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We’ve previously written about Claire.

She wishes to withdraw some consigned firearms, and place reserves on others, after signing a without reserve auction contract with an auctioneer.

Our two previous stories are here:

  1. https://mikebrandlyauctioneer.wordpress.com/2012/09/03/seller-withdrawal-or-auctioneer-withdrawal/
  2. https://mikebrandlyauctioneer.wordpress.com/2012/09/09/auctioneer-says-you-can-withdraw-with-penalty/

Today’s analysis takes a closer look at Claire’s desire to withdraw some firearms, and how her decision relates to the contract she has signed with an auctioneer.

Let’s say that Claire’s auctioneer’s contract has the following clause:

    “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    If any item is removed, sold or withdrawn prior to auction or sold within thirty (30) days after the auction, without such mutual agreement, auctioneer shall receive triple the preassigned commission on those item(s) based on the fair market value of the item as liquidated damages.”

We note the words, “triple the preassigned commission.”

In the United States all states have, generally, some consumer protection laws. Such laws deal with issues like Claire’s, and typically find there are limits on the liquidated damages her auctioneer can charge her.

Such laws generally dictate that liquidated damages must be equal or less in value to the actual costs of the withdrawal.

Further, such laws customarily say that no liquidated damages can be charged at all if the auctioneer:

  • Did not offer any reasonable, favorable term to the seller in return for giving up a unilateral state law right of withdrawal.
  • Breached the contract, such as not advertising the property adequately, or not performing other duties as promised or required.
  • Did not disclose the withdrawal fee in the contract and prior to signing.
  • Is charging adhesionary damages — such as triple the commission otherwise charged as liquidated damages.

On this final note, and as we’ve said, if the charge (penalty) exceeds the true cost of withdrawal and any other genuine related expenses due to such, they would be almost always considered adhesionary — and not enforceable.

Some common adhesionary auctioneer policies for seller withdrawal would include charging for:

  • Reimbursement for any advertising or preparation expenses for this property prior to withdrawal.
  • A flat withdraw fee in excess of what would have been charged if the property sold.
  • An increase in commission charged on this withdrawn property, or any other property in the auction.

As we noted in a previous story about Claire, 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.