The value of avoiding verbal contracts in the horse racing industry
The horse racing industry is unique because it includes people of diverse backgrounds and economic situation. Though it is never advisable for people in the horse racing industry to use verbal contracts, their use is widespread. The key reason is that the industry moves very fast. Thus, to stop and write a new contract or revise an existing contract for each particular issue is not practical and certainly not the focus of the men and women in the horse racing industry, especially at the lower end of the economic part of the game. Most of the people involved in horse racing, especially those in the claiming game, focus their time on preparation and care of horses. Most do not have the education or the financial resources to address ongoing contract negotiation and preparation or revisions of contracts; nor do they have the time.
There have been many articles written regarding why verbal contracts are not recommended and why they have been avoided. These articles also include references to “minimal” caselaw. It should be noted there is “minimal” case law because most people will settle disputes outside of the court room to avoid the legal fees and that the horse racing industry moves so quickly from race to race with the needs of the individual horses changing. It is understandable, especially for those involved in the claiming game, to understand why written (and professionally prepared and negotiated contracts) are limited to large barns that focus on races with large purses. However, the opportunities which partnerships have brought to the horse racing industry, allowing minimal investment to enter the game, has provided more working capital for groups to address these contract issues and to provide professional services and management as though they were working at large barns.
The breeding industry has a completely different focus than day-to-day racing game, especially the claiming level. It is not uncommon to see horses which have been purchased for $300,000 and $400,000 to find themselves in a $40,000 maiden claiming race as a two or three year old. Thus, it is understandable why contracts at the breeding level are more common than contracts at the racing level when the value of the “asset” has been reduced by as much as 90% and there is a continuous change in the needs and the strategy of the horse, e.g. allowance and stakes races versus claiming a most particular a lower level claiming. In addition, for many horsemen, horse racing provides a tax-deductible hobby which includes entertaining expenses.
Attorneys and other professionals servicing the horse racing game need to provide cost effective and efficient service to address these issues regarding contract preparation and management of stables and or partnerships. This must be built on a relationship of familiarity and recognition of the business plans of each individual owner/owner partnership.