In the past several years, auctioneers have been encouraged to act more and more unconscionable. What’s unconscionable? Unreasonably excessive, extreme, unfair, unreasonable …
For example, on the one hand, the law says one can sell “as-is” without offering any opportunity for bidders to inspect prior, and on the other hand, the law says contracts can’t be unconscionable.
It seems to be more-or-less a power-trip. We set the rules, we determine the winners and losers, we have all the property and you can take it or leave it. What a warm, welcoming environment for bidders and buyers to participate in … we even false advertise that the bidders can pay “their price” as if there’s no more to that story.
UCC § 2-316 (3) outlines the most notable waivers concerning auctioneers for implied warranties. Here’s the actual text of that statute:
(3) Notwithstanding subsection (2)
(a) unless the circumstances indicate otherwise, all implied warranties are excluded by expressions like “as is”, “with all faults” or other language which in common understanding calls the buyer’s attention to the exclusion of warranties and makes plain that there is no implied warranty; and
(b) when the buyer before entering into the contract has examined the goods or the sample or model as fully as he desired or has refused to examine the goods there is no implied warranty with regard to defects which an examination ought in the circumstances to have revealed to him; and
(c) an implied warranty can also be excluded or modified by course of dealing or course of performance or usage of trade.
Relatedly, UCC § 2-302 deals with the unconscionability and enforceability of contracts. Here is that complete statute:
(1) If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.
(2) When it is claimed or appears to the court that the contract or any clause thereof may be unconscionable the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose and effect to aid the court in making the determination.
Law Professor Michael J. Phillips wrote an inciteful analysis of the interworkings of UCC § 2-316 and UCC § 2-302 and we have his entire paper here for your review: Unconscionability and Article 2 Implied Warranty Disclaimers.
Professor Phillips concludes in this paper that UCC § 2-302 should (and will) be more aggressively applied by the courts to UCC § 2-316. In other words, given choices, auctioneers can indeed become less unconscionable. In fact, we may have to become such to remain in business?
I can assure any auctioneer out there reading this — if you are selling “as-is” and not providing for any opportunity to preview prior, I or virtually any other auction expert witness will be arguing that you easily had far better choices, and your terms and conditions are unconscionable. Why? Because you did, and they are.
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 Supreme Court of Ohio for attorney education.