Breeding Your Dream Foal

By: Priscilla Blackadder, Nigel Bowen Chambers

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With the development of breeding technologies in recent years, there has been a sharp rise in the number of people breeding their own “dream foal”. Having been through the process myself with my own young Warmbloods, I can say that there are few things in life more exciting. 

But with this area, comes some highly complex legal issues and, sadly, disputes. In this article, we will look at some of the common legal questions which arise at the initial stage of breeding - the stallion service contract.

Stallion services

One of the first questions that any prospective breeder must decide is whether they will use a live cover or whether they will use artificial insemination (using fresh, chilled or frozen semen). There are many reasons why one method might be preferred over another but, in many instances, similar legal questions will arise regardless of the method chosen.

Let’s assume that you have now chosen the perfect stallion for your mare and are ready to proceed with the service. Some of the common questions that arise at this point are:

• “When do I have to pay the service fee?” (I.e. Is it due up front or is it contingent on a successful pregnancy?)
• “What exactly is a live foal guarantee?”
• “If I take my mare to stud, what happens if she gets sick or injured?”

Whilst it is the case that, at law, a default position in relation to these questions is available, what should be remembered is that, ultimately, the courts prefer to give effect to the agreement which the parties entered, as this is often fairer and more equitable than simply applying common law principles. So, in cases where there is a clearly drafted, well-defined agreement between the parties, that agreement will be what stands (subject, of course, to the agreement being lawful).

On that basis, the parties should pay careful attention to ensuring that the terms of their agreement are well considered. Particular caution should be exercised by the person breeding the foal, as in the majority of cases they will need to agree to be bound by the Stallion Service Agreement. The terms and conditions of any such agreement should be considered prior to the breeding taking place and, if in doubt, a lawyer should be consulted so that there are no misapprehensions as to the terms of the agreement or the obligations imposed by it.

It is the case that most breeding disputes could quite easily be avoided if careful consideration is given from the outset.

When is the payment of the service fee due and payable?

The answer to when the payment of the service fee is due is perhaps most straightforward when the mare owner is going down the purchasing semen/artificial insemination path vs the live cover path. This is because, in most cases, the terms of the sale dictate that the semen must be paid for upfront (that is, before the semen is shipped).

Mare owners purchasing semen should still consider the terms of the sale contract carefully. For example, many studs now have a positive pregnancy clause built into many of the Stallion Service contracts. An example of such clause would be if the mare fails the 45 day pregnancy test, then the stud will (subject to a veterinary certificate confirming that the mare is empty) provide further semen at no additional cost until a positive 45 day pregnancy is achieved. However, it should also be noted that many studs state in their agreements that there is no pregnancy guarantee. Accordingly, it is very much a case of buyer beware and knowing the terms of the agreement which you are entering.

Live cover can, in some cases, be more complex in that there are a few options available as to when the service fee becomes payable. The first is the uncommon but simple arrangement whereby the service fee is paid once the mare has been served. A far more common industry practice, and one which is prevalent in Thoroughbred blood stock breeding, is that the service fee becomes payable upon a positive 45 day pregnancy test. That is, upon issuance of a veterinary certificate confirming a 45 day pregnancy, the service fee becomes payable.

A common question I get asked in my practice is what happens when a mare produces a positive pregnancy at 45 days, but then slips the foal. What recourse is available then to the mare owner to recover the service fee? Again, it largely depends on the agreement itself. In those cases, where the service fee is payable upfront or is payable upon the existence of a positive 45 day pregnancy (for which a veterinarian certificate has been issued), then there is little to no chance of the service fee being recovered. Some studs will offer what is known as a “free-return” service, which is basically the provision of a further stud service without payment of a further service fee.

Live foal guarantee

Another area that is of particular confusion in horse breeding is what exactly is meant by the “live foal guarantee” clause and, more importantly, when is it triggered? For instance, if a foal is born alive (breathing), but soon after dies, is the live foal guarantee clause in a contract triggered? More simply put, when is the stallion owner obligated to honour that clause?

Again, it is important that both the stallion owner and the mare owner are clear about what is intended here and that the contract between them clearly reflects their understanding. At law, the default position where there is a “live foal guarantee” clause is that “live foal” means one that is breathing. If the foal is born breathing, but then later dies, there is no obligation on the stallion owner to honour a “live foal guarantee”. In the tragic event where a mare gives birth to a stillborn foal, the stallion owner would be obligated to provide what is known as a “freereturn service”, which means that the same mare can be sent back to the same stallion in the next breeding season without the need to pay a further service fee. But, note that a “free-return service” at law has some fairly strict conditions, which include:

The mare must be bred the following breeding season and the entitlement arises only once; if the mare does not go into foal, there is no further free return; if the stallion has been sold, or has died, or has been rendered infertile, then there is no obligation on the stallion owner to provide the “free-return”, nor is there any obligation in these circumstances to return a service fee which has been paid.

Again, the individual parties can contract out of those arrangements above. For example, some studs will have clauses within their contracts which, in essence, deem that they will honour a live foal guarantee if the foal is born “alive”, but dies within a stipulated time thereafter.

Sadly, sometimes mare owners are often left in a very cruel and distressing position because they have erroneously thought that a live foal guarantee will result in a happy, healthy foal. Mare owners should take the time to satisfy themselves of what this clause means in the particular circumstances.

Some livestock insurance companies now offer cover on embryos, which can be a way to protect the financial investment in breeding.

What if my horse gets sick or injured whilst breeding?

Too often, both stallion and mare owners try to conceal sickness and/or injury from the other party. There are many reasons why this might be the case. For instance, the stallion owner might not want to disclose an illness at the risk of losing a service fee. Or, a mare owner may try to conceal a recent flu so as to service the mare on her next cycle. This can have grave legal ramifications.

It is well-settled, even outside the breeding context, that an owner of a horse has a duty to disclose any condition or disease which his/her animal is suffering. If the owner fails to disclose that condition or disease, and allows that horse into contact with humans and/or other horses, then he/she will liable for negligence.

A stud owner has an obligation to ensure that he/she takes reasonable care not to allow any mare (including her foal) to be brought into contact with animals which he/she knows or ought to know have a disease or condition.

There is a further obligation to disclose to mare owners any circumstances where the mare (and potentially her foal) are exposed to a disease or condition and, if this occurs whilst the mare and foal are agisted at stud, then he/she should be afforded the opportunity to make their own judgment as to what to do (for example, relocate the mare).

Similarly, a mare owner who sends the horse to stud, with the knowledge or suspicion that the mare is carrying a disease or condition, where that disease or condition is passed on, will be liable for any losses which result. This liability extends to diseases and conditions passed from the horse to any humans.

Whilst it is the case that if the owner has no knowledge of the condition or the disease he/she will be absolved from any liability, it should be remembered that the test at law in relation to knowledge is quite strict. So, whilst an owner theoretically may have no knowledge of the disease or the condition, the law will consider whether or not the reasonable owner ought to have known of the horse’s condition.

Insofar as injuries are concerned, again the duty of the stud owner is to take all reasonable care. If an animal does get sick, injured or dies whilst in his/her care, the onus is on him/her to prove that all proper care and diligence was exercised in the circumstances. If the stud owner fails to meet that onus, then he/ she will be liable.

Conclusion

Whilst in a perfect world, our beautiful mares would give birth to happy, healthy foals every time, sadly it is not always the case. Sometimes there is a lot of money spent with no result and, worse yet, an ugly legal dispute. So, what should the parties do to try and avoid these situations? Again, it comes down to a carefully considered and well-drafted agreement.

The best way to avoid these issues in any breeding agreement is to ensure that the terms of the agreement are clearly stipulated, agreed and understood before the breeding services take place. In particular, if the mare owner is not certain about the nature of his/her rights and obligations under the contract, then advice should be sought before entering into the agreement.

About the Author: Priscilla Blackadder is a barrister admitted in New South Wales and licensee at the prestigious Nigel Bowen Chambers. Her principal areas of practice are Intellectual Property, Litigation, Commercial Law and Equine Law. She holds a Bachelor of Laws (Hons), Bachelor of Arts (Music and Media) and is currently studying her Masters in Laws. Priscilla has ridden horses as long as she can remember and, for the last 20 years, has trained and competed in dressage. She is currently bringing on her two young Warmbloods under the guidance of her trainers Judy Dierks and Hayley Beresford. 

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