This issue really isn’t that complex, yet some still don’t seem (and/or refuse) to understand. This “court case” said this, this “court case” said that, and this “court case” held … but what do auctioneers then do?
I’ve tried as best I can to help auctioneers understand that keeping out of court is much better than winning and certainly better than losing in court. In this treatise, I’ll try — again — to explain with several examples.
Let’s just say …
- A buyer sues an auctioneer alleging he took fictitious bids against him, and the court rules these bids could have equally been “seller bids” and rules the auctioneer does not owe damages — this is reason not to take fictitious bids.
- Auctioneer gets sued by a buyer because the auctioneer’s terms and conditions were too complex and in such small print to be understood, yet the court rules the terms and conditions stand and are enforceable — this is reason to make your terms and conditions less complex and more easily understood.
- Auctioneer gets sued by a seller for not allowing in-person bidder inspection and thus not fulfilling his fiduciary duty to maximize price, yet the court rules in-person inspections are not required — this is reason to provide pre-auction inspection opportunities.
- A buyer sues an auctioneer because the auctioneer allowed other bidders to participate without meeting the same registration requirements, and a court rules there is no such duty to ensure bidders “stand upon an equal footing” — this is reason to treat all bidders with the same registration requirements.
- Bidders and the seller both sue an auctioneer for not providing a safe environment at his live auction during a pandemic; the court rules the auctioneer has no such duty — this is reason to provide a safe environment at any auction.
- Auctioneer gets sued by a buyer for reopening the bid outside of the constraints housed in the UCC § 2-328; the court rules the UCC § 2-328 can be overwritten by agreement — this is reason to follow the UCC § 2-328 by the letter.
- A buyer sues an auctioneer because the auctioneer implied a car ran well (it didn’t) and was in good mechanical condition (it wasn’t) under an “as is” disclaimer; the court rules auctioneers can disclaim implied warranties — this is reason to not imply any misrepresentations.
Of course, there are those who see these seven court examples and say, “The auctioneer won in each case … so I’m free to do the same with no risk.” Is this correct thinking? It is not.
The right answer isn’t to win in court, and rather avoid litigation. In fact, it’s better to take genuine bids, make terms understandable, provide in-person inspections, register all bidders on equal footing, provide a safe environment for your bidders, follow the UCC § 2-328, and not misrepresent property.
Maybe the better question is, why wouldn’t you take genuine bids, make terms understandable, provide in-person inspections, register all bidders on equal footing, provide a safe environment for your bidders, follow the UCC § 2-328, and not misrepresent property?
Specifically, we noted in a recent article that there is no reason whatsoever to have auction terms and conditions which are nearly impossible to read nor comprehend, even if such may be enforceable: https://mikebrandlyauctioneer.wordpress.com/2021/08/30/bidder-know-hear-understand/.
I’m not suggesting the advocates of bad behavior have any ulterior motive, other than to be quite frankly noticed — paid attention to so that you start to think there must be a different valid point of view — different than what you actually know deep-down is correct behavior.
We’ve suggested (too subtlety, possibly?) that some occupations are supposed to give advice with deference to moral, economic, social, and political factors but we rarely see any considerations for moral, economic (staying out of court, for example,) social, nor political factors: https://mikebrandlyauctioneer.wordpress.com/2021/07/29/auctioneers-the-law-says-and/.
In practice, it’s almost like having an internal ethical standard which supplements your legal limitations. As we’ve repeatedly noted, just because you can, doesn’t mean you should, and just because you don’t have to doesn’t mean you shouldn’t: https://mikebrandlyauctioneer.wordpress.com/2020/05/18/just-because-you-can-doesnt-mean-you-should/.
To be fair, there are frivolous lawsuits filed, as well as lower court litigation which might not demonstrate that such behavior is to be modified or avoided. For instance, if a seller sued an auctioneer for following their contract’s specified duties, that’s not a reason to avoid following the contract.
Obviously, by behaving better, the chances of ending up in any courtroom in the United States are remote. This way, auctioneers can worry about their businesses, their families, their friends … and worry less about getting sued. Next time you see a list of court wins showing you the proper (suggested) behavior, remember that’s a list of court cases.
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.