Of course, my phone rings … “Hey, I may need your help. I have a bidder who is telling me this other bidder …” As I listen, I know this issue well. This auctioneer said he saw on social media that auctioneers have the discretion to register bidders as they please, independent (capriciously) of the [not] set terms and conditions.
I asked this auctioneer why he was calling me, as I don’t hold that view. His reply? While I can’t specifically disclose …. he was well aware I didn’t hold the same view. This auctioneer now better realizes that auction terms and conditions should be set in advance and not altered — just as his attorney told him a few minutes prior to our conversation.
You see, auctioneers have had to continue to endure the remnants of an argument — that bidders can be held to disparate terms and conditions, and registered (or not) arbitrarily and/or capriciously. For example, I can advertise that in order to register for my auction that 10% and a bank letter is required but nonetheless register others without either or both.
We have testified in court more than once that we disagree, and that all bidders earn the “right” to bid by satisfying the terms and conditions. In other words, if our auction requires 10% and a bank letter, then one can only bid if he meets those requirements and nobody can register (nor bid) who doesn’t meet those requirements.
In 2020, the Supreme Court of Appeals of West Virginia said:
Finally, as a general principle, all the bidders at an auction must stand upon an equal footing. Accordingly, an auctioneer cannot vary the announced terms of the sale as to some bidders, or any one bidder, to the detriment of the other bidders.Alex Lyon & Son, Sales Managers and Auctioneers, Inc. v. Leach, 844 S.E.2d 120 (W.Va. 2020)
You might think this is the first time this issue has been litigated, and you might think this ruling was incorrect. However, this is not the first time a court of note has considered this issue and came to the same conclusion.
The Supreme Court of the United States in Erie Cole & Coke Corporation v. U.S. 266 U.S. 518 (1925) held that the terms of an auction were “binding alike” on the auctioneer/seller and all bidders. The Court of Special Appeals of Maryland in Pyles v. Goller, 109 Md. App. 71, 86 (Md. Ct. Spec. App. 1996) held bidders should “stand on equal footing.”
Yes, there was indeed a jury trial in California (Village at Redlands Group LP v. Auction.com Inc. Superior Court of the State of California for the County of Orange, Case No.: 30-2015-00777483-CU-FR-CJC) in which we testified as well where the court ruled that bidders didn’t necessarily need to be held to the same terms.
We going to state this one more time: There is an excellent chance you can avoid [this type of] litigation by establishing your terms and conditions prior to your auction and requiring all bidders to meet or exceed those requirements. You see, all the cases [litigation] I’ve cited above involved this issue.
Said another way, there are yet no cases of a bidder suing for being denied the right to bid because he didn’t meet the registration requirements, and there may never be so long as auctioneers don’t vary the announced terms of the sale as to some bidders, or any one bidder, to the detriment of the other bidders.
Are you an auctioneer who’s still thinking bidding at your auction is a privilege (rather than a right) and that you can (and it’s a good idea to) vary your terms at your will for any certain bidders, thus providing for “unequal footing?” The possible consequences of your choices are stark.
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.