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.

Specific interest rights may be contractually conveyed to one or more buyers. A seller can convey a portion or all of any specific interest right while retaining a remainder interest. For example, an owner may contractually convey 50% of his total ownership interest in a bull and retain 50% percent of ownership. The buy sale or partnership agreement can convey and/or retain any variation of percentages of specific interest rights as agreed by the parties to the transaction.

A formal written agreement setting forth the terms, rights and remedies of the parties should be executed before commencing performance of the agreement. The percentage and interest to be conveyed, once agreed upon, should be set forth in the body of the agreement. A properly drafted bill of sale should spell out all the agreed terms and conditions of the transaction.

The basic elements of a written agreement are:

1. Names and full addresses of all parties
2. Description of the cattle (if applicable)
3. Purpose of agreement
4. Date of delivery, or point at which contract begins
5. Duration of agreement
6. Financial terms of agreement
7. Payment of additional expenses
8. Care of the cattle
9. Release and hold harmless
10. Risk of loss
11. Arbitration of disputes
12. Reservations clause
13. Indemnification
14. Termination of agreement
15. Governing law or arbitration
16. Signatures

Next, the transfer clause should specifically identity the cattle and percentage of ownership to be conveyed. Include the name, registration number, sex, color, age, sire and dam. If the seller intends to retain any percentage of ownership interest in the bull the reservations clause must clearly state what rights and percentage of ownership is to be retained by the seller.

The bill of sale should contain a specific listing of all rights and duties of both the buyer and seller. Specific provisions should be included in the document for distribution of income and allocation of expenses. Decision making authority should be designated to one party and actual possession rights should be addressed. Provisions relating to additional transfer of ownership interest, or termination of the partnership agreement, should be expressly listed in the agreement.

By using a properly drafted buy sale or partnership agreement you can maximize your profit potential by retaining a variety of interest rights in your animal while selling fractional percentages to a variety of different investors.