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  • Writer's pictureMike Brandly, Auctioneer

Disclaiming value and results

Should auctioneers guarantee their sellers any certain results from the auction of their property? Should sellers be persuaded to sell at auction with some sort of guaranteed result? For the most part, auctioneers don’t make final-price guarantees, but it’s not difficult to find “guarantee-type” agency arrangements.

Our question today is, could you as an auctioneer disclaim any representations you make about the value of the property or probable auction result? For instance, could your contract say something like this?

The seller signed this agreement without being dependent nor guaranteed the value of the property or any likely result from the auction. Auctioneer makes no representations or warranties as to the value of the property or likely highest bid price at auction.

Such disclaimers do work as long as they are consistent with other expressions made. For instance, “Your property will demand at least $1,000,000” and “I disclaim any warranty your property will demand $1,000,000” are inconsistent and therefore the disclaimer is ineffective.

Here is one of our prior writings regarding this issue of disclaiming expressions: This may indeed be the most widespread misunderstanding for auctioneers?

A prudent reminder is that text messages and email messages are considered “in writing” and as such could be as enforceable as the accompanying written contract — especially if the text or email suggests a modification, amendment, or contradiction to the primary written contract, and even more so with a discussion concerning a revised consideration.

Could your written contract say that it cannot be modified, amended, or contradicted by any text or email … maybe the above disclaimer says that? Here again, consistency is important in that if the text or email says the opposite — that this does modify, amend, or override the written contract — then does it or doesn’t it?

The good news for auctioneers is this: If your disclaimer is in the written contract and your representations concerning value or results are oral representations made outside of the contract, a court will likely rule the written contract stands.

Any oral representations and the like made beyond the written contract are referred to as “parole evidence” which is usually inadmissible. Exceptions include fraud, duress, mistake, illegality, related agreements, vague or ambiguous written terms, etc.

Otherwise, generally, if an oral agreement or understanding contradicts an explicit term or subject in the written contract, it is typically inadmissible, however, there are cases where it becomes admissible with related performance and particular evidence especially if the auctioneer is the one modifying.

Many auctioneers have bidder/buyer/seller terms and conditions that say something like this: “Announcements made day of sale [may] take precedence over printed material …” so in essence saying oral statements [may] counter written bidder terms. This is hardly a new concept for auctioneers to consider. 

All this disclaiming of any preceding and/or subsequent words (orally or in writing) outside of the primary written contract and related enforceability varies to some degree by state with specific case law. Be sure to secure competent legal counsel in your state to get applicable analysis.

Ideally, auctioneers would ensure consistency regarding any oral conversations, texts, emails, written documents, and other communication. In that way, there would presumably be a clear understanding between the auctioneer and the client.

Importantly, is there case law that says a properly marketed arms-length auction results in market value? The Supreme Court of Ohio ruled on such a case in 2015:

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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