We previously wrote about keeping the seller’s identity (and sales price) confidential at auctions. That article can be read here:https://mikebrandlyauctioneer.wordpress.com/2010/05/30/seller-wants-his-identity-and-sales-prices-kept-confidential-at-auction/
Our conclusion then, as it is now, is that some sellers prefer to keep their identity confidential, and that is one reason they prefer the auction method of marketing.
Yet, on September 19, 2012, the Supreme Court of the State of New York ruled in William J. Jenack Estate Appraisers and Auctioneers, Inc., respondent, v. Albert Rabizadeh, appellant, Case 2010-08747 (Index No. 09-546) that for an enforceable auction sale contract, the seller’s name must be identified.
In other words, if the seller wants to remain anonymous, the high bidder (buyer) can’t be forced to close the deal, and can unilaterally withdraw from the contract to purchase.
The particular New York law is Title 7 – § 5-701 (a)(6), which overall details that certain contracts must be in writing to be enforceable [voidable]:“Not withstanding section 2-201 of the uniform commercial code, if the goods be sold at public auction, and the auctioneer at the time of the sale, enters in a sale book, a memorandum specifying the nature and price of the property sold, the terms of the sale, the name of the purchaser, and the name of the person on whose account the sale was made, such memorandum is equivalent in effect to a note of the contract or sale, subscribed by the party to be charged therewith;”
This topic, generally, is about the Statute of Frauds; we wrote about such here:http://mikebrandlyauctioneer.wordpress.com/2010/02/18/auctioneers-the-statute-of-frauds/
All states (except Louisiana, only in part) have adopted the Statute of Frauds. However, states are free to modify their own state law, which includes modeling their own Statute of Frauds — exactly what New York did.
In the United States the Statute of Frauds (and in Louisiana by another statute) says that any contract for the sale of goods, at or in excess of $500, must be in writing to be enforceable.
While courts rarely invoke this statute in litigation, this New York case involved using this law (with the accompanying modification that the seller must be identified in the writing) to upset the purchase.
What is material for auctioneers?
This law only applies to auctions in New York, and nowhere else.
This law, as it is written in New York, has — in my opinion — a fair chance of being rewritten (or reinterpreted) in light of this case.
Nowhere in the United States (including New York) is it required that auction sales be memorialized — including identifying the seller — to be valid.
Further, for those auctioneers in New York who are thinking … “Maybe I’ll have the bidders waive the requirement of disclosing the seller’s identity, and further waive that the contract be memorialized …?” While this might work in some cases, ultimately bidders waiving state law probably won’t be upheld in court. We previously discussed this in some detail here:http://mikebrandlyauctioneer.wordpress.com/2010/03/20/can-the-auction-bidder-waive-rights-granted-under-state-law/
For now, or at least since September 19, 2012, auctioneers in New York will have to be mindful of this law. Particularly for large dollar purchases, identifying the seller (and getting the buyer to sign something) will be an important step to protect their seller’s position.
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. His Facebook page is: www.facebook.com/mbauctioneer. He serves as Adjunct Faculty at Columbus State Community College and is Executive Director of The Ohio Auction School.
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