auction, Auction Law, auctioneer, auctioneers, auctions, disclaimers, expressed, implied, UCC § 2-316, warranties
Let’s say this picture is an actual fork, marked “sterling silver.” Sterling silver here in the United States is generally by weight 92.5% silver and 7.5% other materials (alloy.)
Today, we explore — again — how an auctioneer can (and cannot) sell this utensil without buyer recourse. Foremost:
- Whatever is said or expressed otherwise is an expressed warranty that cannot be disclaimed.
- This utensil implies suitability to assist with eating, for example, which would constitute an implied warranty.
- We believe auctioneers can probably not disclaim implied warranties lacking an opportunity to inspect prior.
Generally speaking (and in these examples, the subsequent statements take precedence over other markings/representations) for an auctioneer:
- Describing this as a “fork” and it is marked (or represented as) “sterling silver” then it has to be a fork and it has to be sterling silver, or the buyer has recourse.
- Describing this as a “fork” which is marked (or represented as) “sterling silver” but the auctioneer says “It’s not sterling, it’s marked incorrectly” then it doesn’t have to be sterling silver but it has to be a fork, or the buyer has recourse.
- Describing this as “Lot 1” the auctioneer says, “It’s not sterling silver, it’s marked incorrectly” and “You’re buying it with any defects,” then it doesn’t have to be sterling silver and if the buyer was given the opportunity to inspect prior, then it doesn’t have to be a functional fork (not free of defects.)
- Describing this as “Lot 1” and the auctioneer says, “It’s not a fork to be used to eat with (fitness)” then it has to be sterling silver or the buyer has recourse but if the buyer was given the opportunity to inspect prior, it doesn’t have to be a fork to be used as a fork.
- Describing this as “Lot 1” the auctioneer says, “It’s not sterling silver, it’s marked incorrectly“ and “It’s not a fork to be used to eat with (fitness)” then it does not have to be sterling silver and if the buyer was given the opportunity to inspect prior, it doesn’t have to be a fork to be used as a fork.
This issue largely relates to the Uniform Commercial Code § 2-316, which deals with both expressed warranties and implied warranties: https://mikebrandlyauctioneer.wordpress.com/auction-treatise/%c2%a7-2-316-exclusion-or-modification-of-warranties/.
Importantly the UCC § 2-316 notes some disclaimers must use certain [written] words and be conspicuous such as “AS IS” and related. Courts have ruled regarding this: https://mikebrandlyauctioneer.wordpress.com/2021/09/13/conspicuous-auction-disclaimers/.
Of course, we have auctioneers telling me as long as they say they are selling this utensil “AS IS” then the buyer has no recourse no matter the implications or expressions. In fact, some auctioneers say they can proclaim “It might be a fork” and/or “It might be sterling silver” and even then the buyer has no recourse.
As well, some auctioneers say that the opportunity for inspection prior to purchasing is not required, as the buyer has to take the property “AS IS” with no recourse. We don’t agree in regard to disclaiming implied warranties.
We believe an opportunity to inspect prior would be required to disclaim any implied warranties and wrote about our thoughts here: https://mikebrandlyauctioneer.wordpress.com/2022/12/28/buyer-inspection-ucc-2-316/.
As the UCC § 2-316 (2) notes, a statement such as “There are no warranties which extend beyond the description on the face hereof” could exclude all implied warranties of fitness. However, UCC § 2-316 (3) appears to override UCC § 2-316 (2).
It’s not difficult to find descriptions and terms like this: “This is a sterling silver fork and you’re buying it subject to errors and omissions and bidders must make their own inspection and cannot rely on the description by the auction house.” This defies the UCC § 2-316 by claiming to waive a clearly expressed warranty.
Auctioneers cannot say this is a “sterling silver fork” and yet it may not be … as it can’t be and maybe not be at the same time. While any expressed warranties and related disclaimers can indeed co-exist, they must be consistent — and this aforementioned statement is anything but consistent.
Can an auctioneer sell a forgery, counterfeit, knockoff, replica, or reproduction? In other words, what is a fork that’s marked sterling silver which isn’t sterling silver? https://mikebrandlyauctioneer.wordpress.com/2018/09/13/can-counterfeits-replicas-knockoffs-sell-at-auction/. It might depend upon the reasonable understanding of the ordinary purchaser and other factors.
There is also the issue of when a bidder cannot reasonably inspect. The Supreme Court of the United States ruled in a case known as Smith v. Richards, 38 U.S. 26 (1839) where this issue was addressed as follows:
Whenever a sale is made of property not present, but at a remote distance, which the seller knows the purchaser has not seen but which he buys upon the representation of the seller, relying on its truth, then the representation in effect amounts to a warranty; at least the seller is bound to make good the representation
Lastly, I’ve used a fork in this example, but this could be virtually any personal or even real property — horses, collector cars, yellow iron, jewelry, coins, artwork, furniture, tools … the principles of express and implied warranties (and disclaiming them) are very uniform.
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.
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