If there is one thing the eventing world has learned from the HJ Hampton legal battle, it’s that riders with owners absolutely need to get a written contract drafted by a lawyer that defines their relationship with the owner and the horse. Otherwise, as we willl see, things get very complicated. Kate Shearer, who is an EN reader and a law student at Arizona State University has written a short but very technical post for us that helps to explain some of the nuances of figuring out a contract dispute. The post relies on several assumptions that I believe are fair. I should also note that the post was approved by Kate’s contract professor, who is a preeminent expert on contracts. The point isn’t to predict what is going to happen, but to give everyone a feel for how lawyers look at contract situations. It’s a bit like asking a vet to explain how colic surgery works–there’s a balance between being precise and understandable for us normal folk. Thanks for writing this Kate and thank you for reading.
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From Kate:
Contract: “a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes a duty.” (Restatement 2d §1)
Offer: “a manifestation of willingness to enter into a bargain, so as to justify another person in understanding that his assent to that bargain is invited and will conclude it.” (Restatement 2d §24)
Acceptance: consent to the terms of an offer, creating a contract.
Except as stated in subsection (2), the formation of a contract requires a bargain in which there is a manifestation of mutual assent to the exchange and a consideration. (Restatement 2d §7). Consideration is the inducement of a contract; something of value given in return for a performance or a promise of performance by another, for the purpose of forming a contract. A promise is a declaration of one’s intention to do or to refrain from doing something. It can be binding! A contract can be made orally.
Now that we have the basic terminology of a contract out of the way let’s analyze the supposed contract/no contract debate surrounding Henny. Contract disputes are looked at with a “reasonable person” (objective) standard. There must be an offer, an acceptance, and consideration must be evident. Reports have said that there was no written contract in regards to Henny, but I have a feeling that they will try to argue an oral contract. So let’s go through this argument together and see what the chances are.
Because of the sparingly few facts that I have of the situation, I will have to make some assumptions. I will make these assumptions on the basis of acting as a “reasonable person”. When the paid training of Henny came to a close, most “reasonable people” would assume that both Peter and Linda discussed what would become of the situation. At this point I feel an oral contract could have come into place. There would be an offer from Linda that continued to allow Peter to ride Henny. There would be an acceptance by Peter through his performance (continuing to ride). In order for this offer and acceptance to be valid, there must have been consideration on both Linda and Peter’s part. Linda’s consideration was the horse itself, and Peter’s consideration was the expertise and training he would put on Henny. The problem is that there was likely no “end” to the oral agreement, and I think that is the big issue. Peter relied upon Linda’s promise, which is shown in his monetary contribution to Henny (paying for shows, etc).
This brings us to the issue of promissory estoppel. Per the Restatement 2d §90, promissory estoppel is an equitable doctrine declaring that “a promise which the promisor should reasonably expect will induce action or forbearance on the part of the promise or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.” It requires a promise, foreseeable reliance, actual reliance, and injustice absent enforcement. If there was a promise, it is clear that a reasonable person could foresee reliance on behalf of Peter. It is clear that there is actual reliance, as Peter rode and continues to ride Henny upon Linda’s promise. And it is more than likely probable that there would be an injustice (Peter losing his 4 star horse) absent enforcement of the contract. Not only would the injustice be that Peter no longer has a 4 star mount, but it could hurt his business/training interests. Event riders do not make money or win large purses at competitions, but they make their money by their riding ability and placements nonetheless. For Peter, losing the ride on Henny, also loses him the opportunity of maybe putting on his resume “Olympic athlete” or “Rolex Winner”, which would bring him more business as a coach, clinician, and rider.
There needs to be an equitable resolution to this situation, and I think many people just look at the fact that Linda “owns” the horse so it is hers, but there is so much more involved. If it is found that there is a valid verbal contract in which Peter relied upon Linda’s promise of riding Henny, it could very well come out that Linda is not allowed to sell the horse, or if sold Peter is to keep the ride. This issue of sale and rights of any buyer is incredibly complicated. It could depend, possibly, on what the buyer knew or should have known about the contract if one is found. And it could depend on whether the contract is viewed as actually creating an interest in the horse (like a lease) rather than simply a naked promise to make the horse available. So, even if there is a breach of contract by the owner, there still is uncertainty over what the remedy might be.
