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We’ve held here on this platform and otherwise that an “agreement” and a “contract” are essentially the same things — one sounding a bit more official, and the other less so. However, are there otherwise any material differences between these two concepts?

As one who teaches classes on real estate (and auction) law, it’s not unusual for auctioneers to refer to the arrangement with the seller as a “contract” and the arrangement with the bidders involving them “agreeing” to the terms and conditions.

Relatedly, we’ve held that bidders, buyers, and sellers can be held to a contract even if they don’t read it, and maybe even if they don’t understand it: https://mikebrandlyauctioneer.wordpress.com/2020/12/24/can-auction-bidders-be-held-to-things-they-dont-read/.

If we look at UCC § 1-201 we can see these definitions:

  • Agreement“, as distinguished from “contract”, means the bargain of the parties in fact, as found in their language or inferred from other circumstances, including course of performance, course of dealing, or usage of trade as provided in Section 1-303.
  • Contract“, as distinguished from “agreement”, means the total legal obligation that results from the parties’ agreement as determined by the Uniform Commercial Code as supplemented by any other applicable laws.

In researching legal dictionaries, we found that most do distinguish between a contract and an agreement, such as this:

  1. An agreement exists where there is a mutual understanding regarding rights and responsibilities among parties to a business arrangement.
  2. A contract is an agreement between respective parties that creates legally binding obligations.

We recently wrote that we were engaged by a law firm to assist in determining if a bidder had “agreed to” or “agreed with” an auctioneer’s terms and conditions. It seems possibly agreed with is more like an agreement, and agreed to is more like a contract? https://mikebrandlyauctioneer.wordpress.com/2021/05/25/did-you-really-agree-with-to-those-terms/.

It appears likely that UCC § 1-303 would apply to the registration of bidders given their “course of performance,” “course of dealing,” and/or “usage of trade,” and would allow such agreement to the terms and conditions to bind the bidder, but certainly could be subject to interpretation — particularly by a judge or court.

The word “contract” in relation to our above legal definition appears to be more binding by default. A bidder who contracted to the terms and conditions would almost assuredly be bound. We wonder if “agree to be bound” would serve a similar end?

More importantly, why are we even discussing this? Far beyond if the word “agreement” means something different than the word “contract,” we’re now in an era where terms and conditions have gone from a one-half page in 12pt type to 536 pages in 6pt type.

Bidders never debated if they understood the auction terms and conditions 50 years ago, let alone if they were bound by them. Today? Because auctioneers (and everyone else) have this 536 pages of small print, filled with disclaimers, assignments, and associated legalese, even other attorneys can’t understand them.

So when bidders feel harmed, they have their attorneys review the auction’s terms and conditions and the easy targets seem to be a lack of a mutual understanding and/or terms too complex to expect any reasonable bidder to comprehend.

We’ve even had auctioneers telling their bidders that if you “don’t understand the terms and conditions” that they should seek attorney counsel: https://mikebrandlyauctioneer.wordpress.com/2019/04/18/are-we-making-buying-at-auction-easier-or-more-difficult/. Essentially admitting the terms are too difficult and/or complex?

How would any court rule a matter such as this? We’re about to find out, but the risk seems real that terms and conditions which are unconscionable, unreasonable, or fundamentally unfair encourage bidders to review if there was indeed any mutual understanding and/or if the terms are too complex to be understood.

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 and Western College of Auctioneering. He is faculty at the Certified Auctioneers Institute held at Indiana University and is approved by The Supreme Court of Ohio for attorney education.