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We previously wrote about Claire and a firearm consignment to an auctioneer.

Claire decided after consigning some firearms, she wished to withdraw some of them, and place reserves on some otherwise selling without reserve.

You can read more about that issue here:

https://mikebrandlyauctioneer.wordpress.com/2012/09/03/seller-withdrawal-or-auctioneer-withdrawal/

Our topic today takes a closer look at an auctioneer’s contract which specifies,

    “Seller agrees not to remove, sell, or withdraw any property from the auction after the date of contract except by mutually signed written agreement between seller and auctioneer.
    If any item is removed, sold or withdrawn prior to auction or sold within thirty (30) days after the auction, without such mutual agreement, auctioneer shall receive the preassigned commission on those item(s) based on the fair market value of the item as liquidated damages.”

This clause appears to do two things:

  1. This clause says that Claire cannot unilaterally remove, sell or withdraw any property once it is consigned.
  2. This clause outlines the damages (due the auctioneer) if Claire does unilaterally remove, sell or withdraw any property once it is consigned.

And, Claire agreed to this arrangement, signing the contract her auctioneer prepared with this aforementioned clause.

In our previous post we concluded that a court would likely rule that Clair has the right to unilaterally withdraw any of her property, without penalty, per the UCC 2-328 and common law agency precedence.

So, how does an auctioneer protect himself from, for example, Clair withdrawing all her firearms 15 minutes before the auction, thus cancelling the entire auction on very short notice?

Courts have seemed to be more open to contract arrangements in conflict with state law if there are mitigating terms which extend a reasonable right to the client in return for agreeing to the term or condition contrary to state law.

For example, if Clair’s auctioneer modified his contract, and said:

    “Seller agrees not to remove, sell, or withdraw any property from the auction after the date of contract except by mutually signed written agreement between seller and auctioneer.
    If any item is removed, sold or withdrawn prior to auction or sold within thirty (30) days after the auction, without such mutual agreement, auctioneer shall receive the preassigned commission on those item(s) based on the fair market value of the item as liquidated damages.
    Further, if the seller wishes to add additional property to this auction, there will be a discounted commission of one-half (50%) less charged on those items added after the contract signing if no other items are removed, sold or withdrawn from the auction.”

This type of “extending some favorable term” to the seller in return for not withdrawing any items (i.e. giving up some rights,) would likely be looked on by a court as a mitigating circumstance, which would more likely result in the contract being held enforceable.

Lastly, every day in the United States, contract disputes are avoided altogether when the terms are mutually beneficial — when both parties feel their contract arrangement is a “win-win.” Yet another reason for a balanced approach.

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.