Horse loan agreement. Equine law solicitors.

25 Jul The importance of horse loan agreements

Posted at 00:00h in Equine Law by

Loaning out a horse can be an ideal option for horse owners who have outgrown their childhood pony, are working unsociable hours or simply no longer have the time needed to care for their horse.   However, loaning your horse to another person can be daunting and full of unknowns, especially when your priority is the welfare of your horse.

Like any form of loan arrangement, it is essential to have a clear and effective loan agreement in place to ensure both parties understand their obligations.  It will also ensure both parties can avoid the costs of potential litigation should the relationship turn sour, or a dispute arises.

A loan agreement should be as detailed as possible, leaving no stone unturned.

Some of the main points a loan agreement should cover include:

Description of horse

It is important that the description of the horse provides no room for ambiguity. The agreement should include the horse’s registered name, stable name, its microchip and passport number, age, height and any other distinguishing factors such as its markings.

Loan Period

Including the length of the term is important. It sets a standard and makes it clear when the loan terminates. The loaner may wish to include a trial period, a fixed term or an indeterminate period which can be ended by giving a specified period of notice.

Responsibilities

The responsibilities of each party should be made clear from the outset. Including, but not limited to, any set days, level of care, yard jobs and arranging appointments such as the farrier and vaccinations. It should also be clear that ownership of the horse remains with the loaner, although the person who has the horse on loan will have certain responsibilities and usually be in possession of the passport. Possession of the passport does not constitute ownership!

Use

The agreement should be clear on what the horse can be used for and prohibit any other uses. One example could be that the horse is only to be used for hacking and not competing.

Location

This will need to be negotiated between the parties as to where the horse is to be kept and whether the horse can be moved away from the owner, with their permission. The parties may also want to make provisions if the livery yard closes. What will happen to the horse and who has the responsibility to find somewhere new?

Cost

All parties should be certain about their obligation in relation to costs. It is important to set out who is responsible for essential costs such as livery, insurance, farrier, veterinary fees etc. to ensure there is no dispute. This is arguably one of the most important provisions to include in a loan agreement as horses are a big financial commitment.

Insurance

It is sensible for both parties to have insurance in place. This includes insurance for public liability, personal injury, veterinary fees, mortality and even tack. The level of insurance required by the loaner should be described within the loan agreement and agreed upfront. It should also be clearly stated who is responsible for paying the insurance premiums.

Damage

It is inevitable there will be wear and tear whether to the horse’s tack, stable or fencing. The parties should consider where the ‘wear and tear’ threshold ends and account for this in the loan agreement. This should include in what circumstances either party bears the costs of the damage or whether in some circumstances they will be jointly liable.

Disputes

Both parties enter into a loan agreement without the intention of falling out, but there is always a risk that a misinterpretation of the terms of the loan or a dispute can occur. It is important to cover all bases and consider including an alternative dispute resolution clause. This clause aims to avoid litigation costs should a dispute arise. Jurisdiction and governing law clauses should also be included to designate which country’s law applies and has jurisdiction to deal with the dispute.

Liability

It is likely the loaner will want to limit their liability and will not want to take responsibility for any adverse incidents or injury caused during the loan period. The loaner will wish to consider including provisions in the loan agreement excluding liability. However, there are limitations on the ability to exclude liability, such as for death or personal injury caused by the loaner’s negligence. Any such exclusion clauses should be drafted by a solicitor to ensure they are legally binding and do not go further than the law permits.

Termination

It is fundamental to consider how the loan agreement can be ended by either party. Both parties may be required to give a specific notice period by serving a written notice. The logistics of serving this notice should also be considered. The loaner may also want to include an immediate termination clause should they have any welfare concerns.

One of the first questions asked should a dispute arise is always “is there a written agreement?”. Our equine law specialists have extensive understanding of the laws involved in creating a fair and comprehensive loan agreement benefiting all parties involved, horse included!

If you are thinking of loaning your horse, or alternatively have found a horse to loan, contact our equine law team at:

Keep up to date with our legal news and follow us: