Auctioneers can disclaim warranties for fitness and merchantability regarding property they are putting up for auction … typically by using words such as, “You’re buying all this property as is and where is.”
This particular state law is found as referenced in the Uniform Commercial Code (UCC) § 2-316. We have a link to this statute here: https://mikebrandlyauctioneer.wordpress.com/auction-treatise/%c2%a7-2-316-exclusion-or-modification-of-warranties/.
However, this same statute notes, “Unless the circumstances indicate otherwise.” When could the circumstances indicate something else? It seems to us and others who have studied this issue that it could when such arrangement was unreasonable, inequitable — unconscionable. For example:
- You express false information about the subject property with the intent to deceive.
- You withhold or conceal information about the subject property with the intent to deceive.
- You don’t provide the bidders with a reasonable opportunity to preview the subject property.
As an expert witness, I’ve sat in countless courtrooms listening to attorneys’ arguments, judges’ opinions, and juries’ verdicts. If there’s a theme that appears consistent, it’s that courts are endeavoring to find (and compensate for the lack of) reasonableness, equity, and unquestionably conscionable contracts.
Most courts would likely view lying (actually or constructively) and/or not allowing people to view and inspect prior to bidding as unreasonable. I suspect most auctioneers as bidders would feel this same way.
Further, as we’ve discussed prior, if the seller, bidder, buyer, or member of the public feels the circumstances are unreasonable or inequitable, there’s a good chance they seek legal representation in an attempt to pursue damages.
The question then becomes for auctioneers … do you want to win in court or stay out of court? We discussed at length here: https://mikebrandlyauctioneer.wordpress.com/2018/07/26/auctioneers-you-want-win-in-court-or-stay-out-of-court/.
Most of this feeling of inequity and unreasonableness come from buyers. Is it that difficult to solve a buyer’s unhappiness? The auctioneer/seller likely still has title and possession of the subject property (or could regain title and possession) — why not just sell it again to someone else.
The counter-argument seems to be, “But it will sell for less the second time …” but how does this difference compare with the cost of your attorney’s retainer and/or total invoice? In other words, it costs to argue about it, and it might not cost anything to not.
In a previous analysis, we discussed the Restatement (Second) of Torts § 551 (1965) where tort law would suggest sellers (auctioneers) have a duty to actually or constructively disclose material information to buyers: https://mikebrandlyauctioneer.wordpress.com/2020/10/26/possible-liability-for-nondisclosure/.
We also wrote previously about a well-regarded attorney (and since many other attorneys agreeing) noting that he would be happy to take on a case of selling “as-is” without any preview opportunity. https://mikebrandlyauctioneer.wordpress.com/2020/06/27/mottram-and-what-if/. I suspect he would be equally happy to help if the auctioneer was lying.
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, and an Instructor at the National Auctioneers Association’s Designation 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.