Any enterprise in the business of supplying semen for artificial insemination is statutorily obligated by the Australian Consumer Law to guarantee the semen is of an “acceptable quality”.  Studs which collect and supply their own stallions’ semen and genetics firms that trade se

men are 2 such enterprises.

Recent foreign news of the incidence of Warmblood Fragile Foal Syndrome puts into focus the law around semen quality and the rights of breeders when a stallion has an inheritable genetic disorder transmissible through its semen. Would a dose of such semen be of an acceptable quality according to the Australian Consumer Law?

At collection, semen is usually tested to determine its potency. At that stage, however, gene testing for all or any known disorders might not be performed. Testing might not even be currently available for a specific condition. While foals had presented with symptoms of the disease for a long time, the test for Warmblood Fragile Foal Syndrome was developed only recently.

For semen to be of the guaranteed ‘acceptable quality’ it must be at least ‘free from defects’ and ‘safe’ to use being qualitative criteria prescribed by the Australian Consumer Law.  The breeder’s or supplier’s own assessment of these criteria is irrelevant.  The Australian Consumer Law interposes between them the familiar (to lawyers at least) reasonable man test, or as it is expressed in the Australian Consumer Law, the ‘reasonable consumer’ test.

Under this test, a notional reasonable consumer is imputed with full knowledge of the state and condition of the semen, including any of its hidden defects.  The inclusion of hidden defects, in this instance gene disorders, is significant.  Equipped with such knowledge, the notional reasonable consumer must then objectively decide if the semen is ‘acceptable’ after consideration of specific factors : the nature of semen, its price, statements made about the semen on any packaging or label, any representation made about the semen by the supplier, and any other relevant circumstances around the sale of the semen.  In a court of law, the judge is constituted the reasonable consumer in order to apply the test.

We can confidently assume that semen with a genetic disorder that poses potentially fatal or serious adverse health consequences for a mare or foal or both is not free of defects and unsafe and so therefore fails the qualitative criteria set out in the Australian Consumer Law.  But is the semen quality nonetheless ‘acceptable’ having regard to the specifics of the semen and the transaction?  It is hard to imagine a case. The notion that a supplier would exhaustively genetically test the semen and publish the results, including positives, is farfetched.  Indeed, I have come across an instance where the supplier asked me if there was a way to stop a breeder from genetically testing the semen.  The enquiry only begged the question of what the supplier knew and didn’t want the breeder to find out.

The Australian Consumer Law disallows any attempt by the supplier to contract out of the acceptable quality guarantee.  In other words, it is illegal for the supplier to exclude the guarantee or even represent that it does not apply. That said, no breeder would rush into a legal dispute over semen of an unacceptable quality. There is good reason for hesitation.  The amount of compensation that a supplier is liable for depends on proof of the loss and damage caused by the defective semen.  The cost of the semen and wasted veterinary insemination costs would be unarguable. But what of veterinary costs incurred in treating a foal with a genetic problem or an affected mare? What if the foal or mare or both were lost, what of their value? A supplier’s lawyers will try and argue that these losses were not reasonably foreseeable and therefore not compensable.

So to minimise the risk of a claim over defective semen, here are some suggestions for breeders and suppliers.

Breeders might take one or more of the following due diligence steps: Ask for test results of the semen before buying it to evaluate the findings in consultation with their AI vet; Evaluate those findings in terms of their ramifications for any recipient mare, which might entail knowing more about the breeder’s own fertility; Ask what if any genetic testing has occurred into the semen and request a copy of the results; Evaluate any finding of a genetic disorder in light of the mare’s own genetics, which might entail genetic testing of the recipient mare as well; If a genetic disorder is known to afflict a particular breed, request the supplier to give an express written warranty that the semen has been tested for it and returned a negative result – better still ask for a copy of that result to make doubly sure; Ask the supplier to give an express written warranty that the semen has no genetic disorder, detectable or at present undetectable.

Suppliers might: Test the semen for genetic disorders that are known to afflict the breed of the stallion or horses more widely and decide not to sell the semen if positives are returned, or, disclose any positives (albeit a rather uncommercial initiative to take) and adjust the price accordingly; In the absence of genetic testing, make non-testing clear in writing prior to the sale, state that the price reflects the absence of testing, recommend that as a general rule the inseminating veterinarian or AI technician should arrange genetic testing of the semen and, highly recommend, if the breeder should have any concerns at all about use of the semen for the recipient mare, that both semen and mare be genetically tested to determine compatibility.

More informed breeders, asking the right insightful and knowledgeable questions up front and shying away from suppliers who are cagey, non-responsive or flippant can only be a good thing for the breeding industry overall.

6 July 2018

© 2018 Michael Mackinnon, Solicitor & Independent Counsel