Forced sales, court-ordered auctions, and the like are often held to a “commercially reasonable” standard. It’s clear commercially reasonable is also a good standard for any auction.
In the case Westgate State Bank v. Clark, 642 P.2d 961 (Kan. 1982) the court ruled in such a case of commercially reasonableness, noting this passage (emphasis added:)
One of the most important elements of commercial reasonableness is the duty to surround the sale with publicity sufficient to attract a “lively concourse of bidders.” In publicizing a foreclosure sale, the exact time, place, and terms of a public sale should be published. A number of cases hold that if the collateral is equipment, individual consumer goods, or farm goods, there is a duty to provide prior inspection of the collateral for interested purchasers. Failure to allow prior inspection may influence the court to conclude in a particular case that the sale was not commercially reasonable.https://www.courtlistener.com/opinion/1187308/westgate-state-bank-v-clark/
Auctioneers should note the duty to “provide prior inspection,” suggesting that the opportunity should be provided, whether the buyer takes advantage or not.
As we’ve held, why wouldn’t you as an auctioneer provide for some sort of reasonable inspection prior to auction? Because you don’t have to? I would counter that’s not good enough.
Too, as we’ve suggested, if bidders/buyers are too far away (and/or thus it’s too costly) to reasonably inspect, your descriptions are even more important, possibly to the extent that any representations are warranties.
Do you want to be that auctioneer who says, “We believe it’s a Rolex watch” to a bidder 2,500 miles away when it’s not a Rolex watch? Let”s see, he receives the fake watch, is unhappy, and you claim “Nothing I can do … you bought it ‘as-is.'” Is that how we want to be known?
For that matter, how did you feel when you were 18 years old and took that trip to the Caribbean to get that $49 Rolex watch? How did you feel when you returned only to then realize it wasn’t a Rolex watch? I bet you didn’t buy another one …
For auctioneers selling high-dollar property, this principle of allowing pre-auction previews is even more paramount, and it’s not that difficult at all to manage. As value increases, so do legal claims, attorneys, and time/expense away from your business.
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.