Let's Cover It - Incorrect Pedigrees

This article is from the August 2020 Horse Deals magazine.

A horse’s pedigree is an important consideration, especially for buyers of foals and young horses and for those who might have an eye for the breeding potential of mature horses should their first career be unsuccessful or end unexpectedly. Horse breeders document pedigrees (sometimes extending back 4 generations) to market and promote their stock to these buyers. What is more, these recorded pedigrees are usually handed down from owner to owner, as a matter of course, as if they were sacrosanct.

These buyers fairly assume that any documented pedigree is correct. Anything documented, especially if presented with some gravitas (think stud logo, a personal signature, even a seal!) is considered more dependable than anything conveyed by word of mouth. This is so, even without certification anywhere on the pedigree that its contents are true and correct, but moreso if there appears on it any insignia of authority and validation. Most people are trusting, so a documented pedigree is readily accepted and relied on. In the case of foals and young horses it provides, of course, a degree of confidence (but never certainty) that the attributes of the parents will be passed on to the horse, such as type, height, temperament and so forth.

Occasionally, a matter arrives on my desk from a buyer who has obtained, after purchase, proof that the horse’s pedigree is misrepresented, such as from a genetic testing business. Equine Genetic Research Centre of Racing Australia, for instance, can determine by the use of DNA markers, whether a particular horse is by or out of a specified sire or dam. This is scientific proof of exclusion, in other words, that a genetic sample does not match the DNA profile of the purported sire or dam of the horse: it is not proof of the identity of the unknown actual sire or dam of the horse in question. The buyer feels cheated and worries that the value of the horse is less than the price paid which was struck based on the truth of the marketed pedigree.

When the problem is raised with the seller, he or she (even an inexperienced or ignorant lawyer for him or her) will raise various fallacies to deny redress or to at least muddy the waters in an attempt to dissuade the buyer from going further with a claim. Below I expose some of these fallacies.

(1) “You didn’t rely on the pedigree”. If the pedigree is given pre-sale to the buyer, it is absurd to argue that the buyer did not rely on it, since that was the whole purpose of it. At law, a misrepresented pedigree will constitute at the very least a misstatement of fact, in other words, a misrepresentation with legal consequences for the seller. The pedigree might, however, depending on the circumstances, have become an express term of the sale, such that its falsity is a breach by the seller of the sale agreement. On whichever basis a claim is levelled at the seller (a claim for misrepresentation or breach of contract), he or she is in the wrong and liable to compensate the buyer.

(2) “I gave you the pedigree in good faith, I was handed it when I bought the horse”. Innocent misrepresentation is actionable at law. Honestly believing a pedigree was correct at the time it was communicated to the buyer is not a defence. The seller may have a right of indemnity against his or her seller and so on up the chain, but that does not affect liability to the buyer.

(3) “It’s too late.” So long as the buyer still has the horse, he or she has normally 6 years from the time that the pedigree was furnished in which to bring a claim. Intervening events, like deploying the horse or not doing anything with it, breeding the horse, sickness, injury or disease of the horse, factor into a calculation of the compensation due but are not themselves grounds to defend liability to the buyer. Delay is relevant if the seller sold the horse as part of a business of selling horses, like a horse stud or a professional rider. A business seller guarantees by virtue of section 56 of the Australian Consumer Law that a horse sold by reference to its pedigree has in truth that parentage. A breach of the guarantee entitles the buyer to a refund if the claim is made within a “reasonable time” and the horse can be returned in the same condition as when it was bought. If not, the claim is for damages, being the difference between the value of the horse (without the agreed pedigree or any known pedigree) and the price paid for it.

(4) “I didn’t sell the horse as part of a horse sales business, so no guarantee applies”. Even if the seller is not in the business of selling horses (remembering though that all such businesses must start off selling their first horse to someone), he or she may still be conducting a horse related business. Businesses of every description Australia wide are prohibited from engaging in misleading and deceptive conduct (section 18 of the Australian Consumer Law). They must also not, in connection with the sale of a horse or in connection with the promotion by any means of the sale of a horse, make a false or misleading representation that it is of a particular standard, quality or has a particular history (section 29 of the Australian Consumer Law). Provided the seller was engaged in a horse related business, these statutory prohibitions apply to the sale of a horse because of the business nature of the sale. Riding coaches, for example, who might only very occasionally sell a horse of their own or one belonging to a pupil, will be caught by these unfair practice provisions of the Law.

What should a prospective buyer do if concerned about the veracity of a documented pedigree? The seller might be requested to give a documented warranty that the pedigree is true and correct and not misleading in any way. If the seller refuses or is reluctant, the buyer is on alert. Any doubt might be used to negotiate a lower price. Alternatively, the safest course would be to require the seller to provide, at the seller’s cost, a confirmed DNA match to the sire or dam as a condition of the sale. Where a deposit is paid, it must be documented before payment that it will be refunded without deduction if the profiling is negative or inconclusive.

If a breed society is cautious (as many rightly are) to register only specific breeds or to ensure pedigrees of registered horses are in fact what they claim to be, DNA profiling may be required to support an application for registration. So, the certainty of a horse’s pedigree is crucial to address and verify at the time of purchase to avoid the pitfall that a horse will not gain registration and be deprived the commercial benefits of it.

Michael Mackinnon
15 July 2020
© 2020 Michael Mackinnon,
Solicitor & Independent Counsel
Horseforce.com.au

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