Horses and the Law
Public Auctions

Disclaimer - This article is intended as general discussion and information on the topic covered, and is not to be construed as rendering legal advice. If legal advice is needed, you should contact an attorney. This article may not be reprinted or reproduced in any manner without prior written permission of the author.

“A horse! A horse! My kingdom for a horse!” William Shakespeare from “King Richard III” (1592-1593)

How many of you ever felt like Richard the III? Did you ever attend an auction and find that perfect horse for which you bid your kingdom? Or at least it felt that way! Draft horse auctions are great fun. They not only help set the market for draft horse value, but they provide a great social gathering of people in the draft world.

Auctions also tend to make you look deep inside your own barn. Do I need to sell any horses? Do I need to replace any horses? Do I need to buy any horses? If you have answered yes to any of the above questions, you will most likely consider attending one of the major public auctions held across the country.

Now the fun begins. If you are a buyer and have the high bid, do you have the legal right to reject the horse? What if you are the seller, must you legally take the horse back if rejected by a buyer? What happens if the high bidder leaves the auction without the horse and without paying for the horse? What is the legal responsibility of the auctioneer to call any known defects immediately prior to sale?

This article will review the basic legal principles of public auctions and answer the questions posed above.

Before attending a public auction, a buyer or seller should contact the sale barn and request a copy of the sale catalog. The sale catalog contains essential information concerning the legal requirements for the sale of a horse. One of the most important legal requirements is that of a negative Coggins Test. However, please note that there are two types of Coggins Tests, the AGID and the ELISA. Canada does not recognize the ELISA test, so to insure that a horse can go from the states to Canada, you need a negative AGID test within six months or twelve months of the sale date. (The time period depends on the sale barn and again will be set forth in the sale catalog.) Further, individual health papers are required on each horse and on separate form for interstate and international travel.

If you are the high bidder, are you automatically the buyer? The answer depends on whether or not the sale recognizes a reserve or buy-back of the horse in the event of an insufficient bid. A reserve is a bottom-line or minimal amount the seller is willing to take for a horse. If that minimal amount is not met, the seller can withdraw the horse from the sale, and the high bidder is not the owner of the horse. It is important to review the sale catalog and determine whether or not the sale recognizes reserves or minimum bids.

The obvious advantage of an auction is the variety of selection available to the buyer. Many major auctions have hundreds of horses available for sale and also have sale committees which inspect the horses and rate the horses’ ability to hitch and drive. However, buyer beware. Usually guarantees are not given at public auctions and complete vet examinations are rarely permitted prior to sale. With that said, if the inspection committee notes a defect, such as wind or swelled hock, etc., the sale committee has a legal obligation to announce the defect on the block prior to the sale. Likewise, if the seller is aware of a defect, the seller is legally obligated to inform the sale committee so the auctioneer can announce the problem prior to the horse being struck off.

Announcing a defect is critical. If a defect is not announced and later discovered by a buyer before the horse leaves the sale premises, the buyer can legally reject the horse. However, if the defect is announced to the public before the horse is auctioned off, the buyer cannot legally reject the horse as he purchased the horse subject to the announcement and is then considered to have knowledge of the problem, even if the individual buyer did not hear the announcement.

Generally, a sale is considered final when the horse leaves the sale grounds. One cannot take the horse home and then return to the sale grounds to reject the horse since the buyer could have inspected the horse at the sale barn prior to leaving, and since the seller has no way of knowing what may have happened to the horse once the horse was off the sale grounds.

However, there are exceptions to this general rule. A horse can be rejected after it leaves the sale barn if the horse was drugged or had a defective condition which could only be determined by blood tests or in-depth vet exam, which would take more than one day to obtain results. For example, if a horse were drugged, a blood test would need to be taken which could take days for results. In such a situation, with the blood test results from a certified lab and a veterinarian affidavit, a buyer can reject the horse and submit the documents to the sale committee for further action. It is a good idea for the sale committee to be sure that such a clause is inserted in every sale or consignment agreement so that the seller is aware he is responsible to return the money and accept the horse under the conditions set forth above. Note, however, that a buyer is under a time obligation or statute of limitations by analogy. The buyer cannot wait months or even weeks to perform tests. Any analysis must be promptly performed.

What if a high bidder at auction leaves without taking the horse and without paying for the horse? The high bidder, so long as he signs the sale slip, is legally obligated to pay for the horse and all costs incurred thereafter, such as board, feed, trucking, etc. Most auctions have a sale slip or bill of sale, which must be signed by the purchaser after the horse is auctioned off to the high bidder. The sale slip contains information identifying the seller, the horse, the date and the purchase price. Most importantly, the slip also has a place where the buyer must print and sign his name and provide his address. By signing the sale slip, the buyer has legally obligated himself to pay for the horse.

Public auctions are exciting and a lot of fun. However, if you are buying or selling, you must focus on the job at hand. Inspect the horse you are interested in buying with a keen eye, and do not be afraid to ask questions. If you are the seller, be honest with the sale committee and potential buyers and reveal any known defects concerning the horse. Review the sale catalog closely and know the legal requirements of the sale committee. Listen closely to the auctioneer before a horse is put up for sale and note any called defects. If you have done your homework and are ready for the sale, you still need a little luck. So cross your fingers and bid-a-way!

Enough legal talk–it’s time to hitch horses!

Ken is a practicing attorney in Myerstown, Pennsylvania, where a good bit of hispracticein-volves negligence cases. Ken and his wife, Karen, own Sunny Hill Farm Belgians, and they have been exhibiting their six-horse hitch for the past few years at most major shows in the east.