Tags

, , , , , , , , , ,

Claire consigned her grandmother’s collection of rare handguns, rifles and shotguns.

The auctioneer she chose was a Federal Firearms Licensee (FFL) with an auction facility near Louisville, Kentucky.

With the auction day nearing, Claire visited the auction facility with some concerns:

  1. She was not entirely happy with the marketing of the firearms.
  2. She was worried a less than sufficient crowd would be present for the auction.

Nevertheless, she told her auctioneer she would allow the auction to continue, and told him she planned to be present for the auction.

The day of the auction arrived, and so did Claire to the auction facility.

With about five minutes before start time, Claire told her auctioneer she was still concerned about the marketing and crowd, and wished to withdraw several of the firearms from the auction. Too, she wished to place a reserve on several of the other firearms which otherwise were selling without reserve.

Claire’s auctioneer told her that he understood, but that she had no authority to withdraw any of the firearms, nor withdraw them otherwise by placing reserves on them.

He cited the UCC 2-328 as adopted in Kentucky in 1960:

    … In an auction with reserve the auctioneer may withdraw the goods at any time until he announces completion of the sale. In an auction without reserve, after the auctioneer calls for bids on an article or lot, that article or lot cannot be withdrawn unless no bid is made within a reasonable time …”

Claire’s auctioneer told her that he could withdraw firearms from the auction, but she had no right of withdrawal. In other words, the UCC 2-328 says, “the auctioneer may withdraw” but not that the seller may do so.

Claire seemed stunned. As she understood agency laws, and fiduciary responsibilities, her auctioneer was to obey any legal directions she gave him. Since he had a right to withdraw any firearms from the auction, her command to do so was a legal direction which he was obligated to follow.

And, Claire was right.

The courts in the United States have universally held the rights of withdrawal per the UCC 2-328 as valid, as well as holding that agents for clients are to follow all legal directions provided.

And, what if the auctioneer’s contract disallows withdrawal of any property once consigned? What if the auctioneer’s contract spells out a penalty for any withdrawal once consigned?

The answers to both of these questions involves the seller waiving rights granted under state law.

We wrote about that here: http://mikebrandlyauctioneer.wordpress.com/2010/03/19/can-the-auction-seller-waive-rights-granted-under-state-law/.

Generally speaking, the waiving of, or penalty for exercising, the right of withdrawal may be enforceable if the contract otherwise balances this waiver with something of comparable value.

In looking at court cases involving this concept, typically contracts in such cases have been viewed as “non-compensatory” in nature. In other words, the courts have almost always sided with seller’s right of withdrawal, without penalty.

Claire wants to withdraw some of the firearms from the auction? Claire wants to put reserves on some of the firearms? It’s likely she has the right to do either or both, without penalty, if she wishes.

Mike Brandly, Auctioneer, CAI, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, Keller Williams Auctions and Goodwill Columbus Car Auction. His Facebook page is: www.facebook.com/mbauctioneer. He serves as Adjunct Faculty at Columbus State Community College and is Executive Director of The Ohio Auction School.