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I teach a class for auctioneers somewhat regularly on auction case law. The question I sometimes hear is, “Why is auction case law important?” Here, we’ll answer that question.

First, a bit about what case law is in the United States. Case law is one of four sources of law in the United States, and probably the most important of all four. Besides case law, there is constitutional law, statutory law, and administrative law.

Why case law is paramount, particularly for auctioneers, is case law takes precedent over statutory law, administrative law and even constitutional law (although there are no auction/auctioneer related constitutional laws at this time.)

Auctions and auctioneering is largely governed by state law. These laws include the UCC 2-328 and in some states auctioneer licensing regulations. However, if a court hears a case, and makes a decision contrary to state statutory or administrative law, that decision takes precedent over those laws.

Alternately, case law can “fill gaps” in statutory or administrative law, and in that way create more law for which auctioneers to pay attention; for instance, in Virginia there were laws about “without reserve” auctions, but no real clarification if a “without reserve” auction was the same as an “absolute” auction.

Here’s how the Supreme Court of Virginia defined an auction without reserve in the case of Holston v Pennington 225 Va. 551, 304 S.E. 2d 287 (1983):

    “The term ‘absolute auction’ is equivalent to the term ‘auction without reserve,’ a well-recognized term of art in the law of sales. It means that the property will actually be sold to the highest bidder at that time and place, that no minimum price will limit the bids, that the owner may not withdraw the property from sale after the first bid has been received, that the owner may not reject any bid or all bids, and that the owner may not nullify the sale by bidding himself or through an agent.”

From the moment of this decision in 1983, Virginia had new law (case law) stating essentially that an absolute auction was the same as a without reserve auction. This is the law in Virginia unless the legislature passes new law counter to this decision — which they have not yet, and are not likely to do.

What is also important about case law is if it is issued by a state supreme court, other states are more likely to consider it when similar cases are before their courts. Therefore, our Supreme Court of Virginia decision above is even more material for auctioneers — even operating outside Virginia.

In our auction case law class, we discuss both Old English case law in addition to other United States cases, including the only three (3) times an auctioneer-related case was decided at the Supreme Court of the United States — which made law that impacts all auctioneers operating in the United States.

We should note that there are not many auction nor auctioneer-related cases heard in courts in the United States. In fact, no such auction/auctioneer case has been decided at the Supreme Court of the United States since 1921, and none at any state supreme court since 2007.

To look at case law from another angle, many consider three (3) of the most important cases decided by the Supreme Court of the United States to be:

If any of these cases cause you to realized the significance of case law — which they should — then if you’re in the auction business, auction case law should interest you as well.

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.