The Pre-Purchase Contract

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The Pre-Purchase Contract

excerpt from  Horse for Sale, How to Buy a Horse or Sell the One You Have

  2008 Cherry Hill   Copyright Information

If you have found the perfect horse, you can ask the seller to hold the horse for you. When a horse is put on hold, he is essentially taken off the market. That's why many sellers would require you to sign a pre-purchase agreement. Such a contract will indicate your serious intent, outline terms of the sales agreement, and it might also state a limit to the number of times you may try the horse and a deadline for your decision. A pre-purchase contract clarifies items in writing that you discussed with the seller.

Usually a deposit is required in addition to your signature. A deposit can reduce risks for both parties. The deposit will compensate the seller if you do not buy the horse and he loses a sale to another customer because the horse was off the market while you were further considering him. A deposit also provides you a guarantee that the horse will not be sold to anyone else while the contingencies of the contract are being met. The contract also fixes the price at the one originally quoted. A well-designed contract is really a protection for both the buyer and the seller.

In most states, the Uniform Commercial Code (UCC) requires a sales contract for any goods costing over $500. A Pre-Purchase Agreement (or Contract to Purchase or Sales Contract) can satisfy this requirement. Confer with your agent about the laws of buying and selling horses in your state.

Items that might be covered in a CONTRACT TO PURCHASE OR PRE-PURCHASE AGREEMENT OR SALES CONTRACT:

 

PARTIES - Names and addresses of BUYER and SELLER.

STATEMENT OF THE PURPOSE OF THE AGREEMENT

DESCRIPTION OF HORSE. Registered Name, Registration Number and Association, Tattoo, brand, or other identification (state which), Date of Birth, Sex, Color and Markings

PRICE.

PAYMENT TERMS. Amount of deposit and time the deposit will hold horse for. Whether or not the deposit is refundable and under what circumstances.

Balance of the purchase price to be paid when. How payments can be made.

Daily board from the time of offer to the time of possession at the rate of $_____per day is also due at time of possession.

CONTINGENCIES. Whether the contract is contingent on the described HORSE passing a veterinary pre-purchase suitability examination.

Name of vet.

Who pays for exam.

SELLER states that the horse has the following blemishes, unsoundness, conformation defects, vices, or unusual behaviors:

BUYER accepts the above.

WARRANTIES. SELLER warrants clear title to the HORSE and will provide a bill of sale, appropriate registration transfer papers, and necessary health and transport papers at time of possession (or payment, stipulate which). Risk of loss passes from SELLER to BUYER at time of possession (or payment, stipulate which).

Terms governed by what state?

Signed and dated by all parties.

Note: Every state has its own laws regarding the necessary content of contracts. Generally such a contract can not be made with a minor. Check with your agent or attorney or modify a standard sale contract purchased from a business or stationery store to fit your specific needs.

Negotiable items include: price, what vet is used, who pays for vet, deposit percentage, method of payment, length of contract, when risk of loss passes.

Additional items include: who provides transportation, agent's commission, who pays attorneys fees in case of a suit, arrangements for a trial period.

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