As happens these days a couple times a week, I answer my phone to hear: “I’m an attorney representing an auctioneer …” Indeed we provide that service which we describe in more detail on our site: https://auctionlegalconsulting.com/
Most recently, an inquiry involved a breach of contact of sorts — where the auctioneer did not follow the legal expressed wishes of his client. Yet, as our title suggests, the auction took place, the seller was paid … and the seller cashed the check. The attorney asked if this seller could cry foul given she accepted the proceeds from the auction?
I countered that this was possibly a better question for him to answer than me, but he was seeking a commentary regarding customary practice rather than a strict legal answer. I told him, generally, that if the seller isn’t happy with the auctioneer’s performance, often times that check remains uncashed until the issue at hand is resolved.
However, I added that despite the check being cashed, it didn’t likely prohibit the seller/client from pursuing damages for breach of contract. That is, even if the so-called settlement paperwork noted (as in this case):
By cashing this check, seller hereby accepts this settlement as the complete and final accounting of their auction, and relieves auctioneer from all further liability.
In essence such text in the settlement paperwork constitutes proposed unilateral reformation of (an offer to reform …) the original contract, but the money (check) remains (remained) part of the original auctioneer/seller contract. Therefore the cashing of the check does not constitute acceptance of this additional term “acceptance/relief of liability.”
Alternately, could the original contract have a term and/or condition that by cashing the check the seller relieves the auctioneer of any further liability? Absolutely, and if it did, that would be part of the original agreement between the parties and therefore maybe (but maybe not) enforceable.
What we’re discussing here is an exculpatory clause. An exculpatory clause is a contract provision that relieves one party of liability if damages are caused during the execution of the contract. The party that issues the exculpatory clause is typically the one seeking to be relieved of the potential liability. The most famous case which started all this “waiver of liability” is known as Primrose v. Western Union Tel. Co., 154 U.S. 1 (1894). As it’s often noted …
This case held the limitation of liability clause enforceable because it was a “proper and lawful mode of securing a due proportion between the amount for which the carrier may be responsible and the freight he receives, and of protecting himself against extravagant and fanciful valuations.
Nonetheless today many states have made such clauses illegal, and courts all across the United States are routinely viewing them as adhesionary — one-sided, unfair, unreasonable, inequitable, nonnegotiable and therefore unenforceable. In other words, it’s likely even if our aforementioned clause is in the original contract, it is probably not going to prohibit the seller from pursuing damages.
The issue with auctioneer/seller contracts (and similar personal service contracts) is the licensed auctioneer (and/or experienced, professional) is held to a higher standard than the public. The public has a right to expect more from his agent than the agent has to expect from his client; a fact of life for auctioneers today in this country.
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, an Instructor at the National Auctioneers Association’s Designation Academy and Faculty at the Certified Auctioneers Institute held at Indiana University.