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Need Legal Advice on Sale of Horse

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  • Need Legal Advice on Sale of Horse

    I sold a horse (being the agent) 3 years ago. I stumbled across a for sale add on a website last night. I pulled the sale contract out just to be sure I had put my Right of First Refusal clause in there- and yep I sure had. It's a generic clause that I put in all my horse's sale contract. It reads...

    "Horse is being sold on the Right of First Refusal. This means if Buyer decides to offer hrose for sale she must first offhorse back to Seller at the original purchase price ($8500) for the first year and then at the lowest advertised price based on Horse's training and condition after that. She must send a letter to Seller by certified mail before she offers Horse for sale to the general public. Seller then has 30 days to accept the offer or deny it. He will reply with a letter to the Buyer by certified mail. If Seller does not respond during the 30 days the agreement will be voided. If Seller does not buy horse back, Buyer must supply Seller with the contact information for the new owners."

    The horse's previous owner called me this afternoon- he's irate. He wants the horse back and is upset that these people have broken the contract. He's interested in seeking legal assitance in the matter to get horse back at lowest possible price.

    Has anyone ever been through this before? Let me know how it turned out...

  • #2
    My first thought that there is no termination date in this clause - even if the termination was 'lifetime of horse'.

    My second thought is after the first year. . . how does one determine the lowest advertised price if one is not allowed to advertise to determine this?

    Finally, if horse is for sale, why doesnt the previous owner who wants horse back just call up and make an offer? If the owner is not willing to sell at that offer because they are only willing to sell for a higher price, then the the right of first refusal has been exercised and the whole thing becomes null and void.

    Yes, new owner violated the spirit, and potentially the letter, of the contract, but I think it is easily rectified.
    Dina
    www.threewishesfarm.com
    www.fairharbourfarm.com
    http://www.facebook.com/ThreeWishesFarm Like us on Facebook!!

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    • #3
      Right of first refusal clauses are generally unenforceable. The basic premise is that you cannot tell someone what to do with something they legally own. If you don't want someone to resell a horse they have bought then don't sell it. Acting on a right of first refusal is a courtesy.
      "Kindness is free" ~ Eurofoal
      ---
      The CoTH CYA - please consult w/your veterinarian under any and all circumstances.

      Comment


      • #4
        Just a question, obviously this doesn't have anything to do with your situation since the person who bought the horse signed the contract, but why would someone agree to offer the horse back to the original owner for the same price for a whole year? With training and a successful show record the horse's value could increase significantly in that amount of time, so I don't see why any buyer would agree to such a clause, but again not relevant in your case since the buyer did indeed agree.

        Comment


        • #5
          Roxy - I've seen people do that if they sell a horse for a "below market" price to a preferred home, so the new owners can't take advantage of the price break and flip the horse.

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          • #6
            Why would a right of first refusal be unenforceable? The buyer agreed to those terms.
            Deed restrictions on a property are enforceable. Those deed restrictions mean I can do just anything on the property.
            Home owner associations restrict what I can do with my property.
            I purchased a lab puppy on restricted AKC papers. I can't show my property in confirmation classes and if I breed him his puppies won't get AKC papers.
            Why therefore would a right of first refusal in a contract that the buyer signed and agreed to not be enforceable?
            Any lawyers have thoughts on this?
            Oh, well, clearly you're not thoroughly indoctrinated to COTH yet, because finger pointing and drawing conclusions are the cornerstones of this great online community. (Tidy Rabbit)

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            • #7
              Originally posted by scrbear11 View Post

              "Horse is being sold on the Right of First Refusal. This means if Buyer decides to offer hrose for sale she must first offhorse back to Seller at the original purchase price ($8500) for the first year and then at the lowest advertised price based on Horse's training and condition after that.

              He's interested in seeking legal assitance in the matter to get horse back at lowest possible price.

              Has anyone ever been through this before? Let me know how it turned out...
              I believe I saw the ad myself, and was puzzled, but that's another story.

              Haven't been through this personally, but it brought up another question. What happens if the horse's condition does not warrant even the original sale price? (Ie, injury, lameness, etc that would affect the value of the horse at this point in time.)

              Does the original owner have the opportunity for an exam? Or if they really want the horse back, must they cough up at least the original sale amount regardless?
              http://www.fouroaksfarmva.com

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              • #8
                I think that the clause would be enforceable, it is a signed contract.

                Another question legal question:

                If Suzie bought a horse that she later decided was to much horse for her. She advertised it for sale stating all the issues that she had had with the horse (also stating that she was a beginner and the horse needed and advanced rider). Then Debbie came and bought the horse. Debbie signed a bill of sale saying that she knew the horse was an advanced persons horse and the horse was for sale as is etc. Debbie gets hurt by the horse 3 weeks later when horse bucks her off and she breaks a bone. Debbie tries to sue Suzie.

                Could that ever actually go to trial?
                That doesn't make any sense.

                Comment


                • #9
                  Originally posted by colleen9 View Post
                  I think that the clause would be enforceable, it is a signed contract.

                  Another question legal question:

                  If Suzie bought a horse that she later decided was to much horse for her. She advertised it for sale stating all the issues that she had had with the horse (also stating that she was a beginner and the horse needed and advanced rider). Then Debbie came and bought the horse. Debbie signed a bill of sale saying that she knew the horse was an advanced persons horse and the horse was for sale as is etc. Debbie gets hurt by the horse 3 weeks later when horse bucks her off and she breaks a bone. Debbie tries to sue Suzie.

                  Could that ever actually go to trial?
                  That doesn't make any sense.
                  Nope. As long as the contract says the horse is sold as-is, without warranties, etc, if she falls off, it's her problem.

                  Comment


                  • #10
                    Originally posted by toomanyponies View Post
                    Finally, if horse is for sale, why doesnt the previous owner who wants horse back just call up and make an offer? If the owner is not willing to sell at that offer because they are only willing to sell for a higher price, then the the right of first refusal has been exercised and the whole thing becomes null and void.

                    Yes, new owner violated the spirit, and potentially the letter, of the contract, but I think it is easily rectified.
                    I agree. The seller knows the advertised price of the horse. If he wants it, he should buy it quickly before someone else does.

                    Why would you want to involve getting a lawyer to get the horse back. That will only make it cost more money
                    Auventera Two:Some women would eat their own offspring if they had some dipping sauce.
                    Serious Leigh: it sounds like her drama llama should be an old schoolmaster by now.

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                    • #11
                      Originally posted by scrbear11 View Post
                      It's a generic clause that I put in all my horse's sale contract. It reads...

                      "Horse is being sold on the Right of First Refusal. This means if Buyer decides to offer hrose for sale she must first offhorse back to Seller at the original purchase price ($8500) for the first year and then at the lowest advertised price based on Horse's training and condition after that. She must send a letter to Seller by certified mail before she offers Horse for sale to the general public. Seller then has 30 days to accept the offer or deny it. He will reply with a letter to the Buyer by certified mail. If Seller does not respond during the 30 days the agreement will be voided. If Seller does not buy horse back, Buyer must supply Seller with the contact information for the new owners."
                      Doesn't this imply that in order to comply with the terms of the contract, they actually have to advertise the horse for sale?
                      Auventera Two:Some women would eat their own offspring if they had some dipping sauce.
                      Serious Leigh: it sounds like her drama llama should be an old schoolmaster by now.

                      Comment


                      • #12
                        A good right of first refusal clause can be tricky to draft. One basic premise to that clause is that there has to be a term specified. Here it appears you specified the initial one year term, that it match the purchase price. Then you left an "open term." An open term generally will not be enforceable as a valid contract. This kind of term is construed by the courts in many states as similar to non-compete clauses. Because this kind of clause in a contract limits the ability of a person to do something that he or she would normally have a legal right to do, the clause must be very specific and from what I learned many years ago in law school, must include a time limit. States vary in their interpretation of these clauses, so if you want good advice on what the options are, you should check with a local attorney that is familiar with the state common law interpretation for this kind of contractual agreement.

                        Another issue is that there is often some kind of consideration that is spelled out in the contract for that right of first refusal. It could be money, or a month of free board, or something. But to create a valid clause, it is better to spell out some kind of consideration. This issue can vary from state to state,

                        Bear in mind that the lawsuit could be very costly and my best guess is it is not worth the headache. However, if the buyer really wants the horse back, she should approach the current owner and offer to buy it. Even if your clause was considered valid and legally binding (which it may not be due to the lack of term specified), a breach of contract is generally not actionable unless the horse actually gets sold, and the old owner establishes that they wanted to buy the horse, and is ready to buy the horse and in fact will do so. SO if the owner really wants to get the horse back and play this game in court, she is going to have to make the offer, have it rejected, and then file a suit. And I cannot say this is going to be a winner of a case for them, due to the fact that the term was left open after the first year.

                        Please bear in mind that each state has different common law principles that will effect the outcome of the case. I am a lawyer, but in no means wish to give any legal advice in the matter. I only mean to help you understand basic principles so that you can better understand whether you should contact an attorney and consider what options might be appropriate.

                        Also, for those of you that are drawing an analogy to a homeowner's association, that kind of clause is not construed in the same manner as a right of first refusal clause. That would be a long analysis to explain, so I wont go into that. But they are not the same.

                        A good question to ponder is whether the old owner really wants to get the horse back, or are you just offended that the spirit of the clause was not honored? Court's only award damages based on actual loss to a party.

                        Comment


                        • #13
                          My initial reaction--it's been 3 years since you sold the horse (meaning the owner, not you). Do they follow up on every single horse they have ever sold? Why do they care? Is horse being offered for sale for more than they sold it 3 years ago & that's why they are upset?

                          And while I hear lots of talk about 1st right of refusal, I have never actually seen it ever enforced.
                          "I'm not crazy...my mother had me tested"

                          Comment


                          • #14
                            This kind of "clause" is good hearted but really impractical. Has the new owner refused to accept an offer at the lowest advertised price?

                            Has any offer been made?

                            Not a lawyer but don't see any real issue here unless an offer was made and refused.

                            Oh, the deed restrictions? They may be tecnically enforceable but it costs a fortune to do that and all you get is a legal bill and a judgement (Been on a condo board). And they do not restrict selling the property. the AKC does not restrict selling a pet quality dog-or a show dog.
                            When opportunity knocks it's wearing overalls and looks like work.

                            The horse world. Two people. Three opinions.

                            Comment


                            • #15
                              Other than not sending the certified letter I don't see what the purchaser/now seller did wrong. I agree simply contact them and ask about it and make an offer. Very possible they have financial or health issues or simply need a different type horse, all very plausible. Also after the first year because of the reference to lowest advertised price, it would imply the new owner would need to "advertise" the horse before informing the former owner

                              My bet it the seller totally forgot about the clause. They may have lost your or the original owner's contact information, etc. Just give them a call and see what the deal is.

                              You even said its a standard thing but when have you really used it?

                              I think the only time the whole first right of refusal even makes sense is when you give an already trained nice horse away or very under market and ask for it back if they don't want it any more but even then hard to enforce.

                              Comment


                              • #16
                                Not a lawyer, but have consulted with one on a similar issue (psycho former owner threatening to sue based on a right-of-first-refusal clause that wasn't actually in the bill of sale). I was told similar to what Suzanne above said, and in addition, even if I had sold, because there was no penalty spelled out in the contract for breaching that term, the prior owner would have to prove the breach had damaged them materially, and sue for the amount of damages, as the sale was very unlikely to be unwound.

                                But seriously, if the horse is for sale at an advertised price, why doesn't your client just go pay the price and buy the horse? He's just being a jerk if he's going to go throw a lawyer in their face and try to get the price dirt cheap.

                                Also- do you really expect someone to give the prior owner 30 days to decide to re-buy before putting the horse on the market? That's really quite odd, and I'd never sign a contract with that clause, even though it is not easily enforceable.

                                Comment


                                • #17
                                  How much more than the original $8,500 is the new, advertised price?

                                  If I were the old owner, I'd send the new owner a firm "heads up, you're violating our agreement" letter with a copy of the signed contract appropriately highlighted. Give them a chance to make it right.

                                  The bad news for the old owner is that the lowest advertised price may be more than everyone knows the horse is currently worth. The old owner then is obligated to buy at this price or walk.

                                  I can't imagine how this contract would work with a horse advertised without a price.
                                  The armchair saddler
                                  Politically Pro-Cat

                                  Comment


                                  • #18
                                    Now that the old owner has found out the horse is for sale, he needs to make an offer for the lowest advertised price. If he doesn't, he's going to "stubborn" himself out of the contract. IOW, if he doesn't make an offer, now that he knows about it, he doesn't want the horse.

                                    If the horse isn't sold yet, and he makes an offer at the lowest advertised price, the seller should take his offer. Win, win.

                                    Did the seller offer him the horse? Well, now that they advertised, it would be a good idea. They may not have intended to offer the old owner the horse unless someone actually makes an offer on it.

                                    IOW, the horse is for sale, and before I sell it to someone else, I'll call up Mr. Wierdo ExOwner and tell him, so he has an opportunity to bid. If I'm not getting any interest in the horse, I just may take it off the market and not sell it any more. Or take it off the market and do some more training. Or change my mind and not sell it. Or relist it next month for twice the amount I'm asking right now. Actually, I haven't decided whether I am really selling the horse or not. Yes, I advertised, but its only to put out feelers and see what responses I get.

                                    I don't believe the seller is in breach of contract unless he makes a deal without someone else without offering the exowner first opportunity.

                                    I don't think the seller is obligated to sell the horse, just because he is advertising it. I think the seller is obligated to offer the horse to the ex-owner before accepting a sale offer from anyone else.

                                    I
                                    Airborne? Oh. Yes, he can take a joke. Once. After that, the joke's on you.

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                                    • #19
                                      Double post, sorry.
                                      Airborne? Oh. Yes, he can take a joke. Once. After that, the joke's on you.

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                                      • #20
                                        IMO
                                        As an agent I would try to stay as far away from any buy back clauses as possible. It will come back to haunt you. There are certain things that you may want to flip to an attorney. As a typical selling agent this is somewhat out of your field to negotiate. I am not going to tell you that I have never done it, but I try to stay away from any complicated situations in a sale contract. Write a simple sale contract that will cover you and your seller and if they want a further clause in the ttransaction give them a name of an attorney to call.
                                        I recently was sellers agent on a very complicated sale that involved breeding rights and advertising etc. I wrote a contract as I saw the parties wanted the agreement and then sent it to the attorney that I had recommended to them. Even doing that I still get emails re one party not performing to the others expectations. By handling it the way we did I can just email them the attorney's phone #. Not my drama anymore.
                                        Lastly as many have posted, if the man really wants his horse tell him to offer the lowest advertised price. Usually they are just po'ed because the people are asking more $ than he got. In three years time it is most likely worth more if it has a show record and has been trained well.
                                        www.midatlanticeq.com
                                        Mid-Atlantic Equitation Festival,Scholarships and College Fair
                                        November 11-13, 2016

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