Disclosure of Ownership
The Sales Integrity Program encourages the disclosure of ownership of horses in a sale. Supplying ownership information is not a requirement under the Code of Ethics. It is important to some buyers to know all parties that might have an interest in the sale horse. Those buyers should ask questions about the ownership of a horse, and if a buyer is not comfortable with the information available, then he/she should not go forward with the purchase of the horse.
The Sales Integrity Program recommends a condition of sale be included by each sales company that incorporates the following points regarding the disclosure of ownership. Fasig-Tipton and Keeneland have revised their conditions of sale to include many of these points. Ensure that your sales company includes these points as part of their conditions of sale.
A potential buyer should look for a condition of sale that includes:
- the establishment of a voluntary Ownership Registry maintained by the sales company
- that any ownership interest in a sale horse held by anyone employed by or directly affiliated with the sales company conducting the sale be printed on the catalogue page.
- if an agent or veterinarian has an ownership interest in the horse, this must be revealed in writing in the Agent Disclosure Agreement or the Vet Disclosure Agreement.
- if a change in ownership occurs after a horse is on the sales grounds, the change in ownership is required to be disclosed to the sales company by giving written notice of such change in ownership to the sales company. The change in ownership will be announced by the auctioneer prior to the sale of the horse.
- If ownership is disclosed either in the catalogue or in the Ownership Registry, a change in ownership is required to be disclosed in the Ownership Registry or by written notice to the sales company.
- A change of ownership of 10% or less is deemed not to be a change in ownership for purposes of the Condition of Sale.
- If information is placed in the Ownership Registry, or if information regarding ownership is disclosed in the catalogue, the party supplying the information warrants that the information is materially accurate.
Ownership Dispute
If the purchaser of a horse learns, after the sale, that the information in the catalogue or Ownership Registry was not materially accurate, or that there was an undisclosed change in ownership after the horse was on the sales grounds, the purchaser has the right to collect liquidated damages, provided that:
- the purchaser accessed the Ownership Registry regarding the horse
- the purchaser has paid for the horse in full
If it is found that there was a material inaccuracy in the Ownership Registry or in the catalogue at the time of sale of the horse that was not corrected by subsequent notice as required by the Condition, or that the seller or consignor failed to disclose to the sales company, that there was a change in ownership prior to the sale of the horse or the party from whom the purchaser seeks liquidated damages had actual knowledge at the time of the sale of the material inaccuracy in the Ownership Registry or catalogue, or of the failure to disclose change in ownership as required by the Condition the purchaser may proceed with the following dispute resolution process.
Dispute Resolution
- The purchaser must notify the sales company of its election to collect liquidated damages within six months from the date of purchase of the horse.
- The purchaser must provide a written statement to the sales company describing the situation. This statement must include the sale location, date, hip number, parties involved, summary of circumstances and any other pertinent information. The Sales Company Contacts are as follows:
| Keeneland Association, Inc. | Fasig-Tipton | |
|---|---|---|
| Geoffrey Russell | Boyd Browning | |
| Director of Sales | Executive Vice President | |
| P.O. Box 1690 | 2400 Newtown Pike | |
| Lexington, KY 40588 | Lexington, KY 40511 | |
| (859) 254-3412 | (859) 255-1555 | |
| (859) 255-2484 fax | (859) 254-0794 fax |
If a dispute arises regarding ownership disclosure, and the parties are unable to resolve the matter among themselves or with the help of the sales company, the complainant may initiate arbitration pursuant to the rules of the American Arbitration Association. The parties agree to submit the dispute to binding arbitration, which will be held in Lexington, Kentucky. The findings and decisions through arbitration will be final and binding on the parties.
The non-prevailing party in arbitration pays the costs of arbitration and reasonable attorneys' fees of the prevailing party, including the costs of the sales company.
Resolution
If it is found, through arbitration that a violation to the Condition of Sale has occurred:
- If the purchaser prevails against the consignor the consignor must pay liquated damages of 50% of the hammer price of the horse however the consignor's liability is limited to two times its commission on the horse.
- If a purchaser prevails against both the seller and consignor, the consignor would pay two times the commission the consignor received on the sale of the horse and the seller would pay the balance of the 50% of the hammer price.
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