Try out my horse for few weeks. See if you get along with him." These were the words of a sincere, well-intentioned seller who only wanted a satisfied buyer. The seller expected the buyer, after two weeks, to fall in love with the horse and then pay a fair sale price. Could anything possibly go wrong with this trial period arrangement?  Trial periods are popular in equine sales. For example, a trainer may receive a horse "on consignment" from the seller with the goal of attracting a buyer and then sending payment to the seller. Or, a cautious buyer might want to try out a horse for a while before deciding whether to make a purchase. In the horse industry, trial periods often involve: [1] the buyer paying little or no money until later, if the deal goes through; [2] the buyer hauling away the horse to an unspecified place; and [3] no written contract. These arrangements, especially when done in this manner, can invite many problems. This article discusses five possible problems and ways to avoid them.

Problem One: The "Buyer" Absconds With the Horse -- Never to be Seen Again and Never Having Made Payment

Among every seller's biggest fears is a "buyer" who will dishonestly request a trial period, promise payment later, and then haul away the horse, never to be seen again. This situation is very rare, but two ideas to prevent it are:

* Require Full Payment Up Front. 
As an alternative to the trial period, but with the same benefits, the parties can finish the sale now, giving the buyer the option of returning the horse for a refund if the horse comes back within a certain number of days in good condition.

*Retain the Registration Papers Until The Last Payment Clears. 
Papers may be meaningless to the "buyer" whose real intention is to steal the horse and head straight for the nearest horsemeat packing facility. But the buyer who needs the horse's papers for breeding, racing, or showing purposes will more likely come through if the seller retains papers during the trail period and relinquishes them after the buyer makes full payment.

Problem Two:  The "Buyer" Gets Injured (or Worse) During The Trial Period While Riding or Handling the Horse
The seller's other major concern is liability during the trial period. After all, in many trial period arrangements, the seller retains ownership of the horse and there is no telling what the buyer will do to "test out" the horse. With this in mind, some ideas for addressing the matter are:

*A Well-Written Release of Liability.
The seller would be wise to require the buyer to sign, in addition to the trial period contract, a well-written release of liability. Where allowed by law, a release of liability is a powerful protection for the seller. A release (sometimes called a "waiver") is someone's agreement to sign away what would otherwise be a legal right sue for potentially millions of dollars.

What goes into a well-written release can vary in each state. Sellers seeking the best protection should consider consulting with an attorney and should recognize that form releases found in books and stores are, at best, a starting point.

*Insurance.
Although courts in most states have enforced properly worded and presented liability releases, having a release does not eliminate the need for good insurance. A cautious seller can make sure that his or her insurance is up to date as to types and amounts of coverage and that the insurance will cover injuries that may occur during the trial period.

*Make The Transaction a Sale.
The seller can request that the parties complete a sale of the horse, with the buyer entitled to a refund under certain conditions. This arrangement will not eliminate the seller’s liability, however. The seller can always be sued for breach of contract, fraud, or other legal theories, especially if there is evidence that the seller knew, but wrongfully concealed, the very dangerous propensities that caused an injury.

Problem Three: The Buyer's Friend or Guest Gets Injured (or Worse) During the Trial Period While Riding or Handling the Horse

The seller, simply because he or she may own the horse, is at risk of being named a party in a liability lawsuit if the horse kicks, bites, throws, or injures someone else during the trial period. Certainly, many of the same suggestions found in problem two, above, apply to this scenario. In addition:

*Indemnification. 
In its most basic sense, indemnification is an arrangement in which someone agrees to compensate another for an anticipated loss or liability. As an example, an indemnification provision between the seller and buyer can provide: if there is loss or liability asserted against the seller due to the acts of the buyer, then the buyer will pay the legal fees any liabilities or judgments asserted against the seller.

Problem Four: The "Buyer" Returns the Horse in Lame or Sick Condition

What if the buyer, at the end of the trial period, calls off the sale and returns the horse in lame or ill condition? Some ways to plan ahead are:

*Keep the Horse on the Seller’s Property.  If the horse remains on the seller's property during the entire trial period, the seller can better make sure it is well-tended and not being abused. The seller can also establish rules for the horse's use during the trial period.

*Insurance.
The seller’s mortality or major medical insurance would be at issue if the horse’s health takes a turn for the worst while kept somewhere else during a trial period. The problem is, the buyer might be unaware of the need to notify the insurer. Or, the trial period arrangement might void coverage.

Before the trial period starts, speak with the insurance agent.

Problem Five: The "Buyer" Keeps the Horse at a Stable During the Trial Period But Falls Behind on Payments; the Stable Prevents the Horse's Release to the Seller Stablemen's lien laws can severely complicate trial periods.

That is, the laws of most states give boarding stables a lien on horses. Many of these laws also provide that, when the stable has not been paid, it may retain possession of the horses and even sell them off (with legal restrictions that vary with each state). Because of these laws, the seller risks losing the horse and never even receiving advance notice of a stablemen's lien sale.

What can the seller do? Of the many options available, here are two:

*Identify and Approve the Boarding Stable in Advance. 
If the seller agrees to part with the horse during the trial period, he or she would be wise to know and approve in advance the boarding stable where the horse will be kept. The seller can make sure that the stable knows, at a minimum, the seller's name, address, and ownership interest in the horse.

*Require That the Seller Fully Pre-Pay Board to Cover the Trial Period.
The seller can demand that the buyer fully pre-pay all board that may become due during the trial period. This reduces the risk that the boarding stable will pursue drastic remedies to get paid. This article does not constitute legal advice. When questions arise based on specific situations, direct them to a knowledgeable attorney.