There’s no question that there is increasing risk being an auctioneer and it is an out-and-out fallacy that all this risk is largely eliminated by waiving, assigning, and disclaiming all of it either away from the auctioneer and/or onto someone or something else — and building into terms and conditions customizations with the same goal.
Here’s my “executive summary” (which I testified to under oath:)
The sooner we as auctioneers admit that the marketplace (sellers, bidders, buyers — not us) gets to decide and take commensurate action in light of our terms and other policies being viewed as unreasonable, the quicker we’ll profit from behaving more reasonably. Mike Brandly, Auctioneer
This case in which I testified is a result of a seller and buyer both claiming the auctioneer’s terms and policies were unreasonable, and while they were making a fairly good argument, nonetheless, they and this auctioneer are in court because they thought these terms and policies were unreasonable, regardless of the eventual outcome.
Generally, there has been no more glaring example of our topic today than the discussions the last 10 years or so about auctioneers modifying the UCC § 2-328. Steve Proffitt largely held that auctioneers could not (should not) modify it, but since his passing (and even before,) it’s modified every minute of every day.
The reason it’s modified is the provision held in UCC § 1-302 (a) which notes that the Uniform Commercial Code may [or may not] be varied by agreement. So, auctioneers are free (keep reading …) to modify it, change it, rewrite it, ignore it — just what a bunch of auctioneers has always wanted to do.
For example, auctioneers can by law reopen the bid if another higher bid [not a tie] comes in while the hammer is falling, but an auctioneer could change that — to reopen the bid at any time. This one sentence would allow any term and condition desired, and as such, auctioneers are not held to any of the UCC § 2-328 or virtually any other part of the Uniform Commerical Code.
However, most importantly and conspicuously missing from this aforementioned proclamation is that any modification to the UCC § 2-328 and otherwise could not disclaim per UCC § 1-302 (b) good faith, diligence, reasonableness, and care. Further, any such modification could not be manifestly unreasonable. https://mikebrandlyauctioneer.wordpress.com/2017/03/01/auctions-that-are-manifestly-unreasonable/.
Why would any proclaimer touting “less risk” consistently fail to mention that any such modification had to be in good faith, diligent, reasonable, and with care? Why would this same proclaimer fail to note any such modification could not be manifestly unreasonable? Whatever the reason, it’s misguided.
The aforementioned risk of any such modification isn’t that you or your attorney consider any of this to be reasonable or not, and rather if a seller, bidder, or buyer (and just one other attorney) considers such unreasonable, and then a judge or jury finds it unreasonable. I can disclose to you as an expert witness, I’ve heard several discussions about UCC § 1-302 (b) in courts around the United States.
Further, I can also tell you that I’ve yet to hear any similar discussions about the textual words of the UCC § 2-328 and even wrote some time ago asking when adhering to these 254 words has been a bad idea: https://mikebrandlyauctioneer.wordpress.com/2018/08/01/when-has-the-ucc-2-328-been-a-bad-idea/. I can save you some reading: It hasn’t.
Relatedly, you’ll hear that in Kentucky there are “tie bids” but they “practically” don’t exist — in that in these instances, the auctioneer “may continue the bidding” between these two so-called tied bidders, by asking one to bid more. Which one has to bid more? I thought they were tied? Wouldn’t there be less risk by not reopening the bid, versus telling a bidder he’s a high bidder — and now he’s somehow not? https://mikebrandlyauctioneer.wordpress.com/2020/04/01/the-kentucky-tie-bid-mess/.
We’ve also held that behaving better (in good faith, diligent, reasonable, and with care) results in fewer lawsuits and related time, expense, and stress. It’s not that difficult to do: Ask yourself, for example, if your terms and conditions — and all other contracts and policies — are in good faith, diligent, reasonable, and with care?
If you’re looking for another example, remember when the Coronavirus first appeared and auctioneers were told to “disclaim and assign” all responsibility for providing a safe environment at their auctions. New York University School of Law Professor Catherine Sharkey noted a court might well view an injury lacking your precautions as gross negligence or recklessness.
At this same time, Kurt Bachman, Attorney at Law & Auctioneer wrote for the National Auctioneers Association magazine about such disclaimers coupled with affirmative actions (temperature checks, social distancing, questionnaires, and the like.) Kurt’s summary at the end of his article noted:
What approach is best? The best and safest approach would be to use a combination of disclaimers and affirmative actions. Nothing prevents their joint use. A simple reliance on disclaimers ignores the fact that we do not know how the courts will analyze them and weather that will provide the protection desired. Kurt R. Bachman, Attorney At Law & Partner, Beers Mallers, LLP, Attorneys At Law
Just imagine your court case where you as an auctioneer have claimed you have absolutely no responsibility for anyone’s safety, only to give rise to the thought that you have acted with gross negligence and/or recklessness. Wouldn’t there be less risk by taking some prudent precautions, rather than just “roll the dice?”
We’ve written that it’s not difficult to model behavior based upon court rulings — just look for what people are complaining about and avoid that same behavior in your business, rather than deciding to act in accordance with the winning side. In fact, just keep an eye out for any proudly displayed “list” of court cases. Find the issue (and necessarily not the decision) — that’s what you need to avoid: https://mikebrandlyauctioneer.wordpress.com/2021/08/30/bidder-know-hear-understand/.
Our writing on our Twilight Zone Marathon of bad advice we experienced is here: https://mikebrandlyauctioneer.wordpress.com/2021/12/26/auctioneer-has-the-right-to-do-whatever/. The question really is: Do you keep doing what has resulted in lawsuits, or what likely won’t? https://mikebrandlyauctioneer.wordpress.com/2018/07/26/auctioneers-you-want-win-in-court-or-stay-out-of-court/.
Finally, this entire issue regards some auctioneers who continue to not question any of this questionable advice, thinking anything that favors the auctioneer and disadvantages bidders, buyers, and even sellers is good — not realizing all sellers need are bidders and buyers … and again — bidders, buyers, and sellers make their own decisions about when they feel your behavior is unreasonable — and you shouldn’t be giving them any reason to think it is.
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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