88 SIDELINES JANUARY 2014
FOR HORSE PEOPLE • ABOUT HORSE PEOPLE
e
Equine Law
By Lisa Hollister, Esq.
Recently, my editor was contacted by a plaintiff in a lawsuit
that concerned alleged violations of implied and express
warranties, non-conforming goods, as well as fraud and negligent
misrepresentation. In the complaint, the plaintiff asked for
rescission (the cancelation of a contract and returning the parties
to a position they would have been in had the contract never been
made.) Unfortunately, because this particular matter is presently
before the courts, I feel that it would be inappropriate for me to
review its merits until the court has made a decision.
However, I do feel that it would be helpful for readers to
understand both express and implied warranties as well as how
to exclude warranties the next time you buy or sell a horse. Since
most states have adopted the Uniform Commercial Code, “UCC”,
warranties as defined in the code are the most universal to review.
Express Warranty
Section 2-313 of the UCC states under section 1. (a) “any
affirmation of fact or promise made by seller to the buyer which
relates to the goods and becomes part of the basis of the bargain
creates an express warranty that the goods shall conform to the
affirmation or promise” and as a result a seller needs to be very
careful what they say and how they say it when describing a
horse’s qualities. Additionally, in section (b), the UCC adds that
“any description of the goods also creates an express warranty,”
making it equally important for a seller not to overly describe or
represent a horse’s good qualities that a buyer may rely on when
deciding whether or not to purchase the horse.
For those of you who think a warranty can only be created
by saying words such as warranty or guarantee when describing
the horse, you should be aware that in section 2-313.2 the UCC
specifically states that the seller need not use words such as
“warranty and/ or guarantee” to create a warranty. Sellers will be
relieved to know that under the code, “an affirmation merely of
the value of the goods” or a “statement purporting to be seller’s
opinion” does not necessarily create a warranty. Often such
statements are argued to be merely “puffing” on the part of the
seller. In general terms what this means to the seller is that you
should be careful not to make any statements to induce the buyer
to purchase the horse which you cannot factually back up and, if
you do make any statements, it would be wise to preface them
with words such as “in my opinion.”
Implied Warranty
More commonly in horse sales the issue of implied warranty,
which refers to the goods being fit for a particular purpose, is the
central matter of contention. Under UCC 2-315 when the seller
has “reason to know any particular purpose for which the goods
are required and that the buyer is relying on the seller’s skill or
judgment to select or furnish suitable goods, there is ... an implied
warranty that the goods shall be fit for such purpose.”
For example, under these circumstances, if you as a seller are
aware that the rider is intending to use the horse as a dressage
horse and you know the horse has a physical condition making
the horse impossible to be used for those purposes, and the buyer
is relying on your skill or judgment to select or furnish suitable
goods, then you most likely will have breached the implied warran-
ty under UCC 2-315. Just remember, there are two major consid-
erations under Implied Warranty Fitness for a Particular Purpose:
1. The seller must have reason to know the particular purpose for
which the goods are being purchased and 2. The buyer must be
relying on the seller’s skill or judgment.
Excluding Warranties
The most common exception to warranties being created
comes under UCC 2-316 exclusion or modification of warranties.
Under this section, if there is language to the effect stating that
the goods/horse is being sold “as is,” “with all faults” and/or “no
express or implied warranties” you can limit or even exclude any
warranties. However, if you find yourself without such language in
the agreement, the seller will want to rely on UCC 2-316(b) which
allows a seller to limit any implied warranties by claiming that the
buyer has before entering into the contract examined the horse as
fully as buyer desires ‘or’ refused to examine the horse and, as a
result, there is no implied warranty because the alleged defects
should have become apparent during examination.
Conclusion
The issue of warranties is complex when it comes to selling
horses, and sellers have to be careful not to over represent the
horse’s qualities and the buyer is under an obligation to inspect
the horse. Use of a contract with well-drafted language can go a
long way in preventing needless litigation at a later date.
Lisa Hollister is an attorney practicing
in Cincinnati, Ohio. Questions for Ms.
Hollister’s column can be addressed
to
Information Equestrians Should
Know Concerning Warranties
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