For those offering agistment services for horses, it is important to have a solid agistment agreement in place to cover issues relating to:
- Debt Recovery and Enforcement
- Protection against Claims: Hold Blameless Acknowledgement – Release & Indemnity
- Engaging Third Party Service Providers
- Owner’s Warranties; and
- The Personal Property Securities Act 2009 (Cth)
Daniel Morgan, Senior Partner at Morgan + English Commercial Lawyers, has been refining our agistment agreements within the thoroughbred and related industries for over 20 years and he has outlined our key clauses which we recommend including in any agistment agreement regardless of the size or experience of your operation.
Debt Recovery and Enforcement
Our Fees and Charges clause ensures your clients are liable for all debt recovery and enforcement costs relating to their unpaid accounts. These costs may include legal fees, collection costs, court filing fees and service of document fees. In addition, our agistment agreements allow you to claim interest on all overdue amounts. We also set out the information you should obtain from your clients to increase your likelihood of a successful outcome if you do need to refer an unpaid account for debt collection.
Protection against Claims: Hold Blameless Acknowledgement – Release & Indemnity
Our Hold Blameless clause provides for an acknowledgement from the owner that they have been given the opportunity to inspect the property from which the services will be provided, and they agree that the property is up to the standard required of the industry.
This clause also provides for a release and indemnity from the owner, to the fullest extent possible, against any possible claims made against you in the provision of the services.
In this way, you have the knowledge when providing the services that you are protected from almost all claims brought by owners or third parties, to allow you to go about your business with peace of mind.
Engaging Third Party Service Providers
Another important part of our agistment agreements is our third-party services clause, which provides you with the authority to incur third-party expenses in the provision of certain services (including veterinarian, farrier, horse dentist and other necessary services) for which the owner will be solely liable to pay.
These clauses are a must for agistment farms as work which would usually be expected in the provision of agistment services is nevertheless unauthorised without it.
Owner’s Warranties
There are a number of clauses included in our agistment agreements which secure payment of the fees or other monetary obligations for which the owner is liable.
These include a guarantee from the owner entering into the agreement (or agent or representative acting on behalf of the owner) that they are authorised to bind each and every person who is legally recognised as an owner of the horse and provide a personal guarantee of the full and prompt payment of all monetary obligations arising out of the agreement.
We often have clients show concern about the circumstance in which horses are sent to their property by a trainer or agent of the owner and they are not sure if they are able to bind the owner in respect to its payment obligations.
As with any agreement, the strongest way to ensure a validly enforceable contract is to get it in writing. However, in the absence of an agreement signed by the owner, it is important that you have a guarantee from the person delivering the horse to the property that they will be liable for the owner’s payment obligations if the owner refuses to pay it.
In saying that, you should always obtain the full details of all the owners of a horse when taking delivery from an agent and send a copy of your agistment agreement out to all owners as soon as their horse arrives on the property.
Personal Property Securities Act Provisions
We are also at the forefront of the industry in relation to understanding and including PPSA provisions into our agreements. The Personal Property Securities Act 2009 creates a register called the Personal Property Securities Register (PPSR) which acts as a notice board to interested and third-parties of when a party has taken a security interest over personal property.
When this property is livestock, as thoroughbred horses are, the security interest comes with a priority which defeats any general security agreements which a bank may take over an owner’s assets, as well as creating a priority over almost all other security interests which may be taken over the horse regardless of time.
The great thing about the new PPSA provisions is that they allow the secured party to enforce a lien and power of sale over the security interest in lieu of the client’s payment obligations. In this way, you are able to by-pass costly and drawn out debt recovery proceedings if an owner does not meet its payment obligations for the services. Timely and accurate registration of a security interest on the PPSR places you in a very strong position when it comes to securing payment obligations towards you.
At Morgan + English, we can register your security interest for a small fee and advise you in relation to the enforcement of such interests.
Please contact us on 02 6545 3339 or via email at daniel@morganenglish.com.au if you would like to discuss any of the provisions of our agistment agreement or would like us to draft an agreement for your agistment property.
