Practical and Legal Issues When Equine Businesses Raise Rates

Julie I. Fershtman, Attorney at Law

www.equinelaw.net

Professionals in the equine industry want to be accommodating and affordable, yet the increasing cost of doing business makes that difficult. Prices continue to climb for just about everything – fuel, hay, feed, and workers. Unfortunately, professionals are often reluctant to seek rate increases. The question is how to raise rates in a manner that is both fair and legal. This article offers some suggestions.

Can You Legally Raise Rates?

For equine professionals considering a rate increase, an immediate question is whether they can legally raise their rates. Their contracts might hold the answer. Possibly, contract terms will delay rate increases. This was the case with one boarding stable’s contract that had a year-to-year term; while the stable saw benefit in committing its boarders for a full year, the stable took a financial risk by locking in its fees for a long duration. Contracts of that type may force stables to wait out the expiration of the term before they can seek higher rates.

Practical Realities

The next question is not necessarily legal but practical in nature. That is, what is the proper amount of a rate increase? Chances are that no law limits the amount that a boarding stable or equine professional can charge as a basic fee. Equine professionals seeking profitable rates would be wise to determine their “breakeven point” (the “breakeven point” is the amount of income needed to meet a business’s typical overhead expenses and compensation requirements).

Reserving the Right to Raise Rates

In the equine industry, businesses often encounter fluctuating expenses. Some price increases come without warning, such as a regional drought that affects the cost and availability of hay. Equine professionals, because of these realities of increased expenses, have every incentive to use contracts that allow some flexibility to raise rates. Here are some options for training or boarding contracts:

• Reserving the professional’s right to increase rates. Contracts can specify that the equine business is permitted to raise its rates by giving its customers at least 30 days advance notice of the increase.

• Policies and rules. If the equine business posts policies or rules, it can also reaffirm that the business reserves the right to change those policies, and even increase its rates, with advance notice to the owner as the contract allows.

• Giving customers the option to leave. While the contract can give the business discretion to raise rates with advance notice, the contract can also give customers the right to terminate before the new rates take effect. For example, if the equine business gives 45 days advance written notice of an upcoming rate increase, the contract can also allow clients to give the stable 30 days advance written notice that he or she is leaving and that the contract is terminated.

Imposing New Side Charges

Equine professionals might consider imposing new side charges. Here are examples of side charges that some equine businesses have assessed:

• Holding the horse for the veterinarian or farrier at the stable

• blanketing or un-blanketing (using the client’s blankets) depending on weather conditions

• putting on and removing splint and/or bell boots for turnout

• turning out the horse in an individual paddock rather than a group pasture

• extra stall bedding

• extra feed or hay

• emergency hauls of the boarded horse to a local veterinary facility or equine hospital

As professionals provide these or other services, and keep record of them, they can submit monthly invoices to clients itemizing the services provided and dates. To eliminate misunderstandings, the service contract, such as the boarding or training contract, can attach the most current list of additional services and charges and reserve the right to amend these charges with sufficient advance notice.

Late Payment Fees

In an effort to encourage timely payment, some boarding and training contracts allow the business to charge late payment fees (where allowed by law). For example, some contracts require boarders to pay the stable an extra $15 for every week in which board has not been timely paid. Contracts can also set forth a rate of interest that the professional or stable can charge on unpaid balances. (Please keep in mind that state laws vary as to what rate of interest is legal. The 18% per annum rate found in many equine industry form contracts might violate the laws of your state.)

Plan ahead and protect yourself from rising costs. Maintain profitability by using wellworded contracts that allow you to account for, adjust, and collect your fees.

This article does not constitute legal advice. When questions arise based on specific situations, direct them to a knowledgeable attorney.

About the Author

One of the nation’s best-known Equine Law practitioners, Julie Fershtman is a Shareholder with the law firm Foster Swift Collins & Smith, PC, in Michigan. A lawyer with 36 years of experience, she has handled cases in 20 jurisdictions nationwide and has tried equine cases before juries in 4 states. She is listed in The Best Lawyers in America and Super Lawyers. Her speaking engagements span 29 states. Her newest book is “Equine Law & Horse Sense,” published in 2019 by the ABA. Written for non-lawyers and lawyers, this book received 4 national book awards. Find it on Amazon and look for the horse on the cover. For more information, visit www.equinelaw.net