We recently wrote that for auctioneers it’s better to stay out of court than win in court, and lots better than losing in court. That treatise can be found here:
What we suggested in that story (yet again) is that following the UCC 2-328 strictly is largely if not completely unactionable; in other words, there are few if any court cases against auctioneers who can cite they followed the UCC 2-328 — and of course numerous previously cited court cases when modifications and/or customizations are made.
Customizations are actually permitted per the UCC 1-302, but those changes cannot be manifestly (obviously) unreasonable. While a few courts have upheld an auctioneer’s modifications, the changes themselves consistently impress bidders/buyers and sellers as unreasonable. Thus there’s often a lawsuit when the subject asset is of significant value.
As we continue to have auctioneers contact us to help them in litigation, we typically ask fairly soon thereafter if we can see their bidder/buyer terms and conditions and their auctioneer/seller contract. What are we looking for? You guessed it — customizations — modifications — changes to the most basic auction rules as described by the UCC 2-328. When we find them (and we do) we alert that auctioneer’s attorney of the possible forthcoming issues.
We wrote more extensively in 2017 about manifestly unreasonable auction terms. Our view has only been reconfirmed since: https://mikebrandlyauctioneer.wordpress.com/2017/03/01/auctions-that-are-manifestly-unreasonable/.
Again, there is no surefire way to avoid court nor litigation. However, could a situation present itself where the possible cost of modifying the UCC 2-328 is outweighed by the benefit of such change? Said another way, could the benefits pay for the cost of the legal claim?
For example, an auctioneer says, “Sold!” for $175,000 and a bid comes in late for $176,000. The auctioneer’s terms and conditions clearly say that he can reopen the bid in the case of a missed or late bid so he does. The final bid price is $233,000. Could the $58,000 pay for a lot of legal expenses and time? Maybe.
The UCC 2-328 actually does allow an auctioneer to reopen the bid if a higher bid comes in as the hammer is falling — but that’s a bad idea and it has been proven numerous times in courts, were not reopening the bid largely insulates you from sitting in any courtroom anywhere.
As an auctioneer, our team decided many years ago that we would use the pure, clean, easy-to-remember 254 words of the UCC 2-328 as our guiding light when conducting auctions. If you’re hearing, seeing or being told specifically that modifications to that most basic treatise are in your (or your seller’s) interest we beg to differ. In fact, it’s not hard to find numerous examples which prove we’re right.
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, an Instructor at the National Auctioneers Association’s Designation Academy and America’s Auction Academy. He is faculty at the Certified Auctioneers Institute held at Indiana University and is approved by the The Supreme Court of Ohio for attorney education.
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