auction, Auction Law, auctioneer, auctioneers, auctions, disclaimer, expert witness, J. Stephen Proffitt, risk, UCC § 1-302, UCC § 2-328, uniform commercial code
The Uniform Commercial Code § 1-302 titled “Variation by Agreement” clearly says (emphasis added:) (a) Except as otherwise provided in subsection (b) or elsewhere in [the Uniform Commercial Code], the effect of provisions of [the Uniform Commercial Code] may be varied by agreement.
What is apparently not as clear, is “except as otherwise provided in subsection (b) or elsewhere …” because subsection (b) is regularly ignored. Here’s that particular text (emphasis added:)
(b) The obligations of good faith, diligence, reasonableness, and care prescribed by [the Uniform Commercial Code] may not be disclaimed by agreement. The parties, by agreement, may determine the standards by which the performance of those obligations is to be measured if those standards are not manifestly unreasonable. Whenever [the Uniform Commercial Code] requires an action to be taken within a reasonable time, a time that is not manifestly unreasonable may be fixed by agreement.
Auctioneers are rightly told to minimize risk. That’s why you’re told to waive, disclaim and assign all responsibility for virtually everything, right? Wouldn’t it be just as prudent to avoid the risk of a court, judge, or jury ruling your modifications disclaimed good faith, diligence, reasonableness, and care?
This is hardly the only time we’ve written about this issue including here: https://mikebrandlyauctioneer.wordpress.com/2015/12/01/ucc-2-328-ucc-1-302/. Additionally, here is the entire Uniform Commercial Code § 1-302: https://mikebrandlyauctioneer.wordpress.com/auction-treatise/%c2%a7-1-302-variation-by-agreement/.
What I’m suggesting here isn’t solely my opinion. Steve Proffitt felt the same way about this issue as I do, and other attorneys (and court cases) have confirmed my view of this matter. In fact, we asked the question regarding when adhering to the UCC § 2-328 was a bad idea? The short answer is “It hasn’t ever been.” https://mikebrandlyauctioneer.wordpress.com/2018/08/01/when-has-the-ucc-2-328-been-a-bad-idea/.
For instance, you can reopen the bid if a [higher] bid comes in “while the hammer is falling” – and as such, this isn’t a “tied bid” but rather a higher bid tendered at a specific timeframe, not before the hammer falls, nor after; Only Kentucky has codified “tie bids” but gives auctioneers no workable, equitable, reasonable way to resolve such a circumstance: https://mikebrandlyauctioneer.wordpress.com/2020/04/01/the-kentucky-tie-bid-mess/ while actually inferring there isn’t a tie.
You can operate as you wish, but to — on the one hand — do everything to avoid risk, and then argue assuming this subject risk is beneficial is nonsensical. Have there been lawsuits where auctioneers have reopened the bid? There have been:
- Ragusa v. Greco, 171 La. 686, 131 So. 849 (1930) a high bid was not reopened, but “would have been” and as a result a beneficiary party was not happy. Lawsuit.
- Hoffman v. Horton, 212 Va. 565, 186 S.E.2d 79 (Va. 1972) auctioneer reopened the bid and previous high bidder was unhappy. Lawsuit.
- Kline v. Fineberg, 481 So. 2d 108 (Fla. Dist. Ct. App. 1985) the bid was tentatively reopened but then overruled by a supervisor. Lawsuit.
- Callimanopulos v. Christie’s Inc., 621 F. Supp. 2d 127 (2009) Christie’s reopened a high phone bid and that phone bidder was unhappy. Lawsuit.
We can find no litigation because the auctioneer didn’t reopen the bid. In other words, if you want to stay out of court, you have an infinitely greater chance of landing in court by reopening the bid after “Sold!” contrasted with saying “Sold!” and meaning it: https://mikebrandlyauctioneer.wordpress.com/2020/01/02/the-costs-and-benefits-of-reopening-or-not-reopening-the-bid/.
Lastly, can “Sold!” mean “Sold!” sometimes, and then “Sold!” not mean “Sold!” otherwise? What other industry? Where else on earth? How does one word in commerce mean “Sold!” when you want it to, but not mean “Sold!” when you want it to? https://mikebrandlyauctioneer.wordpress.com/2020/01/03/sold-shouldnt-be-a-lie/. There’s certainly the legal side of this issue, but also the practical (perception) side to consider.
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 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.
Some additional information that is pertinent to your post can be found in §1-302 Official Comment 2: “An agreement that varies the effect of a provision of the UCC may do so b y stating the rules that will govern in leu of the provisions varied. Alternatively, the parties may vary the effect of such provisions by stating that their relationship will be governed by recognized bodies of rules or principals applicable to commercial transactions. Such bodies of rules or principals may include…. Non-legal codes such as Trade Codes.” Would this mean that one could use National Auctioneer Association Code of Ethics or other and Guidelines to vary the effect of the UCC? Would the NAA rules qualify as a “Trade Code”?
Mike Brandly, Auctioneer, CAI, CAS, AARE said:
Michael, appreciate your contributions. I would think “trade code” may actually include an association’s code of ethics, position papers, and the like.
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