We’ve written extensively about auction sellers and buyers waiving rights granted under state law.
For example in a contract to sell or an agreement to abide by certain terms and conditions, that document counters established law.
Two such articles are here:
In these cases, a seller or bidder consciously waives a right granted under state law and such is more likely upheld by court if there are mitigating circumstances; we stress “more likely.” In fact, I’ve seen many court cases decided in this manner.
Yet, what if an auction seller or bidder signs a contract or agreement without knowledge that those provisions counter state or federal law, and/or lack any mitigating circumstances? Is that contract valid? It is enforceable?
The landmark Supreme Court of the United States case Miller v. Ammon, 145 U.S. 421 (1892) is famous because the Court ruled:
The general rule of law is, that a contract made in violation of a statute is void; and that when a plaintiff cannot establish his cause of action without relying upon an illegal contract, he cannot recover.
For instance, an auctioneer requires bidders to register for his auctions, and agree that they cannot retract their bid once placed (in violation of the UCC 2-328) or an auctioneer requires sellers to contract items without the right of withdrawal prior (in violation the UCC 2-328 in conjunction with common law fiduciary duty of obedience/loyalty [Keech v. Sandford, (1726) 25 Eng. Rep. 223, (Ch.) 223-24 (U.K.)]) that the contract or agreement is void.
While not necessarily widespread, it seems I see more and more auctioneers — in an attempt to “think outside the box,” — come up with contract or agreement terms and conditions which counter either state law, federal law, or both.
One of the most egregious examples of this unconventional thinking I’ve seen lately involved an online auctioneer requiring bidders to agree that no previews would be available, all items would sell “as-is” without any warranty, minimum bid increments (and minimum opening bids) would be used in conjunction with a “without reserve” auction and sellers retained rights to nullify any sales up to 24 hours after the auction was concluded.
Of course, selling as-is requires the opportunity for a preview (Federal law,) without reserve auctions cannot require certain minimum bid increments nor minimum opening bids (State law,) and once, “Sold!” sellers cannot nullify sales thereafter without being in breach of contract (Contract and common law.)
As an auctioneer I don’t want to end up in court on the wrong side of Miller v. Ammon regardless of the mitigating circumstances, and I don’t recommend it for any auctioneer.
Mike Brandly, Auctioneer, CAI, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, Keller Williams Auctions and Goodwill Columbus Car Auction. He serves as Adjunct Faculty at Columbus State Community College, Executive Director of The Ohio Auction School and Faculty at the Certified Auctioneers Institute held at Indiana University.
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