“Bidders at an auction ought to know that there are rules — terms and conditions — for the auction and should inquire about those rules before bidding.” Before we address this somewhat vague claim, let’s address different types of “notice” at auctions.
Actual notice is the auctioneer/seller actually telling you something — for instance, if an auctioneer announced, “This is a Drake 18-613 Guided Press” that would constitute actual notice.
Constructive notice is the auctioneer putting facts about this Drake 18-613 Guided Press somewhere where it’s obvious the bidders should know about it. This would constitute constructive notice.
Inquiry notice is the presumption that a reasonable bidder would have sufficient facts (actually or constructively) to make further inquiries about this Drake 18-613 Guided Press.
The auction model of bidders noting an auction in a newspaper, attending, getting a bid number (or not,) and placing bids have been in place for 100’s of years; the terms and conditions were fairly simple including “everything sells ‘as is,'” “pay for your purchases” and “remove by the end of the day.”
Most all case law up until maybe ten years ago refers to “announced” terms and conditions, as most terms and conditions were simple enough to read out loud in entirety … that is until lately. What’s happened since the Internet and Steve Proffitt died? We have 536 pages of disclaimers, assignments, waivers and our opening announcement typically makes no mention of any of them.
As such, a reasonable bidder listens to these opening announcements (or reads the same at the top of the bidding platform) and likely assumes these are the terms and conditions in total, when in fact they are not hardly. The argument the bidder has “inquiry notice” is countered by the auctioneer typically suggesting there is no inquiry notice — in essence by saying “Here’s what you need to know …”
Actually, “Here’s what you need to know …” is rather more often, “Here’s what we want you to know …“ Then, when there’s a problem like unpaids, express warranties, title issues, or the buyer doesn’t take possession, the other 535 pages of terms and conditions are referenced.
What I’ve witnessed in countless court cases and in reviewing 100’s of samples of auction advertising is that it’s initially suggested at the auction that these aforementioned 535 pages of terms and conditions don’t exist and/or aren’t important as they are essentially hidden or otherwise too complex to understand.
However, once we’re in court, and the bidders/buyers haven’t seen nor understood these 535 pages, the auctioneer suddenly notes how significant these terms are, and that the bidders indeed had the responsibility to read, understand, and further inquire about them.
I’ve even sat in a courtroom and watched an attorney ask an auctioneer what his own terms and conditions meant, and his response was “I’m not sure what that means.” The Supreme Court of the United States said in Erie Coal & Coke Corp. v. United States, 266 U.S. 518 (1925) “The terms and conditions of the sale as set forth in the advertisement were binding alike upon the United States and the bidders” and we now have auctions where the buyer, seller nor auctioneer understands them?
Bidders do have a reasonable responsibility to inquire as to the terms and conditions, but in my opinion, that responsibility ends when they are essentially told (and thus led to believe) there is no reason to inquire further. It would seem equally reasonable that bidders, buyers, and even sellers should be able to trust auctioneers.
We’ve often said to be careful from who you take advice; we previously wrote about this dangerous trend you can and should avoid: https://mikebrandlyauctioneer.wordpress.com/2021/02/15/treating-bidders-with-honesty-integrity-and-fair-dealings/.
Finally, we auctioneers have to (should) do better. If it’s important information, tell the bidders all of that either by announcement and/or prominently in printed materials. Hiding it for the auction, and then subsequently wanting to bind the buyer to these same previously concealed terms is dreadful practice.
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.
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