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We’ve written prior about United States v. Blair, 193 F.2d 557 (10th Cir. 1952) and United States v. Weisbrod, 202 F.2d 629 (7th Cir. 1953) and the 1953 ruling clarifying that auction terms could be prescribed within reasonable conditions that are necessary for the general welfare. https://mikebrandlyauctioneer.wordpress.com/2019/12/31/united-states-v-blair-193-f-2d-557-10th-cir-1952/.

Today, we look again at (revisit) United States v. Blair, but in a different regard: How is the bidder bound to the auction’s terms and conditions? As we’ve highlighted below, United States v. Blair noted the following:

Generally, a sale by auction is complete when the auctioneer announces its completion. 7 C.J.S., Auctions and Auctioneers § 7, page 1250. And, title passes to the successful bidder at that time, unless the parties intend to the contrary. Harris v. Merlino, 137 N.J.L. 717, 61 A.2d 276; Lott v. Delmar, 2 N.J. 229, 66 A.2d 25; 7 C.J.S., Auctions and Auctioneers, § 8, page 1260. The owner of the property offered for sale at the auction has the right to prescribe the manner, conditions and terms of the sale. 7 C.J.S., Auctions and Auctioneers, § 7, page 1251. The buyer may rely upon such announced terms and conditions of the sale, and he is likewise bound thereby, whether present at the time of the announcement or has knowledge thereof. 5 Amer.Juris. Auctions, Sec. 15, p. 454; Kivett v. Owyhee County, 58 Idaho 372, 74 P.2d 87; Erie Coal & Coke Corp. v. United States, 266 U.S. 518, 45 S. Ct. 181, 69 L. Ed. 417; See Annot. 28 A.L.R. 991.

US Court of Appeals for the Tenth Circuit – 193 F.2d 557 (10th Cir. 1952)

We note the buyer can be bound to the terms and conditions whether present at the time of the announcement (actual notice) or has knowledge of thereof (constructive notice) and necessarily not that the “buyer is bound by established bidder terms and conditions regardless of whether present at the time of announcement and regardless of whether he has knowledge thereof.”

Further, we note the Supreme Court of the United States said in Erie Coal & Coke Corp v. United States, 266 U.S. 518, 45 S. Ct. 181, 69 L. Ed. 417 that “The terms and conditions of the sale as set forth in the advertisement [constructive notice] were binding alike upon the United States and the bidders.” similar to how the Supreme Court of Appeals of West Virginia ruled in the case of Alex Lyon & Son, Sales Managers and Auctioneers, Inc. v. Leach, 844 S.E.2d 120 (W.Va. 2020).

Our current project involves a case where the attorneys we are working for are arguing that a bidder may not have “agreed with” and rather possibly only “agreed to” (consented to) the auction’s terms and conditions. One issue is if this bidder had any knowledge or understanding (actual or constructive) of the terms and conditions — and how does one “agree with” something he has no knowledge or understanding of?

Certainly, there are other federal district courts and state courts which have commented on this same issue, largely suggesting bidders can be bound to terms and conditions even if they have no knowledge of them. Yet, these higher federal courts seem to hold some sort of knowledge [notice] is material to an agreement.

Obviously, the danger of any bidder being held — with no knowledge — to any auction terms and conditions would be the license that would give any auctioneer to include highly unconscionable provisions. Most auctioneers wouldn’t take advantage, but we’ve seen a few view this as a “green light” to be more shockingly unfair or unjust.

There is the argument that any bidder would have inquiry notice (reason to inquire) about terms and conditions before bidding — but announcements day of auction (actual notice) make almost every bidder think those comprise the entire terms when they often do not. It’s the appearance of actual notice (portrayed as no reason to inquire) when it’s not.

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.