, , , , , , , , ,

We have written about disclaiming expressed warranties. Importantly, there is considerable case law that permits (or not) sellers from disclaiming what they “say” about the subject property, in contrast with the written contract, citing the parol evidence rule along with the appropriate disclaimer.

As such, could this Farmall 806 be sold by written contract, and disclaim what the farmer said about it? Maybe. The contract is a written contract and the oral representations might be considered parol evidence.

However, auctions are different than traditional retail or wholesaler sales. Auctioneers typically conduct live and/or online auctions, where the contract is firmed in writing (online) or orally (live) with words such as, “Sold!” https://mikebrandlyauctioneer.wordpress.com/2022/11/16/anything-i-say-is-not-binding/.

The contract (in writing or orally) has expressed this is a Farmall 806 and it would seem to us the contract could not as well disclaim that it might not be a Farmall 806. And if the buyer found out it was some other tractor painted with an 806 sticker, he or she would have recourse.

Specifically, an online auction is completely in writing; a live auction is predominantly an oral contract. So, the “in writing” contract notes this is a Farmall 806 and the “oral” contract “says” this is a Farmall 806. Therefore, there’s no parole evidence to consider with the written contract, and the oral contract is all oral, accompanied by the terms and conditions.

We’ve previously quoted Law Professor Kurt M. Saunder’s (Department Chair and Professor of Business Law at California State University, Northridge) treatise on this subject: https://mikebrandlyauctioneer.wordpress.com/2021/06/21/can-an-auctioneer-disclaim-an-express-warranty/.

Professor Sauder’s treatise isn’t about auctions, but commerce generally where written contracts are the norm, and oral representations are distinct parole evidence and therefore possibly not held contradictory. Of course, as Professor Saunders notes in his treatise, if there is fraud, unconscionability, or otherwise state law, the buyer may have recourse nonetheless:

Although the language of section 2-316(1) is not a model of clarity, it appears to prohibit disclaimers of express warranties by denying effect to such language when inconsistent with the language of an express warranty in a written contract. On the other hand, it may be easier for sellers to exclude oral express warranties by relying on the parol evidence rule and including a merger clause which states that the written contract constitutes the complete and final agreement between the parties. In these instances, it is likely that a conspicuous disclaimer of an oral express warranty would be regarded as enforceable.

Nevertheless, in such cases, a disappointed buyer who wishes to avoid the effect of an express warranty disclaimer is not without recourse. He or she may find support for negating the effect of the disclaimer in such theories as the fraud exception to the parol evidence rule, the doctrine of unconscionability, or by way of remedies available in state deceptive trade practices and consumer protection statutes.

Law Professor Kurt M. Saunders

Professor Saunders also importantly references basically three (3) buyer recourse strategies:

  1. Those who misrepresent (or conceal information about) property with the intent to deceive and profit can be found to have committed fraud. Such a claim almost assuredly negates such a disclaimer.
  2. Unconscionably is a concept applied in courts inclusive of overwhelmingly one-sided arrangements in favor of the party who has the superior bargaining power, in addition to shockingly unfair or unjust, and/or unreasonable terms.
  3. Many states have deceptive trade practices and consumer protection statutes which also may provide a buyer recourse. This would mean a buyer could file in court, and/or rely on the state possibly commencing action.

As we’ve repeatedly held, you want to stay out of court, rather than lose or even win in court. Wouldn’t not misrepresenting property (with no buyer recourse) with various disclaimers help you do that? There’s no question it would. https://mikebrandlyauctioneer.wordpress.com/2018/07/26/auctioneers-you-want-win-in-court-or-stay-out-of-court/.

Yes, for those reading carefully, we did note “considerable case law …” When you avoid court, you aren’t creating any case law. If you’re an auctioneer and read only this paragraph, you’ve helped yourself today.

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.