I’ve told countless auctioneers that the most confusing 254 words in the English language is the UCC 2-328. I think the most confusing two-word (sometimes four-word denoting location) combination for auctioneers is undoubtedly “as-is.”
We’ve written about the as-is standard for auctioneers working in the United States. Here we summarize the seven major considerations for selling as-is as an auctioneer:
- The Supreme Court of the United States has provided a precedent for a minimum standard for as-is sales for auctioneers. In Mottram v. United States (1926) the Court ruled that a buyer at auction might only be held to an as-is transaction if that subject property is open for inspection and the buyer has a reasonable opportunity for preview.
- For an as-is (as is) disclaimer to be enforceable, it must be conspicuous. As such, “AS IS WHERE IS” would be enforceable only if this print was larger (more visible) than the surrounding print and otherwise conspicuous.
- Contemporary courts in the United States have held that auctioneers (agents/sellers) must disclose both latent defects as well as any hazardous and/or dangerous aspects of any subject property selling at auction whether or not it is selling as-is, and independent of any inspection. Largely, the as-is disclaimer matters little in this regard. We wrote more about this here: https://mikebrandlyauctioneer.wordpress.com/2011/08/12/the-effect-of-the-as-is-clause/.
- Common [law] contract law dictates that contracts at auction must have mutual assent — a meeting of the minds. Therefore, any expression of type, color, size, maker, manufacturer, rating, condition, etc. is then necessary for the valid construction of a contract between seller and buyer. Such declarations likely override any prior or thereafter expression of selling as-is. We wrote more about this here: https://mikebrandlyauctioneer.wordpress.com/2010/12/19/item-at-auction-is-but-maybe-not/.
- Auctioneers cannot disclaim expressed warranties and enforce an “as-is” sale. For example, an auctioneer says “You are buying this Texas Instruments TI-58 calculator as-is.” As-is here only applies to anything not expressed, as this now has to be a Texas Instruments TI-58 calculator, but nothing more.
- While some auctioneers have had bidders/buyers agree to not rely on any expressions (avoiding a claim of fraud which requires such reliance,) misrepresentation remains a valid claim if expressions are proved as such under the guise of selling as-is. We wrote more about this here: https://mikebrandlyauctioneer.wordpress.com/2015/05/01/as-is-and-fairness/.
- The law suggests auctioneers can disclaim implied warranties and sell as-is, but it remains ill-advised. For example, an auctioneer implying something is in working order disclaiming reliance is inviting a lawsuit if the buyer discovers it isn’t in working order.
So what are the best rules auctioneers should keep in mind when selling as-is? In brief:
- Allow reasonable open accommodations for previews.
- Disclose any latent defects.
- Disclose any hazardous or dangerous facts.
- Expect to be held to any expressions and implications.
- Accurately represent (don’t misrepresent) the subject property.
Of course, many auctioneers say, essentially, “If I do all that, what’s the sense — the advantage — of selling as-is?”
Quite frankly, there has never been an abundance of advantages other than to bluff buyers into thinking they have no recourse for a purchase not meeting their expectations. However, importantly as-is does save against claims concerning patent defects as well as generally any unexpressed warranties.
What’s the future hold for auctioneers? Don’t be surprised to see more laws and court rulings favoring bidders and buyers in light of centuries of auctioneer/seller shenanigans; for instance, look for a firming of a standard like this: https://mikebrandlyauctioneer.wordpress.com/2014/07/21/all-known-material-facts/
Considering this, will auctioneers continue to advertise auctions with terms including an as-is disclaimer? They will indeed, but likely with less and less true legal impact.
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 Hondros College of Business, Executive Director of The Ohio Auction School and Faculty at the Certified Auctioneers Institute held at Indiana University.