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Auctions have been taking place for over 2,000 years. Auctioneering is often referred to as the second-oldest profession.

One could think 2,000 years of auction practice coupled with a ripe and robust auction market in the United States, augmented with some licensing laws and a bit of case law, would provide for some “standard of practice.”

If you agree with this premise then you might also agree that there exists a standard to judge obviously reasonable and obviously unreasonable claims and/or propositions regarding auction procedures.

We bring this up because the UCC 2-328 is well known as the standard of practice for auctioneers — although, it’s fair to say that not all auctioneers, everywhere, strictly adhere to all nine sentences. Additionally, it is well established that the UCC is meant as a “gap filler” for commerce not otherwise agreed-to and detailed by the parties involved.

Yet, as I had previously discussed with Steve Proffitt, what a modest group of “gap-filler” promoters nearly always fail to mention is that the UCC cannot be modified or ignored if such private arrangement is manifestly unreasonable. So, we would of course want to know what manifestly unreasonable means.  Have the courts ruled or interpreted this phrase?  Do we know what it means?

You can read here that in 2004 noted authority Law Professor Daniel S. Kleinberger wrote that the courts up until that time had been rather quiet about further defining the concept: http://www.uniformlaws.org/shared/docs/limited%20liability%20company/ullca_manifestlyunreasonablememo_120504.pdf, and there have been few if any proclamations subsequent.

Lacking a clear court directive, how can the term “manifestly unreasonable” be defined? ‘Manifestly’ suggests obviously, plainly, clearly, apparently … and ‘unreasonable’ suggests not governed by reason, or exceeding reasonable limits. If we took a stab at it, could we suggest (is it reasonable?) that ‘manifestly unreasonable’ is synonymous with ‘obviously not governed by reason?’

Courts weigh cases involving “obviously not governed by reason” claims or issues all the time. Typically when one side has taken obviously unreasonable advantage of another, and/or the laws in the United States aren’t being uniformly (fairly) applied, courts routinely rule for the injured party — thus endeavoring to fix an inequity.

As such, imagine:

    • A banking policy that you deposit your money in the bank, but cannot ever withdraw it, however the bank can withdraw it and give it to someone else.
    • An insurance company’s policy that you pay for insurance, but the insurance company can refuse to pay any and all claims and keep your premium and you can’t ever cancel your so-called coverage.
    • An attorney’s policy that you pay him a fee and he can do absolutely no work for you whatsoever and keep your retainer.

Now before you say, “But these customers/clients agreed to these egregious terms and conditions so they are bound by them,” let me suggest more often than not they will claim they didn’t understand, or signed under duress, or otherwise thought they meant something else …

Actually, it’s quite likely that a party sues this bank, insurer or attorney and a court hears the case; take a guess what happens — and maybe more importantly, what’s your bet that this plaintiff continues to do business with this defendant, and fails to tell all his friends about this horrible experience?

Writing auction contracts, terms and conditions and/or policies? Take a second look and see if you are creating an obviously unreasonable environment for your bidders/buyers and/or seller, because the one who is feeling manifestly disadvantaged might well be looking to see you in court.

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, RES Auction Services and Goodwill Columbus Car Auction. He serves as Distinguished Faculty at Hondros College of Business, Executive Director of The Ohio Auction School and Faculty at the Certified Auctioneers Institute held at Indiana University.