Case law for auctioneers is important. Since 2010 we’ve taught such classes across the United States and auctioneers tell me it’s some of the most interesting information (important things to know/remember “couched” in a story that’s entertaining and memorable.)
Notably, in 2013, The Supreme Court of Ohio approved us teaching auction case law to Ohio attorneys as part of their every 3-years CLE (Continuing Legal Education.) Attorneys have been some of the most interested parties to take these classes and as well the most appreciative.
We wrote prior about the importance of case law for auctioneers here: https://mikebrandlyauctioneer.wordpress.com/2011/03/22/why-is-auction-case-law-important/ and here: https://mikebrandlyauctioneer.wordpress.com/2020/06/13/auctioneers-and-case-law/.
Additionally, as a frequent auction expert witness, an understanding of auction case law is paramount to provide attorneys we work with so they can further analyze and use such information on the legal/factual side of their arguments — or most important work to possibly settle arguments.
We’ve also seen opposing parties in auction litigation (and otherwise) propose summaries of auction-related case law which are sometimes misleading or incomplete. For instance, recently we saw an interesting reference to United States v. Blair, 193 F.2d 557, 560 (10th Cir. 1952) herein referred to as “Blair.”
One party was proposing (holding out as true) that this case established the “buyer [at auction] 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.”
On the contrary, and importantly, Blair didn’t say that. Blair actually said:
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.”United States v. Blair, 193 F.2d 557 (10th Cir. 1952)
This list of other cases was as well proposed in an attempt I’m guessing to answer our questions:
- Coleman v. Duncan, 540 S.W.2d 935 (Mo. App., 1976)
- In re Wilson Freight Co., 30 B.R. 971, 975 (Bankr. S.D.N.Y., 1983)
- Finnish Fur Sales Co. v. Juliette Shulof Furs, Inc., 770 F.Supp. 139, 145 (S.D.N.Y.1991)
- Washburn v. Thomas, 37 P.3d 465, 467 (Colo. App. 2001)
- Hessel v. Christie’s Inc., 399 F.Supp.2d 506, 516 (S.D.N.Y.2005)
- Central Connecticut Aircraft, LLC v. State, 2011 NY Slip Op 21489, 41 Misc.3d 919, 972 N.Y.S.2d 390 (N.Y.Ct.Cl., 2011)
- Early Auction Co. v. Koelzer, 114 So.3d 1038 (Fla. App., 2013)
With the exception of Early Auction Co. v. Koelzer, 114 So.3d 1038 (Fla. App., 2013), all these above cases suggest “announced,” terms and conditions as in spoken, rather than in print (the Early Auction Co. v. Koelzer case even differentiated between published versus announced terms) and uses the term “neglected” to read, while not specifically addressing comprehension.
Therefore, if the buyer may rely on the “announced” terms, what about anything that isn’t announced? Terms used to be so simple, auctioneers read all 50 words, but now with page after page, they typically don’t – either because it would take too much time, or they don’t want to read it all. Further, I would suggest announced would include the ability to be heard.
Timing of announcements likely matters as well. We’ve recommended that all announcements start at the auction event start time; for instance, a 10:00 am auction begins with announcements at precisely 10:00 am. It seems prudent to have all the terms and conditions expressed (actual notice) as well as constructively noticed (published otherwise.)
In regard to “inquiry notice” it appears to us we’re on a slippery slope in that we want bidders to feel obligated to inquire while suggesting in our actual notice that there is no need to further inquire. I remember a movie line that went … “Pay no attention to that man behind the curtain!”
As we’ve written before, we’ve seen more than one case in court where the auctioneer nor the buyer understood (or could explain) the subject auction’s terms and conditions. We’ve also been hired to evaluate terms and conditions that were announced 10 minutes before the advertised auction event start time. There was also a case where the terms and conditions were essentially impossible to locate on the auctioneer’s website.
Further, more and more we are viewing terms and conditions which are not reasonably understandable for a variety of reasons. For instance, oftentimes even the attorneys we work for can’t comprehend the terms and conditions, so how do we expect the general public to understand?
We wrote about what state law held in regard to contracts versus agreements, and what legal dictionaries said about those same concepts: https://mikebrandlyauctioneer.wordpress.com/2021/05/27/bidders-agreeing-or-contracting/. Would it not be in every auctioneer’s interests to have terms and conditions which are understandable, even if not read or followed?
The Supreme Court of the United States said in Erie Coal & Coke Corp. v. United States, 266 U.S. 518 (1925) “The terms and conditions of the sale as set forth in the advertisement were binding alike upon the United States and the bidders” However, there is of course more to that statement — including but not limited to — when they were made, if they were understandable, and as we’ve noted in another analysis — are your terms part of an adhesion contract and your subject property or service of a nature not readily found elsewhere?
Relating to adhesion contracts, here’s just one example of what a court might say. In Fairfield Leasing Corp. v. Techni-Graphics, Inc. – 256 N.J. Super. 538, 607 A.2d 703 (Super. Ct. 1992), the Superior Court of New Jersey invalidated an adhesion contract because its waiver clause was single-spaced and had a small type font; as such, the court deemed the clause to be too inconspicuous.
Maybe most importantly, look at this aforementioned bulleted list of cases. See a theme? We continue to write about this issue that seems to escape some enthusiastic fans of winning in court, rather than avoiding court: https://mikebrandlyauctioneer.wordpress.com/2021/06/10/court-cases-and-one-important-lesson/.
It is clear when auction buyers of material property are surprised and/or disappointed with terms and conditions they either didn’t know about and/or didn’t understand … is there any question what happens? There is 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.