April 5, 2013
What mare owners should look for in a typical horse breeding contract.
From The American Quarter Horse Journal
The right breeding contract between a stallion and a mare owner can prevent a number of foreseeable problems. Both stallion and mare owners are sometimes surprised to learn – especially after things go wrong – that their breeding contracts have failed to address critical and foreseeable problems.
If you are breeding a mare this season, here are some elements of breeding contracts in the equine industry to consider.
Contracting With the Right Person
Mare owners should make sure that the one with whom they are contracting has authority. Never accept a contract signed by an employee or agent unless you have first confirmed that the party presenting the contract and signing it has the authority to do so. If the stallion is managed by someone other than its owner, the contract should specify that the manager has authority to transact business on behalf of the owner and, of course, execute contracts. And unless a farm name is a true legal entity (such as a corporation or limited liability company), it should not be named as a party to the contract.
The contract can include a clause stating that the party signing the contract on behalf of an entity (such as a partnership, corporation, or LLC) is duly authorized to do so and to bind the entity to the terms of the contract.
This issue has actually come up in litigation over the years.
The stallion’s availability during the breeding months is critical: Some stallions maintain showing schedules while advertised to the public for breeding. For breedings requiring timely access to the stallion – breeding with fresh semen via live cover or artificial insemination, or cooled shipped semen (as opposed to frozen semen that can be stored for shipment) – the contract can specify a range of dates or months in which the stallion is available.
Disclosure of Diseases and Hereditary Conditions
The breeding contract provides an excellent opportunity for the stallion owner or manager to certify that the stallion is in good health and whether or not, for example, he is a carrier of diseases such as equine viral arteritis, hereditary equine regional dermal asthenia, or hyperkalemic periodic paralysis.
Mare owners might want assurances within
the breeding contract that the stallion has been tested for any or all of these.
In AQHA’s FREE Mare Care report, Dr. Racquel Rodeheaver explains the process of preparing your mare, targeting a breeding date, ordering semen, inducing a follicle to ovulate, receiving and evaluating semen and much more. This report is the perfect resource for beginning breeders wanting to breed their first mare.
To prevent surprises and stay within budget, mare owners can look to the contract to specify fees that the stable expects to charge in the breeding process. By listing fees and charges, the parties to the breeding contract can avoid disputes and clarify the process.
Mare owners should examine the contract for fees:
- Shipped semen collection fees and/or shipping fees
- Shipped container deposits and refund terms for the deposit
- Booking fees: While breeding farms vary in their reasons for using a booking fee, a common reason is to secure a spot on the stallion’s breeding list for a given year
- Sales taxes
- Other services that the stallion manager might secure for the mare and pass
Look for dates when payments are due. Contracts frequently address nonpayment or late-payment problems, such as late payment fees and interest on unpaid balances. While reasonable late-payment fees are commonly found in equine industry contracts, interest rates can vary considerably because state laws regulate maximum interest rates. What is legal in one state could be considered excessively high in another.
In the American Quarter Horse industry, breeding contracts customarily come with a “live-foal guarantee.” Some stallion managers even offer “live color foal guarantees.” As simple as the terms may seem, they can generate widely different expectations among mare owners and stallion management. To prevent misunderstandings, the breeding contract can define these terms. As examples, the live-foal guarantee can be defined as:
- A single foal that can stand and nurse; or
- A foal that survives for 24 hours
(some contracts extend this to 72 hours) after birth
Less common are “no guarantee” breeding contracts in which the mare owner received a breeding right for a season, but no rebreed rights follow if the mare fails to generate a live foal.
In other breeds where frozen semen in the norm, stallion owners may offer frozen semen straws for sale with no return rights, no guarantee of fertility and no live-foal guarantee.
Mare owners can request a contract that stipulates to advance notice and an opportunity for the mare owner to consent to such services (except, possibly, in emergency situations when the mare owner can’t be reached). Or, if the mare owner does not approve certain procedures, such as invasive testing, he or she can insist that the contract specify that no permission is granted for specific services.
By comparison, stallion managers handling visiting mares often prefer language within the breeding contract giving broad authorization to arrange for routine or emergency professional services at their discretion, such as inoculations, reproductive examinations, hoof trimming or others.
Before you look at breeding contracts, it's important to know how to care for your mare. With AQHA's FREE Mare Care: Breeding Tips report, you'll get pages of valuable information regarding how to breed your mare with shipped semen as well as tips for handling the semen shipping container.
Entitlement to Refunds
The breeding contract can specify whether or not and when the mare owner is entitled to receive a partial or full refund.
For example the mare owner might only have one mare to breed. If something happens to the mare before the breeding takes place, a refund would be far more important than an option to breed with a substitute mare.
Conversely, if the mare owner is interested in the genetic match between the mare and a specific stallion, should that stallion die or become infertile before the breeding can take place, a refund would be far more important than the stallion owner’s right to select a substitute stallion to fulfill the contract.
Mare owners who seek to fulfill re-breed rights under the breeding contract are sometimes surprised to learn that they are expected to pay additional booking fees. To avoid misunderstandings on the issue, mare owners should look for how the contract defines re-breed rights.
Insurance in Writing
Insurance can play an important role in the breeding transaction, especially when a mare is kept in the care, custody and control of stallion management. The breeding contract can account for insurance in several aspects. Here are two:
First, if the broodmare (or foal) is insured, the stallion owner should keep on file the name of the insurance company (not the agency that sold the policy), the policy number and the insurer’s designated 24-hour emergency contact number. That way, in situations of injury or illness to the insured horse when the mare owner cannot be reached, stallion managers can fulfill the mare owner’s obligation to notify the insurer. Mare owners, recognizing that compliance with the policy’s notice requirement can be important, have every incentive to make sure that the stallion management has this information and that the managers will notify the insurer in these situations.
Second, mare owners might want the contract to specify that the facility is insured with “care, custody and control”
liability insurance. This insurance is designed to respond to claims involving injuries to or losses involving horses that a boarding stable cares for but does not own.
Release of Liability
Reputable stallion owners and managers constantly pride themselves on quality service and satisfied customers. Nevertheless, their breeding contracts often include releases of liability that are designated to protect the stallion owner and afflicted persons from liability if the mare or foal become injured or die from the breeding or care.
Mare owners shouldn’t assume these clauses are unenforceable. In fact, most states have shown a willingness to enforce them, even when the business protected by the release was negligent.
By comparison, releases that attempt to disclaim liability for severe wrongdoing, such as gross negligence or wanton and willful misconduct, are far more likely to fail in a legal challenge.
Wondering the about the steps you need to take in order to prepare your mare for breeding with shipped semen? In AQHA's FREE Mare Care: Breeding Tips report, you'll learn the ropes from equine veterinarian Racquel Rodeheaver as she offers advice on a breeding soundness evaluation as well as what to do when approaching your target breeding date.
Disputes and Legal Fees
The inescapable fact is that even with a well-worded breeding contract, disputes can arise. These disputes sometimes escalate into litigation. In equine matters, litigation can be expensive and very rarely will a court order a party to pay the other’s legal fees unless the judge is convinced that a specific statute or contract has carefully addressed the matter.
Mare owners who want to protect the right to be reimbursed their legal fees can make sure that the breeding contract includes language that if legal action is undertaken to enforce the contract, the prevailing party can collect attorney fees and court costs.
Never assume that the court will award attorney fees to either party without a specific statue or contract creating an entitlement. Whether the dispute involves collection of fees or another matter, the contract should include language that if legal action is undertaken to enforce the contract or collect fees, the prevailing party shall collect attorney fees and court costs.
Once you've got your mare bred all you have to do is wait for her to foal. When that long awaited foal finally comes, here's come helpful advice on your newborn foal.