Historically, the cattle industry has relied on verbal agreements and handshakes to seal the deal. The final agreement is seldom reduced to writing, and each party may walk away with a different understanding of the terms of the verbal agreement. Carefully drafted written agreements setting out the agreed terms can eliminate disputes and prevent costly litigation. This article will attempt to inform the reader of basic aspects of a properly drafted bill of sale.

Sometimes a buyer only wants to purchase a fractional interest in a bull.

Many investors want to own a bull, but lack the facilities or the experience necessary to provide care and transportation of bucking stock. A carefully drafted bill of sale or partnership agreement can allow the buyer to purchase a fractional interest in one or more ownership rights—and allows the seller to retain the remainder.

Ownership interest in a bull should be thought of as a bundle of sticks. Each right incidental to ownership represents a stick in the bundle. Through the use of properly drafted contracts any or all of the individual ownership rights may be allocated between one or more individuals or corporate entities. Specific ownership interest rights include, but are not limited to, the following: breeding rights, naming rights, cloning rights, semen rights, futurity and classic competition rights, marketing & licensing rights and performance rights.

Many disputes can arise when parties enter into verbal breeding agreements or lease agreements. Often lessees refuse to return a leased cow claiming that it was purchased or was a gift. The lessee may make claims for feed and board in excess of those originally agreed to. Liability issues may arise. Disputes over the standard of care are common, and disputes may arise in the event breeding is not successful, or if the breeding results in a stillborn calf.

Most disputes can be avoided by the use of a properly drafted breeding contract or lease agreement.

What happens if your client’s bull becomes injured, sick or crippled while in your possession and control? Likely the owner will blame you for the injury and seek compensation. What happens if a bull breaks through your holding pens and injures a bystander? Most likely you will receive notice from the injured party that he has retained legal counsel to seek compensation for his injuries.

As with any small business, it is imperative to protect your assets from personal liability by maintaining adequate insurance coverage for premises liability; worker compensation for employees; and coverage for compensation or replacement of expensive bulls, including mortality; theft; loss of use; and major medical policies.