auction, auctioneer, auctioneers, auctions, Lott v. Delmar, manifestly unreasonable, reasonable, Restatement (Second) of Contracts § 205, UCC § 2-207, UCC § 2-328, uniform commercial code, Uniform Sales Act
How many times has somebody (including me) said, “I’m just stopping for one drink …” and it ended up being more than one drink? How many times did it become several more drinks?
The UCC § 2-328 does indeed allow for modification — but more importantly the obligations of good faith, diligence, reasonableness, and care prescribed by [the Uniform Commercial Code] may not be disclaimed by agreement.
Some cite the UCC § 2-207 regarding additional terms in acceptance or confirmation, but again, that’s okay so long as those additional terms constitute obligations of good faith, diligence, reasonableness, and care prescribed by the Uniform Commercial Code.
For more clarification, the Restatement (Second) of Contracts § 205  (Duty Of Good Faith And Fair Dealing,) section D notes that bad faith can involve:
Evasion of the spirit of the bargain, lack of diligence and slacking off, willful rendering of imperfect performance, abuse of a power to specify terms, and interference with or failure to cooperate in the other party’s performance.
Nonetheless, let’s further this parallel:
- Let’s stop after work and grab one drink? Sure, let’s change when title passes from, “Sold!” (assuming it does) to after payment is made. Is this “one drink” reasonable? I think so.
- Could we order a second drink? Maybe we add to our terms that this property is being sold “absolute” so long as a sufficient number of bidders are present and registered. Is this “second drink” reasonable? Maybe, or maybe not.
- How about a third drink? Let’s change the terms so that the auctioneer can withdraw the property even after saying, “Sold!” and void the entire transaction. Is this “third drink” reasonable? Probably not.
- And finally could you order “several more drinks?” What if you were hearing that auctioneers could hold that “2 = 1” or “2 + 2 = whatever?” Can your terms/conditions can say anything you want? That’s positively untrue.
You see, the issue isn’t modification itself, but the ever-present slippery slope where it rests. I’ve sat in several courtrooms where I’ve successfully testified about an auctioneer’s bad faith, carelessness, and unreasonable terms and conditions.
What does that subject auctioneer’s attorney likely argue? “Your Honor, the Uniform Commercial Code can be modified …” Where’s the elephant in the room? One, the auctioneer, and his attorney are in court, and secondly, the judge may or may not agree specifically.
I’ve consistently held that the UCC § 2-328 itself is nearly perfectly balanced and equitable not necessitating any changes for risk of being held as manifestly unreasonable. As for the UCC Article 2 otherwise, there may be areas that could be appropriately enhanced by agreement.
In fact, the act of modifying the default provisions of the precursor to the UCC § 2-328, the Uniform Sales Act, ended up in the New Jersey Supreme Court in Lott v. Delmar, 2 N.J. 229, 66 A.2d 25 (1949); in other words, in a courtroom: exactly what I’ve suggested auctioneers avoid.
I absolutely concur that your specific questions as an auctioneer concerning enforceability and reasonableness should be referred to a competent attorney (to see you only drink one) and how does this contrast with 2 = 1 or 2 + 2 = whatever? This is the difference between one drink and way too many.
Further, do most auctioneers have an attorney who understands all this? Even if, do they discuss this kind of thing with him or her? They don’t. On the contrary, in my experience as an expert witness, more than a few auctioneers have drink #4, #5 and #6 and then drive home, tell the officer “it was only one drink” and find themselves in court the next morning.
Can the Uniform Commercial Code § 2-328 and otherwise be modified by agreement? Are those modifications enforceable and reasonable? Are any modifications done in the spirit of good faith, diligence, reasonableness, and care? Can your auction terms and/or contract say that 2 = 1 or anything you desire? Hopefully, you will drink responsibly.
Mike Brandly, Auctioneer, CAI, CAS, 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, Executive Director of The Ohio Auction School, an Instructor at the National Auctioneers Association’s Designation Academy and America’s Auction Academy. He is faculty at the Certified Auctioneers Institute held at Indiana University and is approved by the The Supreme Court of Ohio for attorney education.