Disclaiming warranties of merchantability and fitness for a particular purpose can be tricky business. As we previously have held, “unless the circumstances indicate otherwise” are words which suggest to us either there was possibly misrepresentation, concealment, and/or a lack of an opportunity to preview.
As such, these warranties can be disclaimed in only a limited and certain manner: https://mikebrandlyauctioneer.wordpress.com/2020/10/27/unless-the-circumstances-indicate-otherwise/. For instance, for auctioneers, we’ve suggested any “AS IS” disclaimer be conspicuous: https://mikebrandlyauctioneer.wordpress.com/2021/09/06/are-you-selling-as-is-or-as-is/.
Further, some in the legal profession suggest when the auctioneer knows the buyer is believing the property is fit for their particular purpose and the auctioneer either misrepresents or conceals the fact the property doesn’t conform to that particular fitness, such a disclaimer may be void referencing UCC § 2-316.
Let’s take five (5) examples of what I’m referring to here:
- For instance, you advertise a “New Lawn & Garden Equipment Auction” and a buyer attends seeking “new lawn & garden equipment” and the sixteenth lot is a “Ryobi 40V String Trimmer” sold “as is” and the buyer is (of course) expecting a new Ryobi 40V String Trimmer” while possibly the auctioneer is selling a used Ryobi 40V String Trimmer. Did the auctioneer misrepresent this lot? Did he conceal information? Was there an opportunity to preview?
- What if an auctioneer announced, “Welcome everyone, and what a wonderful inventory of New Lawn & Garden Equipment we have today.” and lot #16 (described as “Ryobi String Trimmer”) was not new, and sold “as is?” Would a buyer rightly expect this lot to be new? Did the auctioneer misrepresent this lot? Did he conceal information? Was there an opportunity to preview?
- We also wonder if this same buyer came to an auction and said, “Are you the auctioneer? I’m looking for a new Ryobi String Trimmer …” and the auctioneer replied, “Here’s where you register …” In this case as well, it appears to us this buyer is rightly expecting a new Ryobi String Trimmer, and not a used one. Did the auctioneer misrepresent this lot? Did he conceal information? Was there an opportunity to preview?
- A buyer calls an auctioneer to inquire about his online auction. “Hello, my sister is looking for a brand-new, never-used Ryobi 40V string trimmer.” The auctioneer says, “Well, it’s her lucky day, she can go to our website to register.” However, the only Ryobi 40V string trimmer in this auction is used, and selling “as is.” Did the auctioneer misrepresent this lot? Did he conceal information? Was there an opportunity to preview?
- An out-of-town buyer emails an auctioneer about his upcoming auction. The email inquires about bidding on what appears to be a new Ryobi 40V string trimmer. The email asks the auctioneer if this is indeed new, and the reply is a link to fill out an absentee bid form for placing a bid on a “Ryobi 40V string trimmer as is.” This Ryobi 40V string trimmer is actually used. Did the auctioneer misrepresent this lot? Did he conceal information? Was there an opportunity to preview?
This is generally the legal difference between expressed versus implied, and as such what can legally (?) be disclaimed versus what cannot be disclaimed, coupled with the equally subtle differences between merchantability and fitness. One law professor, Professor Robert D. Brain, who’s studied this issue considerably commented about this, suggesting the actual difference in light of knowledge, implied disclaimers, and buyer’s expectations is “nonsense.”
I’m not suggesting this would necessarily be a problem with an “as is” disclaimer, but why assume this unnecessary risk? It seems clear it would be better to expressly note (with actual words) this string trimmer is used, especially in light of other contrary expressions and related expectations.
Disclaimers concerning merchantability don’t have to be in writing, but disclaimers regarding fitness do. We would offer any — and all — legal disclaimers should be in writing and CONSPICUOUS: https://mikebrandlyauctioneer.wordpress.com/2021/09/13/conspicuous-auction-disclaimers/
Too, it’s clearly best to not misrepresent, conceal or deny pre-auction inspection. In this way, auctioneers insulate themselves as best they can from claims — that is, other than simply disclosing the truth about what is being sold.
In summary, the question is (or becomes) why any auctioneer/seller can [knowingly] imply something is suitable for a particular buyer (fit for his/her particular purpose,) but then disclaim any responsibility for its fitness? If we know that buyer’s expectations and reliance, isn’t it fair we meet (or exceed) those expectations or tell them the truth otherwise?
Or is this simply a case of “when the circumstances indicate otherwise …?” It seems maybe it is, in that reasonable behavior would be expected from the service provider (auctioneer) in light of buyer’s expectations and reliance. As the value of the subject property increases, the risk seems unwarranted.
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.