paramount and should come before any other consideration.
Sometimes the owner cannot afford the time, money or space to keep a horse, but cannot bear to sell it and wants to be able to keep an eye on it and take it back if the new home or owners are not satisfactory. In other cases the owner will be away temporarily, eg at college or working abroad, and wants to keep his or her horse for his return (it saves space to say "he", "his" etc - unless the editor dictates "she" - instead of saying "he or she" each time). The owner seldom wants to be paid for the loan, but wants the horse to be well looked after and for the borrower to pay all the "running costs". Sometimes the owner also wants to have the right not only to see but also to ride the horse.
Now on the borrower's side, there are perhaps three main reasons for borrowing. One is that the borrower simply cannot afford to buy the kind of horse he wants. Another is that he wants to find out if owning and caring for a horse as opposed to hiring one by the hour is what he really wants to do and can manage. The third is the case of someone who wants to buy a horse, but needs an extended trial to be sure that the one offered is the right one.
In each case an essential feature of a loan is that the relationship is not permanent and the borrower can return the horse without any on-going obligation.
These are what can go wrong, and often they are the most unexpected things. This can be a much longer list. The moral is just the same as in buying: do not get starry eyed and carried away on the "it will be all right in the end" principle. That is how things go wrong. The more things both of you can think of at this stage, that might go wrong in the future, the more likely it is that you will avoid misunderstandings in the future. Some of the most common problem areas are listed below, with a brief discuss of what can go wrong or needs to be agreed.
2 identify the horse
The most obvious thing are so easily overlooked. Describe the horse as fully as possible, including height, colour, breed, age, name, freeze mark or implanted identity chip, all other identification marks and name. If you have breed papers, you can attach a copy of them to the loan agreement, but do not hand over the originals. You could also include a good photograph in the description.
3 tack etc
You should make it clear whether tack, rugs etc are or are not to be included in the loan, and if they are, they should be fully listed and described.
4 how long?
Having identified what is being loaned, the next most obvious thing should be to agree the length of the loan. There are two main options. The first is a fixed term, eg one month, six months or one year. The second is that the loan is indefinite, but either the owner or the borrower may end it on notice to the other. These can be combined, for instance, by agreeing to a term of six months and, if the loan continues after it, then for one month's written notice of termination from either party to the other.
What is the condition of the horse and, if included in the loan, tack and other equipment? If you do not agree on their condition at the start of the loan, you are certainly not going to be able to agree if they are in as good or worse condition at the end.
6 sound and free from vice?
The borrower should insist that the owner warrants that the horse is sound and free from vice, and also, if appropriate, quiet to ride and to drive in single and double harness. Even if nothing is said about condition and vices, there is probably an implied warranty by the owner that the horse is fit for use and free from vices and defects, which would make it dangerous to use, with the result that the owner could be liable for any claims resulting from the horse's poor condition or vice. Therefore, if the horse is in any way unsound or has any vice, the owner should disclose all particulars to avoid or minimise the risk of claims.
7 who pays what?
This starts as a simple list of things that the owner requires the borrower to pay, which could include all expenses for: - field rent, livery charges etc; - hay and hard feed; - worming mixtures, ointments and other self-applied treatments - farrier; - veterinarian; - horse dentist; - insurance; - provision of tack (if not lent with the horse); - repair and replacing the owner's tack; and - transport to and from the owner's yard. It is not automatic that all of these are to be paid by the borrower. Sometimes the owner will insist on effecting and paying for the insurance. If the loan is short term, eg as an extended trial, it might be appropriate for the owner to pay all the bills for the farrier, the vet and the vet, whilst the horse dentist will probably not be relevant in the time scale. The important thing is to agree in advance who pays what. An agreement to agree later who pay what "if it happens" is not legally binding, but instead has all the makings of a legal dispute.
8 who does what?
This links with the "who pays what" list. It is no good stipulating that the borrower must pay the farrier's bills unless the borrower is under an obligation to have the horse's feet attended to and shod at specified intervals. Therefore you must agree who is responsible for doing all the things that need to be done as well as agreeing who pays for them.
9 care and attention
The first obligation must be to look after the horse and keep it in good health and condition, and the other obligations, shoeing, vet etc follow from that and can be based on the who pays list. You normally want the borrower to maintain (or improve) the standard of the horse's schooling and may require him to keep it in use.
10 use: permitted and prohibited
On the other hand you may want to restrict what the borrower can do with the horse. For instance you may be happy for the borrower to use the horse for hacking out and gymkhanas, and dressage and show jumping (at least up to an agreed class of competition), but prohibit, say, eventing and hunting. If you do not limit what the horse can be used for, the borrower can probably assume that he may use the horse for any purpose in its capabilities. At the same time the owner will probably want to restrict who is allowed to ride the horse.
As well as use, the owner should be aware of the risk of the horse being taken out of the district. Therefore he may insist on a geographical restriction. Where may the horse be taken? The owner should specify where the horse is to be kept and that his permission is needed before it is taken out of the specified district or even to another yard.
Another important point, which is easily overlooked, is to forbid breeding from the horse without the owner's permission and to agree to whom any foal would belong. Any foal bred in breach of a prohibition against breeding almost certainly belongs to the owner, but if the borrower is permitted to breed from a loan mare, then in the absence of agreement on the point, the foal probably belongs to the borrower. Where breeding is simply not mentioned, the [probable outcome is that any] foal would belong to the owner.
This begins to come to the painful part of loaning. If all goes well the loan will come to an end when agreed and the horse and tack will be returned to or collected by the owner. However in addition the owner often needs a right to recover possession of the horse during the agreed term or without advance notice, if the borrower breaks the agreement or for the welfare of the horse, for instance if the owner believes that there is any form of ill-treatment. The agreement can include right for the owner to enter the borrowers property to see or take possession of the horse, but there can be difficulties where the horse is kept in livery or on rented land. In these cases, the owner, in the absence of permission from the owner of the livery yard or land, would be a trespasser and forbidden entry. This is another reason to specify where the horse is kept.
Perhaps the first point to make here is that the owner should be able to prove in the first place that he owns the horse. How do you prove that the horse is yours. When and where did you buy it? What did you pay and how did you pay it? Indeed, have you paid the whole price? Have you got the receipt? What does it say? If there was a written sale agreement, have you got it and what does it say? Even if you can prove your contract to buy a horse, how can you show that the horse in question is the same one that you are about to lend? These are largely matters of evidence, and well kept records are likely to deal with the question. The relevance to loan agreements is that your borrower might at some stage claim that the horse is his. If he does, you must be able to prove your ownership before you can challenge his claim. There are several ways this problem can arise.
The simplest is straight theft. The borrower simply removes the horse out of the district and sells it where it is not known. In passing, the brazen horse thief has been known to obtain false freeze mark papers and sell a horse out of the owner's own field! If the borrower is not known to you personally, you will need at least proof of identity and, if you have any doubts, a guarantee from either someone you know or somebody like a bank.
3 adverse possession
The most careless is that the owner in effect abandons the horse leaving it with the borrower and failing to take any steps to assert his ownership. You probably know that a landowner's right to recover land from a trespasser is lost after twelve years. The "limitation period" for chattels, which includes horses is [six] years: so if you do nothing for [six] years, and then ask for the horse back and the borrower refuses, you will have lost your right to apply to the courts get it back. Even if the loan terms leave everything to the borrower, all you need to do to assert your ownership is visit "my horse" occasionally or to ask or write about "my horse", any of which is enough to show that you claim it as yours. If the borrower should deny or challenge your ownership, you are warned of a problem, on which you should take legal advice as quickly as possible. The fact that for several years the borrower has looked after the horse exclusively, has paid all the bills and even has had it freeze marked or identity chip implanted in his name does nothing to transfer ownership to him.
If you have read this far and are not exhausted, you might be asking if all this fuss is worthwhile. I hope however that the descriptions of what can go wrong are enough to convince you that a bit of effort to get things right at the start can go a long way to avoid trouble in the future. Of course there is no substitute for common sense, good will and a bit of give and take, but, despite the best intentions, it is easy to assume that you know what the other person has agreed, whilst he is in fact assuming something quite different. Lawyers often say that the best agreements are those on which the parties have worked so hard, that they do not need to be looked at again.
Owner (name-A), (address).
Borrower (name B), (address).
[Users The Borrower's children (name C) and (name D).]
Horse [Liver chestnut mare, 15.1 h height and 8 years old, called (name E), freezemark number (....))(as portrayed in the attached photograph and copy papers signed by the parties].
Tack The tack and other equipment listed in the schedule.
Term Twelve months from the date of this agreement.
Livery Yard The livery yard of and operated by (name F) at (address) or any other suitable livery yard designated by the Owner.
Agreed Value£(.....) ((.....) pounds), being the amount agreed by the Owner and the Borrower as the fair open market price for the sale of the Horse.
1 The Owner agrees to lend the Horse [and Tack] to the Borrower and the Borrower agrees to Borrow the Horse [and Tack] for the Term free of any rent (or) at a rent of £(.....) ((.....) pounds) per week payable in advance on every Saturday.
commencement and period of loan
2 The loan under this agreement starts on [(date) (or) today] and remains in force until it is terminated on any [[Saturday] (or) the last day of any month] [not earlier than (date) (or) the end of the Term] by not less than (number) [days' (or) weeks'] prior written notice by either party to the other. accommodation.
3 The Borrower [and the Users] will keep the Horse at (address), where they will keep [her] stabled and pastured as appropriate according to the seasons and weather. The Borrower [and the Users] will not move [her] to any other place without the Owner's written permission.
care and attention
4 The Borrower [and the Users] will take good care of the Horse giving [her] plenty of love and attention and keep [her] properly fed and watered according to workload [but not include any [sugar beet] in [her] feed] and keep [her] in not less than [her] present physical condition [as evinced by the statement of the horse's condition should be signed and attached to this agreement] and state of schooling and training.
5 The Borrower [and the Users] will shoe and worm the Horse at least every six to eight weeks, have [her] teeth rasped at least once in each year and maintain [her] inoculation against flu and tetanus up to date in accordance with normal veterinary practice.
6 The Borrower will be responsible for all veterinary, farriers and other necessary fees and expenses in connection with the Horse during the Term.
7 The Borrower [and the Users] will ensure that the Horse's schooling is maintained at least its present standard and that the Horse with either of the Users has not less than one hour's tuition in each week of the Term (except four weeks which may be omitted) with the above named (name F) at the Livery Yard or elsewhere as agreed with (name F) or some other instructor agreed in writing by the Owner.
8 The Borrower [and the Users] will use the Horse only for pleasure purposes, including hacking, gymkhanas and show jumping [but not for hunting or racing in any of their forms], and will not lend [her] to any other person or allow any other person except a competent rider to ride [her] without the Owner's written permission.
8 The Borrower will use the Horse only for teaching normal flatwork, dressage and jumping to those of her pupils, whom she considers suitable and not likely to cause any harm to the Horse, in the (name) School of Equitation, including hacking, gymkhanas and show jumping but not for hunting or racing in any of their forms, and will not lend him to any other person or allow any person except a competent rider to ride him without the Owner's written permission.
9 The Borrower [and the Users] will not breed from the Horse.
10 The Borrower will not change the name of the Horse or give him any other name for any purpose or register him with any organisation without the Owner's written permission.
11 The Borrower will insure the Horse [and Tack) in the joint names of the Borrower and the Owner for not less than the Agreed Value against all usual risks including death, loss of use, veterinary fees, death or injury of every person who at any time rides or handles [her] and third party risks, pay all premiums to keep the insurance in force, notify the insurer of this agreement and supply a copy of the policy to the Owner.
12 The Borrower will provide for and use in respect of the Horse properly and whenever necessary all appropriate tack, rugs and other equipment.
13 The Borrower [and the Users) will keep the Tack secure and in good and well maintained condition, repair it as necessary, replace any of it which is lost stolen or damaged so as not to be useable with items of a similar quality, use it properly and not use it for any purpose except on or for the Horse.
14 The Owner owns the Horse free from encumbrances but otherwise gives no warranty of any kind about [her] and the Borrower must rely for all purposes exclusively on [his (or) her (or) the Users'] trials and veterinary examination of the Horse.
option to buy
15 The Owner grants to the Borrower the option to buy the Horse [and Tack] for the Agreed Value.
16 The Owner may sell the Horse [and Tack] to any other person during the last three months of the Term, or earlier if the Borrower offers to buy the Horse [and Tack] for less than the Agreed Value; but will not do so without first offering [her] to the Borrower by two weeks' written notice at the price offered by the other person.
17 The Borrower may exercise his (or) her right under clause 15 at any time during the Term or accept the Owner's offer to him (or) her under clause 14 within two weeks of the Owner's notice under clause 16; and shall do so in either case by written notice to the Owner accompanied by a bank draft for the price. On payment of the price the ownership of the Horse [and Tack] will pass to the Borrower absolutely and free from encumbrances.
18 The Borrower [and the Users] will let the Owner visit the Horse at all reasonable times, but the Owner will not ride the Horse at any time without first notifying the Borrower and ensuring that it does not interfere with use or planned use of the Horse.
19 If the Owner exercises his (or) her right of sale under clause 16, the Borrower [and the Users] will let the Owner and any person authorised by his (or) her to view, try and examine the Horse on not less than two days' prior notice and will give any such person reasonable facilities to view, try and examine the Horse.
20 The Borrower shall obtain from all persons, who have any interest in any property on which the Horse [and the Tack] is or are kept or to which it is taken, consent to Owner's right of access to the Horse [and the Tack] during and on the termination of this agreement.
not to operate or destroy
21 Except in the case of emergency the Borrower will not have the horse operated on without consultation with the Owner or destroyed without the Owner's written consent.
22 The Borrower may terminate the borrowing at any time:
- in the first three weeks of the Term without any penalty or liability to the Owner except for the breach (if any) of this agreement; or
- during the remainder of the Term with the consequences in clause 24.
23 The Owner may terminate the Loan and retake possession of the Horse [and Tack] at any time if the Borrower [or the Users or any of them] fails to comply with the terms of this agreement or if the Owner has good reason to believe that he (or) she should do so in the interest of the health or welfare of the Horse.
effect of termination
24 The Borrower will without delay and at [his (or) her] expense return the Horse [and Tack] to the Livery Yard and pay all charges for the full livery of the Horse there for the balance of the Term [three months (or) the remainder of the Term if less] if the loan is terminated by the Owner on the grounds of any material breach of this agreement by the Borrower [or the Users], by the Owner for any reasonable cause (justified by veterinary or other expert opinion), or by the Borrower for any reason.
25 At any time on or after the termination of this agreement by either party the Owner may at the cost of the Borrower retake possession of the Horse [and the Tack) and for that purpose enter any place at which they are or at which the Owner reasonably believes them to be. personal to borrower.
25 The loan is personal to the Borrower and terminates automatically if the Borrower dies or lends, sells or in any other way parts with the possession of the Horse or attempts to do so.
27 All disputes differences and questions which at any time arise between the parties touching or arising out or in respect of this agreement or its subject-matter shall be referred to a veterinarian as an single arbitrator in accordance with the Arbitration Act 1996.
particulars of the Tack [Saddle: Fieldhouse GP] [Bridle with Stuben snaffle bit] [Blue and red quilted stable rug] [Blue check travelling rug] [Hessian rug] [Blue New Zealand rug] [Tail and leg bandages]
SIGNED by the Owner
SIGNED by the Borrower
[SIGNED by the Users)
This precedent is not intended for short term hire. The purpose of the loan must be ascertained. The two most common reasons for an owner to lend a horse are that (1) he does not wish to sell it, but cannot afford the time, money or space to keep it but wishes to take it back if the new home or owners are not satisfactory, and (2) he will be away temporarily, eg at college or working abroad, and wants to keep the horse for his return. This precedent assumes, as is usually the case, that he owner does not wish to be paid a rent for the loan, but wants the horse to be well looked after and for the borrower to pay all the "running costs".
For the borrower, there are perhaps three main reasons for borrowing: (1) he cannot afford to buy the kind of horse he wants; (2) he wishes to find out if owning and caring for a horse as opposed to hiring one by the hour is what he wants to do and can manage; and (3) as a prospective buyer he needs an extended trial to be sure that the horse offered is the right one.
(note to clause 5 and 11)
It is not automatic that all of these are to be paid by the borrower. Sometimes the owner will insist on effecting and paying for the insurance. If the loan is short term, eg as an extended trial, it might be appropriate for the owner to pay all the bills for the farrier, the vet and the vet, whilst the horse dentist will probably not be relevant in the time scale.
(note to clause 8)
In the absence of express agreement to limit use to which the horse can be put, the borrower can assume that he may use the it for any purpose in its capabilities.
(note to clause 9)
Where breeding is not mentioned, any foal would belong to the owner as would any foal bred in breach of a prohibition against breeding, but if the borrower is permitted to breed from a loan mare, then in the absence of agreement to the contrary, the foal probably belongs to the borrower.
(note to clause 12 and 13)
Whilst it is not usual to include tack on the sale of a horse, on a loan the owner is likely to want to ensure that the borrower uses tack that fits and the borrower does not normally expect to incur the expense of buying tack.
(note to clause 14)
Whilst the borrower may wish that the owner warrants that the horse is sound and free from vice, and also, if appropriate, quiet to ride and to drive in single and double harness, the owner should insist that the borrower tries the horse thoroughly and, if not an experienced, does so both in person and by and experienced rider. If nothing is said about condition and vices, there is probably an implied warranty by the owner that the horse is fit for use and free from vices and defects, which would make it dangerous to use, with the result that the owner could be liable for any claims resulting from the horse's poor condition or vice. If the horse is in any way unsound or has any vice, the owner should disclose all particulars to avoid or minimise the risk of claims.
(note to clauses 18 to 20)
If the horse is kept in livery or on rented land, the owner would be a trespasser and forbidden entry, in the absence of permission from the owner of the livery yard or land.
(note to clause 22)
The obligation in clause 24, to pay the horse's livery charges for the full term if the borrower terminates the loan prematurely, puts a heavy burden on the borrower at the start of the term. This clause is intended to give the borrower an escape by breaking the agreement for any reason without penalty in the first four weeks, which should be adequate to decide if the horse is suitable.
copyright Roderick Ramage
click below to