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  • Writer's pictureMike Brandly, Auctioneer

Terms, conditions & fairness

You have to listen carefully … as in some cases you’re being lied to. Can auctioneers treat bidders differently — capriciously — in regard to registration requirements? I suppose you can do anything you want. On the other hand, should auctioneers treat bidders differently — capriciously — in this regard? Absolutely not.

In the Supreme Court of Appeals of West Virginia the case of Alex Lyon & Son, Sales Managers and Auctioneers, Inc. v. Leach, 844 S.E.2d 120 (W.Va. 2020) the Court held in part that “Fundamental principles of fairness required the defendant to treat the [original] plaintiff and [other bidder] equally.”

Fundamental principles of fairness? Really? In other words, for it to be fair, all bidders should be held to the same terms and conditions? In this case, it seems clear. Why would any auctioneer want to risk this same verdict? The only reason I’ve heard is that some sellers may wish to assume more or less risk …

Risk? Yes, some sellers may want to allow their old girlfriend to register without putting down the $20,000 required deposit to register per the terms and conditions — and thus assume even more risk including a lawsuit by the high bidder that the auctioneer/seller is likely to lose.

In fact, the Court also stated:

Finally, as a general principle, all the bidders at an auction must stand upon an equal footing. Accordingly, an auctioneer cannot vary the announced terms of the sale as to some bidders, or any one bidder, to the detriment of the other bidders.

We were hired in 2016 as the expert witness in the original litigation cited above and maintained — as we always have — that bidders must be held to the same terms and conditions — just as the Supreme Court of Appeals of West Virginia ruled.

We also wrote about a seller’s tolerance for risk here including some detail on this same issue: We would hold your tolerance for risk has to include an analysis of how such changes will affect all other parties involved — sellers, bidders, buyers.

Some have asked me, “So I can’t have terms that if my old girlfriend shows up …?” Sure you can, but it’s obviously prudent to then have in your terms that she can register without the $20,000 and everyone else needs $20,000 before you start registering anyone — and thus this constitutes your terms and conditions regarding participation.

However, this “girlfriend” exception has risk as this would meet with the terms and conditions, but not be treating all bidders as standing on equal footing. Probably better to have your old girlfriend give you the $20,000 deposit like everyone else.

Kurt Bachman, Attorney, and Auctioneer in LaGrange, Indiana also wrote about this issue in the National Auctioneer Association (NAA) magazine October/November 2020. He is a regular contributor to the Auctioneer magazine and I would strongly suspect he would suggest you treat all your bidders the same except for bid amounts.

Lastly, courts are increasingly looking at printed terms and conditions on bid cards, websites, printed advertising, etc. What do those terms and conditions say? It’s abundantly clear auctioneers can be held liable for violating their own terms and conditions.

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 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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