Legal focus What’s the Problem With Verbal Contracts?

What’s the Problem With Verbal Contracts?

Julie I. Fershtman, Attorney at Law www.equinelaw.net

For decades, this author has written articles on the importance of getting equine-related agreements in writing. Some of the articles even shared common characteristics of effective contracts. Still, people in the horse industry continue doing business with nothing in writing, and disputes have occurred. This article explores what can potentially happen when verbal contract disputes become the subject of a legal battle.

Real Cases Where Verbal Contracts Failed Over the years, verbal contract disputes have generated legal battles. Here are three examples of cases where verbal agreements failed in court challenges because of state laws:

• In a 2003 case from Maine, a verbal agreement regarding ownership, care, training and racing of thoroughbred racehorses was found to be void and unenforceable based on a state law [Maine Statute of

Frauds, 33 M.R.S.A Sec. 51(5)] that required certain types of contracts to be in writing. The verbal arrangement in that case, the court found, violated the law. • In a 2000 New York case, the court refused to enforce a verbal contract involving the boarding, breeding and care of mares and resulting foals. In doing so, the court relied on a state law [New York General

Obligations Law Section 5-701] that required certain types of contracts to be in writing to be enforceable. • In a 1972 New York case, the plaintiff was a horse buyer who claimed to have a verbal agreement to buy the defendant’s racehorse for $60,000. The seller denied an agreement existed, however, and no written contract existed. Arguing that the alleged verbal agreement should not be enforced, the seller cited a different state law [New York’s Uniform Commercial Code, Article 2-201], which required contracts for the sale of goods priced at $500 or more to be in writing. Based on the law, and taking into account circumstances of the dispute, the court ruled that no en-

forceable agreement existed. Equine Industry Statutes That Can Make Contracts Important Aside from general state laws referenced in the cases described above, that can apply to a wide variety of industries, many states have laws unique to the equine industry. These laws sometimes make written contracts important, if not necessary. For example:

Equine Activity Liability Statutes Currently, 48 states (all but California and Maryland) have some type of equine activity liability statute. Some require written contracts. Arizona’s law, for example, provides no protection unless the equine activity participant has signed a “written waiver” that includes specific language supplied in the law. Similarly, West Virginia’s law requires participants to sign a written statement using language that the law provides. Under the laws in a small number of states, “equine activity professionals” or “equine activity sponsors” will lose any benefits in their equine activity liability statute unless their written contracts include the law’s “warning” language or other language as the law specifies.

Equine Sale Disclosure Laws California, Florida, and Kentucky have equine seller disclosure laws, which can impact the language of certain equine sales contracts in those states. Kentucky’s law requires, among other things, written bills of sale and disclosure of agency relationships in sales transactions involving race horses. Florida has an equine sales statute that requires, in part, that sellers and agents in Florida horse

Schools, Colleges and Universities

sales use written disclosures and consent agreements. California’s Business and Professional Code can impact sales contracts involving with Equine Programs racehorses in that state as it requires written bills of sale, disclosures of commissions, and more. What Happens in a Verbal Contract Dispute? Name of school: Averett University When legal disputes involve a verbal agreement, resolving them is never quick, easy, or cheap. Why? With nothing in writing, each party to the What degree or certificate programs are offered? transaction usually will have a totally different understanding of what it Bachelor of Science Degree in Equestrian Studies. involved. As a result, the outcome of lawsuits can be uncertain, but what There are 5 concentrations to choose from within the degree. All is certain is that legal fees could be very expensive. majors take a core of about 30 hours in ES courses and then speThis article is not meant to suggest that written contracts will prevent cialize afterwards. 1all disputes from occurring. Sometimes even the most sophisticated Dressage Instruction: students develop skills and a base of clascontracts can generate legal disputes. To their credit, however, written sical theory for eventing, training, competing, teaching, and contracts can help narrow the grounds of a dispute, which can save writing about Dressage. time, money, and aggravation.2 Eventing Instruction: teaches classical theory and practice for competing, training, and teaching eventing. This article does not constitute legal advice. When questions arise based Students can earn their ARIA certification while in school through on specific situations, direct them to a knowledgeable attorney. an instructor certification course. They also have the opportunity to go through USDF and USEA instructor training programs. 3 Equine Assisted Psychotherapy: Students take courses in

psychology as well as participate in practicums learning EAP equine specialist skills. 4 Equine Science: Students take a variety of science course to pre-

About the author: pare them for graduate studies in veterinary medicine, nutrition, equine reproduction and more. 5 Julie Fershtman, one of the Equine Management: Students take additional courses in the nation’s most experienced business department to compliment the equine courses, and

Equine Law practitioners, is prepare students for a variety of business and marketing careers a Shareholder with Foster in the equine sector. Swift Collins & Smith, PC, in What riding disciplines are available? Michigan. She has successfully litigated equine cases in 18 jurisdictions nationClasses in dressage, hunt seat and eventing are offered at a variety of skill levels. wide and has tried cases in Are the horses owned by the school, students or others? 4 states. She is listed in The The horses are all owned by or leased to the University. Best Lawyers in America and received the American What equestrian-related extracurricular activities (clubs, teams, eBar Association (ABA) tc.) are available? “Excellence in the Advancement of Animal Law Award.” Her speaking We participate in the Intercollegiate Dressage Association, engagements span 29 states. The ABA recently published her new Intercollegiate Horse Show Association (hunt seat), compete 372-page book called “Equine Law & Horse Sense,” and it is available regionally in eventing and combined training shows, work with a for purchase on Amazon and through the ABA. For more information, local thoroughbred rescue, and have a pre-vet club. please visit www.equinelaw.netAre there pre-qualifying criteria for students wishing to enter your program? There are no pre-qualifications for our program. Because our

WORLD-CLASS EQUINE AT CAZENOVIA COLLEGE

• Nationally ranked team competing in Hunter Seat,Western Horsemanship, Reining and Dressage • Nationally recognized equine business management program • Ranked one of America’s Best Colleges and a top Best Value in the north by U.S. News

OUR 240-ACRE EQUINE EDUCATION CENTER

Cazenovia College, Cazenovia, N.Y. 13035 www.cazenovia.edu 1.800.654.3210