Breeding season presents an exciting time for most breeders. It also involves rather large expenses and risks. In order to promote a positive experience in your breeding endeavors, you should always use contracts. This article will discuss why you should use a breeding contract, the essential elements of a breeding contract and considerations for special situations associated with breeding stallions, such as embryo transfer, transported semen, cooled/frozen semen and artificial insemination.
Why Use A Breeding Contract?
Traditionally, the horse industry operated on a handshake. Few horse transactions were ever reduced to writing. Truth be told, not everyone in the horse industry agrees that written contracts will help their business. Realistically, horse transactions (sales, breeding, etc.) sometimes involving a great deal of money and have a long-term effect on the parties. With this in mind, I urge participants to be mindful of the benefits of using breeding contracts.
Breeding contracts serve many purposes in your breeding operation. The process of drafting and executing the breeding contract often brings awareness to the possibility of ambiguity or confusion. A properly drafted and executed breeding contract will clearly define all the important terms of the agreement, and can often prevent a disagreement, or even potential litigation, down the road.
The breeding contract also provides a means for enforcing the agreement between the mare and stallion owner. Take for example the situation where a mare owner breeds to a stallion, only to have the stallion owner refuse to sign the resulting foal’s application for registration. A properly drafted breeding contract will state that the mare owner is entitled to a foal capable of being registered. If the stallion owner refuses to sign the application for registration, the mare owner will have the ability to present the contract to a court of law for enforcement.
Similarly, the stallion owner will also benefit from entering into a breeding contract. Most breeding contracts will have provisions which limit the stallion owner’s liability. In addition, the breeding contract can provide a means for enforcing payment of breeding fees and additional expenses.
Essential Elements of Breeding Contracts
In today’s world, there is no such thing as a “standard breeding contract.” With technological advances, such as transported and frozen semen, your breeding contract should be tailored to your particular situation. Below you will find some of the elements for a well drafted breeding contract.
- The parties to the contract. The registered owners (or an agent of the registered owners) of the mare and stallion should execute the contract. This section should also include addresses and phone numbers for all parties.
- Stallion. The breeding stallion should be clearly identified, along with his registration number and all of his nominations (such as being a Sweepstakes or NSHR nomination sire).
- Location of stallion.
- Mare, if required. If the stallion service is for a particular mare, the mare’s information (name, registration number) should be included.
- Breeding fees. The amount of the breeding fee must be included in the contract. The contract should also provide for method of payment (cash, terms, trade). Any amounts required for booking fees should also be included.
- Fees and expenses. All potential fees should be addressed in the contract. All mare care, vet and farrier fees should be identified and made the responsibility of the mare owner. An issue which arises in the transported semen situation is the costs for purchasing or renting containers, as well as the time for return of rented or borrowed containers.
- Guarantees. Most breeding contracts contain a “live-foal” guarantee. Any such guarantees should be included in the contract, along with definitions of any ambiguous terms, such as live foal. Many define live foal as “a foal able to stand and suck without assistance.” Without such definition, a great deal of ambiguity remains.
- Type of breeding allowed. The contract should clearly state what type of breeding the stallion owner will provide to the mare owner. Some stallion owners do not offer transported semen, while others perform only natural breedings.
- Time of breeding. Often breedings are purchased for the upcoming year. However, some mare owners plan further in advance. In order to avoid a potential dispute, the contract should clearly identify by what date the mare owner must use the breeding.
- Re-breeding rights. While breeding farms do their best to settle all mares, some mares inevitably will not get in foal. A good breeding contract will identify a mare owner’s right to re-breeding.
- Transferring breeding to different mare. Some contracts provide that a breeding is sold for the use on a specific mare. If such a contract exists, it should also provide a provision identifying when the breeding can be transferred to a different mare, and under what circumstances such a transfer will be allowed.
- Sale of breeding. The contract should identify if, and under what circumstances, a breeding can be sold or transferred to another party.
- Conditions for acceptance of the mare. Many breeding farms require certain immunizations and tests prior to a mare’s arrival. At a minimum, the contract should require the mare owner to provide proof of inoculations, coggins and health certificate upon the arrival of the mare on the farm. Similarly, this provision should give the farm owner the right to refuse acceptance of the mare unless such requirements are met.
- Entitlements of mare owner. Upon paying the breeding fee and having their mare bred, the mare owner will be entitled to certain things, such as a signed application for registration for their resulting foal.
- Refunds. The breeding contract should address whether the stallion owner will allow any refunds, and if so, under what circumstances.
- Liability waiver. The stallion owner should include in their breeding contract a liability waiver covering potential liability to the mare owner.
- Death/injury to stallion. The contract should address the potential death or injury to the stallion. Options include refunding the breeding fee or allowing the mare owner to breed to a different stallion owned by stallion owner.
- Lien/security interest. This provision will give the stallion or farm owner a lien and security interest in the mare and resulting foal for any unpaid breeding fees, mare care, vet or farrier bills. This protects the stallion or farm owner from the mare owner’s nonpayment.
- Equine Activity Liability Act. Since the breeding contract will also serve as a boarding agreement in some situations, your state’s equine activity liability act language may also be required in your contract. Check your local laws for requirements and applicability.
- Jurisdiction/Venue. The stallion owner will want to include a provision in the contract which states that their local jurisdiction and venue are required if a lawsuit is brought when a dispute arises. Similarly, the stallion owner should provide that their home state’s law applies to any disputes.
When parties enter into an agreement that involves a “special situation,” the parties should pay attention to detail and ensure that the terms of their agreement are properly explained in their contract. This is essential in an unusual industry, such as horse breeding, because the rest of the public does not completely understand this industry. If, for example, the parties’ dispute reaches a judge in a court of law, the judge will likely not fully understand the horse breeding industry. Thus, you should be careful to spell out the terms of your agreement so that someone outside the horse industry could easily understand the contract. The special provisions identified below are in addition to the terms identified above.
Stallion owners have recently increased their use of breeding packages. Often the stallion owner will offer a mare owner a discounted price for the purchase of multiple breedings. This type of arrangement can be beneficial to all involved, but it also presents several questions or ambiguities. The following are areas of special consideration, which should be carefully scrutinized:
- Time for Use. If a mare owner purchases a package of breedings to a stallion, it is essential to identify the time period during which the breedings must be used. If not identified otherwise, most courts would hold that the mare owner can use the breedings at any time. Thus, if the stallion owner wants to limit the time for which the breedings can be used, it should be identified in the contract. Generally, stallion owners do not limit the time for use. If, however, the stallion owner will not retain the stallion for a longer term (i.e., stallion owner possesses stallion on a lease), the limited term should be placed on the use of the breedings.
- Sale of Breedings. The contract should clearly identify the mare owner’s right or limits on the sale of the breedings. Because the mare owner likely received a discount for the purchase of multiple breedings, the stallion owner would probably prefer the breedings not be transferrable. If not identified as “non-transferrable,” the breedings will probably be held transferrable by the mare owner.
- Death/Injury to Stallion. Because multiple breeding contracts often involve a longer period of time than standard breeding contracts, they should identify the impact of the death or injury to the stallion. In other words, the stallion owner needs to state what the mare owner will receive if the stallion dies, gets injured or becomes infertile. Options include: refund, breedings to other stallions, and loss of breeding rights.
Many farms now use transported semen exclusively. Its use can often reduce the expense of breeding significantly. There are times, however, that transported semen can increase expenses. With this in mind, the breeding contract should clearly spell out the costs associated with the breeding, as well as allocating responsibility for such costs. This will often prevent disputes regarding fees and expenses.
Transported semen also requires excellent timing to result in a pregnancy. Often times a mare has only a short window of time when insemination will result in a pregnancy. Because of the timing element, stallion owners should clearly identify their shipping policies in the contract. This should include all notice requirements and the window of dates allowed for shipping.
While not as common as other types of breeding, some mare owners elect to use embryo transfer. This procedure, which allows a mare’s foal to be carried by another mare, can be extremely costly and time consuming. A stallion’s breeding contract for embryo transfer should allocate all costs and risks associated with the breeding and embryo transfer.
Cooled and frozen semen is also gaining popularity in the horse industry. Its use also does not go without risk. Often times straws of frozen or cooled semen do not have the motility or quality of regular shipped semen or natural cover. Further, errors can occur in the freezing or cooling of the semen which can affect its quality. All risks and costs associated with this type of breeding should be identified and allocated in the contract.
Because of the expense that goes into breeding, as well as the risks of long-term effects, breeders should use breeding contracts which properly address all issues associated with breeding. The contracts will help to clarify ambiguities at the onset, and prevent disputes down the road. If the parties do have a dispute, the breeding contract will provide a court with a clear understanding of the parties’ agreement. In short, the breeding contract will make the breeding business enjoyable, successful and reduce disputes.
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© November, 2001. All rights reserved. This article may not be reprinted nor reproduced in any manner without prior written permission by the author.