Placing a horse on sales livery can make the selling process considerably easier. The sales livery yard may prepare and advertise the horse, respond to enquiries, arrange viewings and trials, communicate with vets, negotiate the price and sometimes conclude the sale.
However, it is important to consider what may happen if the buyer later alleges that something important was said, or left unsaid, about the horse. Is there a possibility that the sales livery agent be personally liable, even though the horse belonged to someone else?
The usual agency principle
An agency relationship arises where one person, the agent, is authorised to act on behalf of another, the principal.
In a typical sales livery arrangement:
- The horse’s owner is the principal
- The sales livery yard or professional is the agent
- The prospective purchaser is the third party
Where an agent acts within their authority and makes it clear that they act for a named owner, the sale contract will usually be between the owner and the buyer. The agent will not ordinarily be a party to that contract or personally liable for the owner’s contractual obligations. Essentially, their involvement ends when the contract is concluded.
The position may be different if the agent:
- Acts outside the authority given by the owner
- Does not disclose that they are acting as an agent
- Agrees to accept personal responsibility
- Represents that they have authority when they do not
- Becomes the seller in substance, rather than merely acting as an intermediary, such as providing their own opinion of the horse or providing information to the buyer that has not been given to them by the owner
However, the fact that an agent is not contractually liable does not necessarily protect them from liability for their own statements.
The Hedley Byrne principle
The decision in Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 established the principle of liability for negligent misstatement.
In simple terms, a person may owe a duty of care when they assume responsibility for supplying information or advice, knowing that another person is likely to rely upon it. If the information is provided carelessly, is reasonably relied upon and causes financial loss, liability may arise even though there is no contract between them.
This is particularly relevant to sales livery. A buyer may deal almost entirely with the yard and rely upon statements such as:
- “The horse has never bucked or reared.”
- “It is suitable for a novice.”
- “There is no history of lameness.”
- “It is straightforward to hack alone.”
- “The owner is only selling because of lack of time.”
If the sales agent presents themselves as knowledgeable, provides specific information and knows that it will influence the purchase, a court may find that the agent assumed responsibility for its accuracy.
When might the agent be liable?
Liability is not automatic whenever information proves incorrect. Relevant questions include:
- What did the agent actually say?
- Was it presented as fact, or merely opinion?
- What knowledge and expertise did the agent claim to have?
- Did the agent take reasonable steps to verify information received from the owner and did they qualify that the information was from the owner?
- Was it reasonable for the buyer to rely on the statement?
- Did that reliance cause the buyer’s loss?
- Was any clear and legally effective disclaimer given?
An agent who honestly repeats the owner’s account and clearly identifies its source may be in a different position from one who adopts that information as their own or makes an unqualified assurance.
Silence can also be risky. A partial answer may create a misleading impression, particularly where the agent knows of a serious health or behavioural issue.
Practical protection for sales livery agents
A written sales livery agreement should define the agent’s authority and require the owner to disclose relevant history. Advertisements and messages should distinguish verified facts from information supplied by the owner. Material representations should be recorded, and uncertain matters should be qualified rather than guessed.
Any party selling a horse should be mindful that whilst acting as an agent may prevent liability under the sale contract, it does not provide immunity for careless statements. In horse sales, words can carry as much risk as the horse itself.
Our specialist team can support you with compliance awareness so that you do not get caught out. Contact Natalie Dean today for help.