, , , , , , , , , ,

We previously wrote about force majeure clauses in regard to unforeseen circumstances — for instance war, strike, riot, crime, plague, terrorism … or possibly a pandemic, hurricane, flood, earthquake or the like here: https://mikebrandlyauctioneer.wordpress.com/2020/03/27/auctioneers-force-majeure-clauses/.

In other words, such clauses could address unexpected circumstances. These would be things generally not thought of at the time the contract is formed. Further, as we noted, contracts to some extent almost automatically give rights of suspension or termination of performance in cases of “impracticability,” “impossibility” and “frustration of purpose.”

Then, there are foreseen circumstances — such as anything that is thought of at the time the contract is formed. For a live auction, what do we do if it rains that day? What if it snows? What if it’s very cold? Very hot? Other than extremes, these are foreseeable conditions.

Foreseen conditions are typically written as contingencies in the contract — in essence anticipating the event and what we do in that instance. For instance, an auctioneer might confirm a duty to his seller by saying, “We’ll set up two tents if it’s raining that morning.”

Lastly, the unforeseen can suddenly become the foreseen — and then seen when it happens. If it starts raining that morning — foreseen — and then keeps raining to flood stages — unforeseen — the auctioneer and his client need to meet to discuss next steps.

These next steps can result in the auction being delayed, postponed or even canceled and such should be addressed in the contract between the auctioneer and his client. A contract could have preexisting provisions, but the question would be if they were foreseen (contingencies) then the contract could stand pat.

Too, it would be important for any contingencies to identify the particular party (auctioneer, principal, or both) who can invoke the contingency. For example, can the auctioneer postpone? Can the seller delay?

If the event is unforeseen, that’s when the contract would need to be reformed because if you and your client don’t know, or can’t foresee, a contingency it’s likely not addressed in the contract prior. Alas, we don’t know what we don’t know.

We have argued for years that almost all contracts are incomplete in some manner — in that, we can’t anticipate every circumstance at the time of signing — going forward. As such, a meeting of the minds at that moment of contract creation might not really last that long.

Lastly, it seems to us that if the auction is scheduled consisting of some illegal purpose (auctioneer in a license-state with no such license, for example) the contract would be considered void and no such follow-up addendum (auctioneer now has the license) would revive it to valid status — and rather a new contract altogether would be needed.

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.