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We further this study of waiver of rights granted under state law with, “Can the auction bidder waive rights granted under state law,” in this regard: Let’s say that person attends an auction with the intent to register and bid on a few items. The auctioneer’s staff informs the prospective bidder he must sign and agree to the terms, including that if he bids, and the auctioneer accepts his bid, he may not retract his bid under any circumstances.
State law in 49 of the 50 states in the United States dictates bidders may retract their bid at an auction anytime, for any reason, up until the “fall of the hammer,” per the UCC 2-328. however, in our case here, let’s say the auctioneer’s terms and conditions require the bidders waive that right of retracting their bid.
So, our question is: Can the auction bidder waive the right of retraction granted by state law?
Similar questions arise in other cases. For example, can an employer require employees sign a contract mandating arbitration rather than filing suit? Can an employment contract deny the employee’s participation in an class-action lawsuit? Can an employment contract deny maternity leave? And, there are many others …
This issue for auctioneers, while different in different states, basically divides into three points:
- If the bidder waives a right that otherwise state law grants, the agreement with the auctioneer may be consented to, but may not be enforceable.
- If the bidder waives a right that otherwise state law grants, but some similar right is extended the bidder (which is deemed reasonable), the agreement with the auctioneer may be consented to, and the agreement is probably enforceable.
- If the bidder waives a right that otherwise state law grants, and results in a highly unfair, adhesionary relationship between the auctioneer and bidder, the agreement may be consented to, but the agreement will probably not be enforceable.
Let’s look at these three scenarios with an example of each:
In #1, we use the term, “may not be enforceable,” and this one is right in the middle-ground in most courts. Let’s say our bidder intends to bid on a 1953 Chevrolet pickup, but to get a number, he must agree to these terms an and conditions which dictate he cannot retract his bid once accepted. The auctioneer did, however allow every bidder an additional hour of preview the day before the auction. A court may view this as reasonable as the bidder has give up rights of retraction, but has been extended additional preview privileges. Or, a court could view this as unreasonable, since by state law, any bid at an auction can be retracted prior to the “fall of the hammer.”
In #2, we use the term, “probably enforceable,” and this one leans toward enforceability because the bidder is given additional rights, or mitigating rights. For example, our bidder intends to bid on a 1953 Chevrolet pickup, but to get a number, he must agree to these terms an and conditions which dictate he cannot retract his bid once accepted. The auctioneer has instead, extended an additional week of preview opportunity to all prospective bidders, and even allowed them to test drive the pickup. A court would probably view this waiving of rights as reasonable as the auctioneer would be extending unusually generous previews for bidders in trade for the bidders not being able to retract their bid during the auction.
In #3, we use the term “probably not enforceable,” and this one leans toward unenforceability because the bidder is positioned in a highly unfair or adhesionary position. For example, our bidder intends to bid on a 1953 Chevrolet pickup, but to get a number, he must agree to these terms an and conditions which dictate he cannot retract his bid once accepted. All bidders must also agree that both Spanish and French bid calling will be used interchangeably with the bidders native language of English, and even if an item is described as “perfect,” it sells “as-is” without any warranty. A court would likely view this waving of rights as unreasonable, as the changing of languages during the bid calling would likely be difficult to follow, and that warranties are being expressed, but bidders (buyers) cannot enforce them.
In summary, these types of auction issues don’t get into court very often. I would recommend auctioneers not require bidders to agree to terms and conditions counter to state law. Of, if an auctioneer feels he must have such terms and conditions, at least offer the bidders some other benefit or feature to help balance the agreement, and maintain a reasonable contractual arrangement.
I recommend this for auctioneers too, because we in the auction business must remember that usually a court views us as the professionals, and our bidders (buyers) as members of the public. If a certain passage in an agreement is to get the attention of a court, it will likely be a passage that is to the detriment of the bidder (buyer), rather than to the detriment the auctioneer.
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 is Executive Director of The Ohio Auction School.