A Practical Overview of Breeding Contracts
A breeding contract is a legally binding agreement between the dog owner and the owner of the opposing sex in a breeding transaction. The breeding contract typically lays out the terms and conditions of the breeding association, such as the timing of the breeding, cost of the transaction, rights to the resulting litters, and more.
The reason why we have breeding contracts is to avoid unforeseen disputes, not just amongst the breeders, but between the breeders and their clients. Even if you’re not planning on selling your puppies, you’ll still need to outline expectations for the resulting puppies, even if that means giving them away or keeping all of them yourself. In fact, not having a breeding contract is nothing short of an invitation to litigation , not only between the breeders, but for the clients and even the buyers of the puppies.
Most major organizations, such as the American Kennel Club (AKC), and the Canadian Kennel Club (CKC) provide standard forms for breeding contracts. If this is your first breeding, I suggest using the standard form from the organization recognized by the country or province that your breed is registered in. Your local kennel, club, rescue society or puppy training school may also have standard form contracts that are standardized and easy to understand.
Alternatively, if you intend on customizing your breeding contracts, then you may want to consider a reputable breeder that is not known to have had any litigation for you to use as a template.
Basic Components of a Breeding Contract
A breeding contract should fulfill certain basic requirements. It should be clear and unambiguous; and it should protect all contractual parties in the performance of their respective obligations. Specifically, the following information should be contained in any definitive breeding contract:
- Identification of parties that are responsible for specific obligations. Defining who each party is helps eliminate future ambiguity as to the obligations of each party.
- The animal’s pedigree. Obviously, to facilitate accurate record-keeping, the contract should refer to the prenumbered registry certificate issued by the recognized national breed registry (for example, the American Quarter Horse Association, the Association of Racing Commissioners International, and the United States Trotting Association) which lists the documented ancestry of each animal. The National Animal Identification Program (NAIS) has been proposed in part to assist in the identification of certain livestock, but it has not yet been fully implemented at the federal level.
- Responsibilities. The contract should clearly state the responsibilities of each party and the consequences of their respective failures to perform contractual obligations. For example, if the stallion owner fails to breed an animal because of injury, what will happen to the mare’s breeding fee?
- Payment obligations. The contract should be clear as to the following:
a. How much will be paid for service? Will a single fee be paid for a single breeding or will there be additional fees for each attempt? How much will it cost for each surgical insemination? How much will it cost for shipping chilled or frozen semen?
b. When is payment due? At the time of the contract (that is, in full payment for a certain number of straws of frozen semen)? At the time of each surgical insemination?
c. Where should payment be sent, and to whom should invoices be directed?
5. Remedies. The contract should clearly state the remedies available in the event that a contractual party fails to fulfill its obligations under the contract. If the stallion owner fails to complete the breeding in a timely manner because of longevity issues, will the mare owner be entitled to a refund, or only to use the stallion owner’s facility for future breeding attempts? For example, the contract could provide that:
The failure by Stallion Owner to provide the Mare Owner with one (1) successful breeding, as required by this Agreement, shall give the Mare Owner the right to a refund of the stud fee ($______).
The agreement could also provide that any disagreements will be submitted to mediation or arbitration through the American Kennel Club or another significant breed registry. For example:
Any dispute between the Mare Owner and the Stallion Owner which arises out of, relates to, or is connected with legal rights of any person arising from this agreement shall be submitted to arbitration, and the laws of the state shall apply.
6. Other provisions. Care should also be taken to include additional clauses which facilitate the enforcement of the above provisions. For example:
a. Restraint of trade clause. If a breeding contract between a mare owner and stallion owner restricts the owner from breeding to other stallions, state law might view that as a restraint of trade. Consider the possibility of that potential issue when entering into the agreement, and, if necessary, include a provision (to enhance its enforceability) that provides that the parties are engaging in competition, and that each party has negotiated for the terms of the contract.
b. Non-discrimination clause. In some states, when a stallion owner refuses to breed to a mare because of her color, weight, training, or other factors that can be viewed as discriminatory, the stallion owner may be in violation of discrimination provisions of state law. To avoid allegations of discrimination, include a non-discrimination clause in the contract.
In summary, a good breeding contract should be clear and concise, and should sufficiently cover the parties’ performances and their subsequent remedies for breaches of contract. If the contract is not precisely written, it may be difficult to determine the parties’ requisite obligations, and the cost of litigation to resolve the issue may be greater than the profits begged on the first stud fee.
Legal Aspects of a Breeding Contract
Contracts related to dog breeding usually include boilerplate clauses that cover aspects like dispute resolution, jurisdiction, and indemnification. However, carefully thinking through these clauses can make a big difference when it comes to liability issues and regulatory compliance.
Dispute Resolution: Although many breeders prefer the simplicity of resolving disputes under local jurisdiction, you should always specify the state’s laws that apply to any dispute. This will dictate not just the governing law but also where you can file a lawsuit. If a lawsuit is filed in a different state or even a different country, the other party will be able to fight its enforcement or resist taking any action required by the judgment, such as delivering a dog or providing a refund.
Limitations on Liability: Many breeding contracts attempt to limit the liability of the breeder. These clauses can fail for two reasons. The first reason is if you can establish that the limitation on liability does not make sense in light of the amount of money at stake because a limitation at zero dollars will not provide the buyer with a meaningful remedy. The other reason is that a limitation on liability may be illegal if it is in violation of applicable state or federal anti-trust laws or regulations.
Intellectual Property: In some states, such as Florida, any contract that involves giving away IP – such as a breeding contract or stud admittance contract – must be in writing. Breeding contracts typically involve the transfer of intellectual property for free and therefore are almost always subject to this rule. Even though other states do not specifically cover the transfer of IP, some states have similar rules. Therefore, this material should be included in a written document even if your state’s laws do not require one.
Indemnification: Contracts will often have clauses where the parties agree to indemnify each other in certain circumstances. Breeding contracts almost always have indemnification clauses. Although they are acceptable as a general matter, there are legal limits on indemnification. A contract cannot provide for indemnification for intentional conduct. Some states also consider claims based on breach of contract to be beyond the scope of indemnification clauses. For example, if your breeding contract is breached and you bring a claim against the other party, you cannot then make an additional claim for breach of fiduciary duty that you created retrospectively as a result of the breach of contract claim. This doesn’t apply when there is an independent duty, such as a statutory duty or a duty as a matter of law. So an ethical or legal claim that is estopped or waived may still support a claim for breach of fiduciary duty or fraud, but it must be separate from the breach of contract claim.
Establishing Breeding Standards and Requirements
In addition to the overall description of the horse and/or fresh or frozen semen to be bred, the breeder may want to set certain breeding standards/expectations to ensure that his/her wants and needs will be met. The types of standards to be set will vary by situation, but generally speaking, few breeders have the get in mind to which they will be breeding their mare. Rather, the breeder will have an idea of the type of foal that he/she hopes to produce and is looking to the stallion to provide that quality. If no standards are set, the stallion owner is under no obligation to inform the mare’s owner of any deficiencies in the quality of the foal produced, even if the quality of the foal results in a significant reduction in the value of the foal.
An example set of standards that a breeder may want to require of the stallion owner, based upon the needs and wants of a particular breeder, may include:
While the above examples of standards are not exhaustive, they provide a clear illustration of the intention of requiring certain breeding standards. If these standards are set forth in the breeding contract, the stallion owner can elect not to enter into the breeding contract. In that case, the parties will have ample opportunity to renegotiate the terms, if desired. However, if the stallion owner is willing to enter into the breeding contract in spite of the standards set forth by the mare’s owner, the mare’s owner can rely upon certain measures being taken by the stallion owner to meet the requirements and, subsequently, the stallion owner can be held liable if he/she fails to do so.
For example, if the above breeding standards are required in the breeding contract related thereto, the veterinarian examining the stallion for soundness will have more concrete and complete information from which to work to determine if the stallion is truly healthy enough to breed the mare. Likewise, the blood test for EVA will be more complete to determine whether the stallion is positive for EVA and, if so, what risk it may pose to the mare. The blood test for EVA can only confirm that the stallion is negative. For this reason, to prove that the stallion is negative for EVA, the blood test must be run on a regular basis and/or the veterinarian examining the stallion should be instructed to inspect the test results from the prior examinations. If the blood tests are not run on a regular basis, the stallion may have tested negative for EVA at some point in time; however, the stallion may have become positive for the disease since that last test was run. While impossible to know 100% whether this has occurred, the stallion owner could be held liable for failing to conduct the blood tests on a regular basis and for failing to provide the correct information to the examining veterinarian.
Common Issues with Breeding Contracts
As with any contract, issues often arise in the performance or enforcement of a breeding contract. Breach of contract may seem like an obvious threat—one party to the contract not performing his or her obligations under the contract. Fortunately, most breaches of contract can be easily addressed either by complying with the terms of the contract or paying some form of damages to make the aggrieved party whole.
What can be much more difficult to address are events that arise unexpectedly and significantly affect the contract, such as health problems in either the male or female, or health or behavioral issues with the resulting puppies or kittens. These events may not be within the control of any party to the contract. Parties may argue over responsibility for these events, what is due as damages or otherwise, or in some cases whether the events relieve any party of its obligations under the contract. In addition, if the resulting puppies or kittens have health problems, parties may also argue over who has responsibility for certain veterinary costs.
It is good practice to address in the breeding contract how the parties will address these events, including the specific procedures that should be followed and any timelines for those procedures . Some contracts address the possibility of certain problems by releasing the breeder from liability for these issues. However, even if there is no liability for the resulting animal’s health problems, it is important to carefully delineate between the documentation required for a passing OFA score or OFA hip evaluation and the veterinary procedures that should be followed if the OFA results are not satisfactory. In addition, some contracts specifically indicate what should happen with a troublesome or unsellable puppy or kitten. If the Breeder is willing to take back the animal, he or she may require the Endorser to relinquish ownership and provide the Breeder the right to rehome that animal.
There are also cases in which two or more parties to a breeding agreement have claims set forth in other legal agreements or pleadings in actions against the same party. Some breeders have experienced this when someone sells both animals and breeding rights. A legal advisor may be important to ensure that all of the parties realize their respective rights, that they have not violated any other legal agreements, and that any damages are fully awarded and collected without further litigation.
A Helpful Guide to Developing a Thorough Breeding Contract
Drafting a thorough and enforceable breeding contract requires careful attention to detail and a clear understanding between the parties involved. The following tips may help ensure that your contract covers all necessary aspects of the agreement:
• Document the entire agreement, even if it seems obvious that you and the other party will do what you are granting each other. Adopting a belt-and-suspenders approach will go a long way toward ensuring the validity and enforceability of the contract.
• Include sample contracts if you have done any prior breeding transactions with the same party. This will serve as a roadmap to ensure that you are accounting for all potential issues in the contract.
• If you are not familiar with all of the possible issues to address in a breeding contract, engage the help of an attorney who does understand these issues.
• Require both parties to initial each page of the contract. This is particularly important if you are placing a great deal of value on a breeding transaction.
• Keep good records of the breeding transaction and the relationship between the parties. This will be important if the contract is ever challenged as unenforceable for any reason.
• Ensure that you can completely perform the entire agreement, and don’t execute the contract unless you can perform the agreed-upon obligations. Put simply, don’t initiate an action without having a full defense available to you if you need to defend a breach of contract claim.
• The parties should sign after each page of the contract, and include a page where the parties’ initials are conveniently located.
• Ensure that the parties sign the contract in one place. Multiple signatures on different parts of the contract may render the contract invalid.
• Stamp and initial each page of a contract before it is signed. This way, if the contract is breached, the other party cannot insert pages to the contract that were not actually signed by the parties.
Breeding Contracts in Various Animal Industries
Equine, canine, and livestock industries all have different considerations with respect to breeding contracts.
In the equine industry, some states specifically require the semen to be collected by a licensed veterinarian, whereas other states do not. Also, certain states require health certificates, and tests such as Coggins, before a mare can be bred. Certain states require that the stallion owners be licensed or registered. In addition, the Board of Agriculture puts health and safety requirements in place for horses that board on a breeding farm. The stallion owner is responsible to ensure the farm is in compliance with these requirements before boarding a horse.
Canine breeding contracts can vary widely by State and differ from equine contracts by virtue of the different industries . For example, some states have requirements with respect to breed registration, which will vary depending upon the breed of dog to be bred. In addition, there are industry standards where certain breeds are concerned which apply in some jurisdictions but do not apply in others. Breeder groups and clubs also have their own standards for registration and are important to consider when entering into a canine breeding contract.
Livestock breeding contracts will often contain a range of restrictions and requirements including required veterinary vaccinations, required tests (e.g. Brucellosis), Board of Agriculture licenses, etc. Certain states have special laws and regulations about noncompete clauses in livestock breeding contracts. These noncompete provisions may apply on a state by state basis depending on whether the breeding of the livestock is on a farm or whether the breeding is at another location.