Are your lease arrangements in writing?
Leasing a horse without having arrangements written down puts you at greater risk of not being able to resolve things that go wrong. In our leasing article published in December 2013 we set out what you need to consider when leasing and loaning horses. Further to the 2013 article, the following additional information is useful reading for those who lease and loan horses.
There are two different types of lease arrangements. Private arrangements, where the lessor is not in trade, and those where the lessor and/or lessee lease or loan horses to the extent that they would be considered “in trade”. A lessor and/or lessee who are in trade should have robust lease agreements in place which set out the terms of the lease, and which incorporate applicable consumer legislation such as the Consumer Guarantees Act 1993 and the Fair Trading Act 1986.
For private lessors, it may not be cost or time effective to have a lease agreement drafted. This often leads to private lessor lease arrangements being inadequately documented, or not at all. Then, when a dispute arises, the parties only have verbal terms to rely on. To address this issue, Norris Ward McKinnon provides free template Horse Lease Agreements for private lessors and lessees, and Horse Sale and Purchase Agreements for private sellers and buyers to use. These can be found at http://www.nwm.co.nz/our-services/equine/ where you can request a free copy of the templates by email.
In addition to recommending detailed written lease agreements, some governing bodies require specific prescribed forms to be lodged with them when a horse of that breed or discipline is leased. This is the case with both those in trade and private lessors. For example, where a thoroughbred is leased in New Zealand for the purpose of racing, New Zealand Thoroughbred Racing (NZTR) requires a specific form to be completed and lodged with them. The SR16 form records the details of the horse and the parties, the term of the lease and the racing manager (if any). NZTR recommends that a separate lease document is completed to record further details, which can be attached to the SR16 form. A template of this, the ‘Draft Lease Pro Forma’ can be found on the NZTR website.
Despite the SR16 lease form being completed and lodged with NZTR, and/or if an additional lease agreement has been entered into by the parties, NZTR will not, as a matter of course, enforce the terms of the SR16 form or other additional lease arrangements. In the event of a dispute the parties will need the assistance of the Disputes Tribunal or a higher Court should they be unable to resolve the matter. It is our understanding that other governing bodies take a similar view in respect of disputes arising under such lease arrangements. Given that disputes are determined between the parties without the assistance of a governing body, it is more likely that costs to reach a settlement will be significant. This is why having well-drafted written lease arrangements is important.
If you have any questions or require legal advice in relation to the above, or other equine matters, please don’t hesitate to contact us.
Alice Nunn is an Associate in the Equine Team at Norris Ward McKinnon. You can contact Alice at [email protected].
Jess Collett is a Solicitor in the Equine Team at Norris Ward McKinnon. You can contact Jess at [email protected]
