When the conversation turns to something like the UCC 2-328, contract law, or the like, and I point out that a certain practice is troublesome, risky or even illegal, the most common answer seems to be: “We’ve always done it this way …”
A close friend of mine died at 53 years old. She smoked heavily for 40 years … I think we can safely say just because we’ve been doing something for years doesn’t necessarily make it a good decision.
What I’ve found is that auctioneers have been, for example, reopening bids in defiance of the UCC 2-328, offering binding warranties but holding buyers to an “as-is” standard in defiance of basic contract law, making all kinds of decisions unilaterally without consulting with their client disregarding agency law …
The pattern seems to be that auctioneers learn the business from other established auctioneers, who learned it from other established auctioneers, who learned it from other established auctioneers. This continuum of learning seems to prolong common misconceptions and without interceding continuing education, it continues on and on and on.
In my travels, here’s three good examples of “We’ve always done it this way …” only ultimately resulting in “We shouldn’t have been doing this at all.”
- Since 1994, an auctioneer in Nebraska had been holding multi-parcel auctions and saying, “Sold!” after each individual lot, then combining them in various combinations until a court ruled in 2006 that upon “Sold!” the lots could not be withdrawn to be combined in any fashion.
- An auctioneer in Ohio had for decades, sold property with reserve but changed the auction type to absolute when the reserve was met until a court ruled that they owed their client over $100,000 in damages when a bidder retracted his bid and another bidder bid $1.00 in that now-absolute auction.
- For over 25 years, an auction house in Florida allowed their sellers to bid on their own items without proper disclosure until a court ruled that such disclosure was required and damages were due hundreds of past customers.
Further, there’s also the, “Our longtime attorney has always told us …” which can also lead to problems. There are very few attorneys skilled in auction-related law, and relying on just one without researching issues independently and asking other well respected attorneys and auctioneers is ill-advised.
Essentially, the “We’ve always …” argument suggests that a customary practice makes such action ethical and legal — because it is customary, widespread and accepted, even if illegal or prohibited by statute or rule.
Certainly over the long-term, laws and rules change due to society’s customary practice but until they do, the laws and rules trump behavior. Every day in the United States, people are murdered, cars are stolen, college football players are paid … to the point that it’s customary … but it’s still illegal and/or in violation.
The laws and rules regarding auctioneering in the United States are virtually unchanged since the 1700’s, much of which is based on English common law. The most recent (and likely last) Supreme Court of the United States case regarding an auctioneer was in 1926 — and that case affirmed longstanding laws, essentially rejecting customary practice.
What’s the best way for auctioneers to stay in business for a very long time? One way is to not necessarily behave the way they’ve always behaved without at least one eye on auctioneer-related court cases, applicable laws and rules, emerging technology and auctioneer association resources and contacts (particularly within state auctioneer associations and the National Auctioneers Association.)
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. He serves as Adjunct Faculty at Columbus State Community College, Executive Director of The Ohio Auction School and Faculty at the Certified Auctioneers Institute held at Indiana University.