Tags

, , , , , , , , , ,

We’ve held that a “bright line” defining when an auction is absolute or without reserve is horrible for the auction industry. What is this bright line? To explicitly change an auction from with reserve to without reserve, the only words that could count would be “absolute” or “without reserve.”

Our previous writing on this subject is here, where you can read the court’s comment, and the thoughtful, insightful response from defense counsel: https://mikebrandlyauctioneer.wordpress.com/2022/09/20/explicit-bright-lines-and-auction-malpractice/.

Why is this so bad for the auction industry? Because then an auctioneer could use any other expressions suggesting an auction was without reserve or absolute, but the auction could remain with reserve. For instance, “It all sells today to the highest bidders …” would tell bidders it was absolute while in fact, it would be with reserve.

A court with discretion to gauge the intent of the advertising, and evaluate the wording as it relates to bidders’ expectations would put auctioneers on notice not to suggest something is selling without reserve (absolute) unless it genuinely was. This way, we would see less abuse of the bright line thinking.

To say it another way:

  1. If an auctioneer is held to a bright line law or ruling, he knows he can advertise his auction as “It all sells today to the highest bidders …” (so bidders think it’s absolute) and conduct a with reserve auction.
  2. If an auctioneer knows courts look at the context and apparent intent, he might hesitate to advertise his auction as “It all sells today to the highest bidders …” (so bidders think it’s absolute) and conduct a with reserve auction because a court might rule the auction was indeed absolute.

One way to [help] ensure bidders aren’t deceived about the type of auction would be to put in all advertising “selling with reserve” or the like, along with any other words, so consumers would not rightly think the auction was absolute. Of course, that defeats the purpose of such “bait and switch” tactics — which is the idea.

The UCC § 2-328 is the applicable law (by analogy) here, where except in Louisiana, all auctions are with reserve unless in explicit terms put up without reserve. Our contention is that “explicit” matters more to what buyers perceive than how auctioneers (and as such sellers) propose it means.

In Weidel Sand Gravel, Inc. v. Middletown, 19 Ohio App. 3d 311, 484 N.E.2d 724 (Ohio Ct. App. 1984,) the court referenced the following definitions of “explicit” in an auction case:

Webster’s Ninth New Collegiate Dictionary (1983) 438, defines “explicit” as “fully revealed or expressed without vagueness, implication or ambiguity: leaving no question as to meaning or intent * * *.” “Explicit” is also defined in Black’s Law Dictionary (5 Ed. 1979) 519 as “[n]ot obscure or ambiguous, having no disguised meaning or reservation. Clear in understanding.”

19 Ohio App. 3d 311, 484 N.E.2d 724 (Ohio Ct. App. 1984)

How is “It all sells today to the highest bidders …” not fully revealed and clear in understanding? Doesn’t appear vague, obscure, ambiguous, or disguised to most people I’ve talked with. Doesn’t it matter what the typical buyer would think? Many auctioneers clearly believe it matters.

Maybe this all got started for most auctioneers today with the case of Drew v. Deere Co., 19 A.D.2d 308, 241 N.Y.S.2d 267 (N.Y. App. Div. 1963) which concluded that “Selling to the highest bidder” was merely an intention (with reserve,) and in essence then not a guarantee (without reserve.) Of course, don’t forget that John Drew sued John Deere Co. because of this …

I’ve successfully argued in more than one lawsuit that language (while lacking the words “absolute” and “without reserve) constituted an absolute auction. Why did I argue that? Because the auctioneer clearly (explicitly) wanted bidders to think the auction was absolute while conducting a with reserve auction.

If an auction is absolute, it is malpractice to advertise any other way than “absolute.” However, if your auction is with reserve, it’s equally troublesome to use any expressions bidders would reasonably interpret as “absolute.” https://mikebrandlyauctioneer.wordpress.com/2019/02/22/is-your-absolute-auction-being-advertised-conducted-as-such/.

There has been a persistent problem for decades with auctioneers expressly advertising with reserve auctions as absolute. There has also been an even more persistent problem for decades with auctioneers implying a with reserve auction is absolute, as we discussed on The Sale Ring Podcast: https://thesalering.blubrry.net/episode-78-advertising-absolute-auctions-when-it-is-not/.

Incidentally, some say absolute auctions aren’t actually better for the seller — but where do we see any auctioneers advertising their absolute auctions (expressed or implied) to be with reserve? Do these auctioneers think the words “absolute” or “without reserve” attract more bidders? Do they think the more bidders, the better for the seller? It would appear — explicitly — that they do.

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, Brandly Real Estate & Auction, 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 has served as faculty at the Certified Auctioneers Institute held at Indiana University and is approved by The Supreme Court of Ohio for attorney education.