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Horse & Law Issue 18 - Leasing - Best Practice

31 May 2017

Whether it’s a first pony or broodmare, leasing is often the only option for people to secure the right horse for their purpose. Like many other equine transactions, the terms of the lease are usually unclear and not often in writing. The uncertainty of lease arrangements leads to frustration for the Lessor and Lessee and regularly ends in a dispute of some kind.

When a dispute does happen and there is no documentation recording the lease arrangements, it becomes difficult to establish who is in the right and who is in the wrong. The fight then becomes one person’s word against the other. Without written evidence of the terms of the lease, a dispute of this kind can be a hopeless case.

Although there is no legal requirement for a lease of a horse to be in writing, the documentation recording the agreed lease arrangement may prevent disputes arising in the first place. One of the most important acknowledgements that should be recorded in writing is that horse is being leased, not gifted.  Disputes arise when the Lessee claims that the horse was gifted to them and they refuse to return the horse to the Lessor. More often than not the disputing parties are former friends/family. Some key terms of lease arrangements, which should be discussed and agreed by the Lessor and Lessee are set out below:

    • Identification: The horse, Lessor and Lessee should all be identified in the lease document. For example, the horse’s age, breeding, colour, branding and height should be recorded, along with confirmation of breed and competition  registration (i.e. ESNZ). The Lessor and Lessee should record their legal names and contact details.
    • Permitted use: A horse being leased for breeding purposes will face different risks than a horse leased for eventing or racing. Identifying and agreeing on this use in writing will limit the scope of activities which the Lessee can use the horse for. Any other use will need prior approval by the Lessor.
    • Term: How long is the lease for? Are there any rights of renewal? Who is responsible for the return of the horse at the end of the term?
    • Lease Fee: Is the Lessee expected to pay for the lease of the horse? When is the lease fee due to be paid? Can this fee be increased or decreased?
    • Costs: Who is responsible for the costs associated with the horse? The day to day costs of feed, equipment, farrier work and entry fees, for example, would usually fall with the Lessee. However, costs such as major veterinary treatment may be the responsibility of the Lessor.
    • Injury: What happens if the horse is injured or dies in the care of the Lessee? What if the injury or death is a random incident due to no fault of the Lessee, or if the Lessee’s negligence contributed? A process for dealing with an injury or death should be clearly documented.
    • Insurance: If possible, the horse should be insured and the premium paid by the Lessee.
    • Lessor interaction/consultation: Access to the horse by the Lessor is a much disputed issue in lease arrangements. For example, when and how the Lessor may visit the horse should be determined from the start of the lease. Further, consultation with the Lessor in relation to the horse’s agistment location often gives rise to Lessor complaints.
    • Cancellation / Termination: How can the lease be cancelled and when does the lease terminate? A lease should set out when it comes to an end and specify in what instances the lease can be terminated before the end date by either party.
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The points above are by no means an exhaustive list of the terms that should form part of the lease document. However, they should provide the starting point on which the lease document can be formed.

 

Alice Nunn is a Senior Solicitor in the Equine Team at Norris Ward McKinnon. You can contact Alice at alice.nunn@nwm.co.nz.

Alice Nunn

 

Jess Collett is a Solicitor in the Equine Team at Norris Ward McKinnon. You can contact Jess at jess.collett@nwm.co.nz

Jess Collett cropped for website