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I was looking at an auction the other day, where an auctioneer was selling graded coins at auction (such as an 1889-CC Morgan Silver Dollar, MS-60) but later in the auction description noted that none of the grading was guaranteed or warranted.

So, that 1889-CC Morgan Silver Dollar is MS-60, but maybe not?

This could just as well be a parcel of land, a piece of commercial restaurant equipment, a bulldozer or a piece of gold jewelry … “Folks, this is (whatever) but don’t hold me to it!”

Auctioneers, sellers and buyers need to be careful. As we noted in an earlier article “Is it always “as-is” at an auction?” if the auctioneer wants to sell items without any guarantee or warranty, then there should be no expressions to the contrary or the “as-is” status or lack of warranty could well be voided.

A better strategy for this auctioneer selling these coins would be one of two alternative approaches:

  • All these coins are graded and guaranteed to grade as such
  • None of these coins are graded, and no grade is guaranteed or warrantied

Obviously, the strategy of expressing what would appear to be a fact about the property selling — but then not wishing to be held liable if that fact is found to be incorrect — is done in the hopes that the buyer bids with the purported fact in mind and/or won’t think to hold the auctioneer accountable if the description is later found to be false.

Auction contracts involving the buyer and seller require that there is a meeting of the minds between the parties. It would be difficult to argue that there is a meeting of the minds when the auctioneer (representing the seller) is saying something is (a coin graded MS-60) but the buyer could receive something else (a coin graded XF-40) and have no recourse.

Now that we’ve established the basic tenet of this argument, two variations on this theme are sometimes used by auctioneers:

    A. The buyers understood, and acquiesced, that the property was being described with good intent, but not to the extent that any guarantee or warranty was expressed or implied.
    B. The property was being described as “appears to be,” or “looks like,” and without certainty, so no warranty of certain condition was stated.

Courts in the United States have ruled repeatedly that when professional service providers (licensed or not) are engaged by the public, extra care on the part of the service provider is to be expected; as such, the service provider is held to a higher standard.

In this regard, courts have held, for instance, that an auctioneer who routinely sells coins should know the grade of those coins, and should not be able to assert a lack of knowledge. Too, courts have been unforgiving if there is the appearance of misrepresentation, even if only rising to the level of negligent misrepresentation.

A virtual doctrine of liability is invoked if the service provider knowingly makes a statement which is untrue or reasonably should have known that the statement was not accurate, and the buyer then relies on this representation to his detriment.

We would assert here that it really isn’t all that complicated. Referencing our earlier example, this 1889-CC Morgan Silver Dollar is a MS-60, or it’s not — and auctioneers should just say it is, it’s not, or they don’t know (if they genuinely don’t know.)

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.