Or, if you prefer, I suppose, “Bad faith, negligence, unreasonableness, and carelessness?” As a frequent auction expert witness (over 40 cases) all these words matter in a court of law. It is increasingly clear that it is in every auctioneer’s interest to be mindful of “Good faith, diligence, reasonableness, and care” as standards of performance.
Specifically, for example, the UCC § 2-328 prescribes such things as each lot is an auction in itself, when the so-called sale is complete, when (or if) lots can be withdrawn, and the implications of the seller bidding. Could you as an auctioneer have terms counter to this law? You could, but you can’t disclaim good faith, diligence, reasonableness, and care — and why would you want to?
Of the cases where this particular example was the issue, it seems the subject auctioneers were ignorant and/or mislead about the risks of such disclaiming … ignorant because maybe that’s what they’ve always done, or mislead because they were taught this disclaiming was a great idea.
Let’s define some terms:
Good faith: Honesty, faithfulness, reasonable commercial standards of fair dealing, absence of intent to defraud or to seek an unconscionable advantage
Diligence: Care, caution and the attention and care required from a person in a given situation
Reasonableness: Fair, proper, or moderate under the circumstances
Care: The degree of care that a prudent and competent person engaged in the same line of business or endeavor would exercise under similar circumstances
Here are some other terms:
Bad faith: Dishonesty of belief or purpose
Negligence: Failure to exercise the standard of care that a reasonably prudent person would have exercised in a similar situation; any conduct that falls below the legal standard established to protect others from unreasonable risk of harm
Unreasonable: Not guided by reason; irrational or capricious
Carelessness: The fact, condition, or instance of a person’s either not having done what he or she ought to have done, or having done what he or she ought not to have done
In virtually every court every day, judges and juries are looking for honesty, reasonableness, fairness, and proper behavior and are especially attentive to dishonesty, unreasonableness, unfairness, and/or improper behavior. And guess what improves your chances of success in court? Any guess what improves your chances of failure in court?
I can assure every auctioneer everywhere that honesty, reasonableness, fairness and proper behavior will reduce the chances of even finding oneself in court — which is even better than winning or losing: https://mikebrandlyauctioneer.wordpress.com/2018/07/26/auctioneers-you-want-win-in-court-or-stay-out-of-court/.
In more than one case where we have been hired as an expert witness, an auctioneer greatly benefited from working under the strict textual letter of this (the) law (UCC § 2-328) rather than his version of it. In one case, as a result, he was able to tell a plaintiff he was following state law, rather than terms and conditions he modified — moving any liability away (essentially assigning — in a good way) from himself to the state which had adopted that law.
Besides this hopefully obvious benefit, we previously posed this question, “When has the UCC § 2-328 been a bad idea?” https://mikebrandlyauctioneer.wordpress.com/2018/08/01/when-has-the-ucc-2-328-been-a-bad-idea/. It appears to us that the answer to that question remains … never.
Want to avoid court? If you can’t do that, you will want to win in court. Either way, keep words like, “Good faith, diligence, reasonableness and care” for better odds in that endeavor. Or write your contract and terms contrary to all that, and take your chances.
Lastly, have you watched any televised court cases lately? I would guess you probably have. How many times did you hear the word, “reasonable?” If you were paying attention, you heard it a lot: “Were his actions reasonable?” “Is it reasonable for a person to …” “What is considered reasonable?” “What did The Supreme Court of the United States say …?” “Isn’t it unreasonable for …?”
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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