We tend to look for affirmation instead of information — as I noted some time ago: https://mikebrandlyauctioneer.wordpress.com/2019/09/05/auctioneers-information-versus-affirmation/. Once we have a word, sentence, or idea in our heads, we quit reading … we quit asking questions.
There are three (3) notable examples of this in the auction industry: Reopening the bid in light of a so-called tie-bid, varying the Uniform Commercial Code, and disclaiming expressed and implied warranties. Here we’ll show that these concepts need context which is often ignored:
UCC § 2-328 (2): A sale by auction is complete when the auctioneer so announces by the fall of the hammer or in other customary manner. Where a bid is made while the hammer is falling in acceptance of a prior bid the auctioneer may in his discretion reopen the bidding or declare the goods sold under the bid on which the hammer was falling.
UCC § 1-302 (a) & (b): Except as otherwise provided in subsection (b) or elsewhere in [the Uniform Commercial Code], the effect of provisions of [the Uniform Commercial Code] may be varied by agreement. The obligations of good faith, diligence, reasonableness, and care prescribed by [the Uniform Commercial Code] may not be disclaimed by agreement. The parties, by agreement, may determine the standards by which the performance of those obligations is to be measured if those standards are not manifestly unreasonable.
UCC § 2-316 (1) & (2): Words or conduct relevant to the creation of an express warranty and words or conduct tending to negate or limit warranty shall be construed wherever reasonable as consistent with each other; but subject to the provisions of this Article on parol or extrinsic evidence (Section 2-202) negation or limitation is inoperative to the extent that such construction is unreasonable. Subject to subsection (3), to exclude or modify the implied warranty of merchantability or any part of it the language must mention merchantability and in case of a writing must be conspicuous, and to exclude or modify any implied warranty of fitness the exclusion must be by a writing and conspicuous. Language to exclude all implied warranties of fitness is sufficient if it states, for example, that “There are no warranties which extend beyond the description on the face hereof.”
Auctioneers and others routinely tell me that “auctioneers have the discretion to reopen the bidding,” “provisions of [the Uniform Commercial Code] may be varied by agreement,” and “auctioneers may negate or limit warranties both expressed and implied” essentially focusing solely on the bolded text above.
Auctioneers might be able to reopen the bid if a higher bid comes in “as the hammer is falling,” and the Uniform Commercial Code can be varied by agreement if not “manifestly unreasonable” and auctioneers cannot disclaim expressed warranties that are inconsistent with what’s been expressed, and disclaiming implied warranties likely requires an opportunity for preview.
Of course, for the advocates of modifying state law all across the country — why not throw out the entire Uniform Commercial Code (UCC) and do anything you want to? If it can all be varied by agreement, is anything off-limits? https://mikebrandlyauctioneer.wordpress.com/2023/10/30/so-you-can-do-what-anything/.
Actually, the UCC prescribes limits on variation (good faith, diligence, reasonableness, and care) and overall negates anything “manifestly unreasonable.” However, could parties agree (or auctioneers dictate) to vary the limits on variation? The “anything goes” crowd would likely say, “Sure, why not?”
Further, who decides if you have an “agreement” to vary? Who decides if your variation is obviously (manifestly) unreasonable? I’ll answer both questions: Auctioneers largely decide unilaterally to vary state law — with or without any true agreement — and as I’ve witnessed countless times, courts and attorneys will then analyze those modifications to determine if they are reasonable or not.
You do notice that “good faith,” “diligence,” “reasonableness,” and “care” are somewhat subjective. Your opinion of what these mean may be terrifically different than what your buyer or seller thinks they mean. I can assure you — you don’t want to be in court discussing the definitions of these words.
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 formerly at 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 Auction 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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