Can I be Sued over an eBay Auction?

July 17, 2008

One of the great features of the Weblog is, you can see search terms that people use, to find your blog. While this is not a blog about online auctions, and since there are plenty of those all over the web, I don’t plan on this becoming another one of those. However, this seemed to be a fitting subject, regardless of the type of auction.

Of course, the short answer to the question is YES. Why, of course you can. Especially in today’s litigious society, where people sue anyone for anything at the drop of the hat, or should I say, hot coffee spilled in your lap, as one seeks to blame the restaurant for serving coffee that’s “too hot” and causing light scalding on their leg when the clumsy individual caused the injury to themselves. Why do people always seek to blame others for their own faults? Money and greed are usually the culprits that answer that question.

However, if someone does cause real problems and losses to someone else and the individual at fault refuses to provide relief to the damaged party, then that was the intention of providing legal recourse for addressing the situation. I don’t think it was ever meant to be used by crooks to sue the victims for hurting them when catching the crook in the commission of a crime or other silly actions that should never waste our taxpayer’s dollars to misuse our legal system.

So, I have to wonder, what did this person do to have someone consider bringing a lawsuit against them? We continually hear of the seller’s that scam buyers and buyers that scam the sellers. There are also those that think they can run an eBay style auction and claim “as-is, where-is” and be absolved of all legal responsibility for what they represented. While Live Auctioneers also use those terms, at least the buyer can see what they are buying and determine their own suitability. But that may not even be a viable defense if the auctioneer made a specific claim about an item.

I had a friend that bought a motorcycle on eBay from a seller in a different state (well over 1000 miles away). When he received a box of junk parts, he contacted the seller and the battle was started, as the seller claimed it was all there in the box. Well, this certainly wasn’t what was envisioned from the description and the seller wanted to make things difficult, so my friend found a lawyer in the seller’s home state and filed suit. Now, that’s the bad part, as you normally have to file suit in the other person’s jurisdiction, at least in most cases (there are exceptions, like when it’s spelled out in a specific contract, for one). Of course, now the seller wants to try to negotiate and refund his money. Well, this is likely to cost the seller a whole lot more than he was going to make on the scam, as my friend is going to pursue him in court, even though it means he will have to take off work and travel over 1000 miles when it’s scheduled for a court date. I’m sure he’ll be seeking reimbursement for those costs, as well, not to mention his lawyer’s fees.

The best way to avoid a lawsuit is to be as honest as you can, with those you deal with. While it’s no guarantee that someone won’t find something as a perceived wrong and try to sue you, it should lessen your chances.


No Warranty Or Guarantees at Auction, EXCEPT…

June 2, 2008

I was presented the following scenario in the comments here

Here’s a basic summary of the comments:
I was recently duped into buying a painting supposedly from a valuable artist only to find out later that it was not. In this case, the auctioneer’s homepage posted all the items for sale and had the artist’s name and year the painting was done. The day of the sale, he said that he was told by a colleague that it was probably the work of the artist in question.

When a buyer attends an auction, there are “Terms & Conditions” that the Auctioneer usually gives at the beginning, although they may also be posted in written form. In most cases, these Terms & Conditions have a statement such as, “All items are being sold “As-Is, Where-Is, with No Warranties or Guarantees Expressed or Implied.”

Many Auctioneers think this gets them “off the hook” in case there is something wrong with the item, as buyers are also told to look things over and know what they’re bidding on. So, in this context, it appears that it rests solely with the buyer’s own judgment. And it Does… UNLESS, the Auctioneer makes a statement of the items’ condition, authenticity, value or other similar statement. Now, I know that there are some Auctioneers that may try to argue this point, but those are the ones that may find out the hard way… in front of a judge.

As long as the Auctioneer says, “I’m selling this nice painting of a farm house by a lake” and you can see that it is just that, but you know there’s a small rip in the painting, then it is up to your judgment of value for this painting. Caveat Emptor, as the saying goes or “Let the Buyer Beware”, which means it is solely up to your own knowledge and judgment. If you didn’t notice the rip, and you’re the high bidder, it’s still YOURS, when the Auctioneer calls “SOLD.”

But, what if it was a print and not a painting? What if the Auctioneer said it was by a particular artist and it wasn’t?

My first question is, “Was the Auctioneer kidding around?”, as we all know that most Auctioneers may use a bit of tongue-in-cheek humor to entertain, as well as sell stuff. This would certainly be a gray area and may depend on the reaction of the crowd. After all, if it was picture of a mallard swimming on the lake and the Auctioneer referred to it as a Walt Disney Painting of Donald Duck, then it probably wouldn’t change anything… Yes, I know that’s the extreme, but more subtle forms of humor and conjecture may also be used and if most of the crowd knows better, then it may still be hard to hold him to his word.

However, if you are bidding on something that has been held out to be much more valuable than it actually is, and the Auctioneer knowingly or not, tells you that it is “likely a Picasso”, then he may have a lot more problems trying to convince a judge that he was just “kidding around”.

If the auctioneer states “I have a Picasso”, then it may be assumed to be genuine. However, if he says, “I have a painting that is signed Picasso”, then it is up to the bidder to determine if it is real, as he has not claimed it to be genuine. However, the wording of a statement can be difficult to ascertain what he may be implying. If in doubt, stop the auctioneer and ask… “Is this a genuine Picasso?”

To state that a “colleague said that it was probably the work of the artist in question”, does not relieve the auctioneer from his obligation, as he is an agent of the seller. So, if the “seller” misrepresented the item, it may still be an invalid sale. To state “probably” is not necessarily a good defense for the auctioneer, as it may still be considered a misleading statement. I know that if I heard an auctioneer say “probably”, I am going to consider that it was not verified and unless I know that, it IS what it’s supposed to be, then I’m not going to bid very much (if I bid at all). But, that is not to say that you were not misled into thinking that it was an original… so, the actual wording of his statements may actually determine his liability.

However, if the auctioneer stated something like, “A colleague said that it was probably the work of the artist in question, but I can not guarantee it, so please bid accordingly“, then he has basically left it to the bidders to decide for themselves, as to its’ authenticity. If I made such a claim, I would make sure everyone heard me, by repeating the “no guarantee… bid accordingly” and I may also add “I have not verified this”, just to make sure there was no misunderstanding by the bidders. It’s not unusual for a seller to bring something to auction, who is also misinformed about their goods. Often, the auctioneer is only repeating what he has been told by the seller, however it still makes both, the seller and the auctioneer responsible, should the item not be as the seller believed. This doesn’t make them bad people, just misinformed… but the seller should still be held to his claim. However, if either KNEW it was a fake, then it is a serious offense, as that gets into fraud and may be a criminal offense.

As I previously pointed out, sometimes, it’s all in the way it is said and some bidders will try to use the line, “but I thought he said…”

In these types of cases, it doesn’t matter what you thought he said, as it is each individual’s own responsibility for determining the authenticity and to pay close attention to the Auctioneer. If you only heard the part when he said “Picasso”, if you aren’t sure, then you should stop him and ask for clarification before bidding.

Now, back to the original comment that was left. This Auctioneer posted this picture on his website and put the “Author’s Name” under it. This could clearly indicate to the consumer that he is claiming it to be authentic. Since this Auctioneer went on to say that “a colleague said that it was probably the work of the artist in question” is only putting additional authenticity to what was already published and he may actually be considered to be holding this out to be authentic. To put the “question” on the end of the statement may not get him off the hook in this case, without further statements to make clear that he is not sure of the authenticity that was previously claimed on the website. If I had an interest in this item, I certainly would have stopped the Auctioneer and questioned his “appraisal” of the painting. If he continues to assert that it is was probably authentic, then he would likely be held to a guarantee that he has just expressed, otherwise he may be found to have violated FTC laws for fraud.


U.S. Auctioneer State Auction Laws

May 2, 2008

I’ve noticed a lot of people searching for State Auction Laws & Auctioneer Laws. Now, you can find all the auction laws listed on this site, as I just added a New Page to the Auction Law Weblog. You will find links to the respective state government websites with information about Auctioneer Licensing requirements and associated Auction Laws, as available for every U.S. State, as of May 1, 2008.

This took hours of research to draft this information, so I hope you find it useful. You will notice the link on your upper right side under “Pages“. To get back to this weblog, just click on the Auction Law Weblog banner at the top of the web page.

There use to be a link to the Florida Auctioneer Academy website shown here, which provided similar links. But, I found the webpage to be outdated with a lot of dead links and missing a lot of states that have information available on the internet, so I have removed the link and developed this New Page on State Auction Laws & Auctioneer License Requirements. So, this should be the most up-to-date Auction information available (at least, today).

HOWEVER, I must include the usual Disclaimers for those that try to act like lawyers or expect everyone to get everything exactly right or try filing complaints and lawsuits!! This is not considered to be legal advice in any manner, shape or form, nor do I claim to provide correct and accurate information. While I’ve tried to find the most up-to-date information available, I can not guarantee the accuracy of any information, links or any other thing. It is the responsibility of each individual to contact the appropriate government offices in your own state to determine all business requirements and consult with an attorney for legal advice. As usual, this website is for general informational purposes only and links may not be updated on a regular basis, so I can not and will not take blame if the information has changed in any form, because this is not intended to be complete, nor considered to be legal advice. In fact, you will probably find that there is a lot more information required to make any determination of suitability of your situation and you should consult an attorney first, before assuming anything based on your own interpretations of any laws or regulations, much less anything you find on this web site. WHEW! I hope I covered all the disclaimers needed… just in case, USE THIS WEBSITE WITH CAUTION!!! OTHERWISE, YOU CAN PAY A LAWYER OR SPEND THE TIME TO LOOK IT UP FOR YOURSELF AND TAKE YOUR OWN CHANCES! I’m just trying to be helpful and save you a little effort.

So, if you find any errors, recent changes or additional information, let me know and I’ll try to update the page as quickly as possible.


Fiduciary Duty of an Auctioneer

November 15, 2007

An auctioneer’s fiduciary duty is to the seller. This means the auctioneer is an agent for the seller and must act in the best interests of the seller.

This falls back on the basis of general law, widely accepted in all courts of law throughout the U.S.:
(1) “Fiduciary” means an agent, trustee, partner, corporate officer or director, or other representative owing a fiduciary duty with respect to an instrument (i.e. “contract”).
(2) “Represented person” means the principal, beneficiary, partnership, corporation, or other person to whom the duty stated in subdivision (1) is owed.

In addition, the field of real estate is usually quoted in many examples because they are basically the only industry that allows for “dual agency”. However, to completely understand this “agency”, you must understand that the Broker has ultimate responsibility for all transactions by any salespersons working under the supervision of the Broker’s license, therefore the actual Broker is undertaking the role of dual agency (not the individual salespersons, as I will explain). In other words, the Broker can not be a direct party in the transaction (in any way and must remain neutral, or without specific directions to either salesperson) and will appoint two different salespersons to work for the seller and the buyer, since an individual agent cannot represent a fiduciary to both. On the same basis of law, if a RE salesperson has not specifically contracted to act as a buyer’s agent, then it is automatically assumed that the salesperson is acting on behalf of the seller, therefore is the fiduciary only for the seller.

To support that last statement, the Federal Trade Commission (FTC) speaks of this in numerous publications, one of which is:
http://www.ftc.gov/os/comments/realestatecompetition/518795-00391.htm
Fiduciaries are held to a higher standard under common law. Upon visiting, for example, a store, a consumer does not expect, or have any right to expect, the store’s salesperson to be looking out for the consumer’s best interest. But in hiring a trusted lawyer or real estate agent or investment trust company (you may also add “auctioneer”) to act for him, a client expects full fiduciary responsibility, including undivided loyalty, with no undisclosed conflicts of interest. Consumers are more easily misled when, as clients, not just customers, they are giving their trust to their own professional fiduciary.

In addition, you can find additional commentary on the basis of fiduciary duties at:
http://en.wikipedia.org/wiki/Fiduciary
Conflict of duty and duty
A fiduciary’s duty must not conflict with another fiduciary duty. Conflicts between one fiduciary duty and another fiduciary duty arise most often when a lawyer or an agent, such as a real estate agent (also add “auctioneer”), represent more than one client, and the interests of those clients conflict. This usually occurs when a lawyer attempts to represent both the plaintiff and the defendant in the same matter, for example. The rule comes from the logical conclusion that a fiduciary cannot make the principal’s interests a top priority if he has two principals and their interests are diametrically opposed; he must balance the interests, which is not acceptable to equity. Therefore, the conflict of duty and duty rule is really an extension of the conflict of interest and duty rules.”

Also see:
http://en.wikipedia.org/wiki/Conflict_of_interest

In other words, as a sole individual/entity, you can not have a conflict of fiduciary duties between the parties, or you are subject to a dereliction of duty to one or both parties. Therefore, under the basis of general law, it basically means that when an auctioneer signs a contract with a seller (the principal), the auctioneer has a fiduciary duty to the seller to act as their primary agent on their behalf and in their best interests or “as they would act”.

Now, this does not mean that if the seller misrepresents something, that the auctioneer doesn’t have a “duty” to the buyer to correct the problem. However, the auctioneer and the seller are both responsible for providing a reasonable duty to provide said goods in the condition stated for the agreed upon price/trade, as this falls under the Fair Trade Agreement statutes (that you can also search for under the FTC’s website). However, this does not create a fiduciary duty to the buyer, but only serves to treat the buyer fairly under the FTC’s Fair Trade Agreement.

The primary point is regarding the auctioneer’s fiduciary duty to act on behalf of the seller. The difference between the Fair Trade Act regarding buyers and fiduciary duty to the client (seller) is the same, regardless of whether it is a real estate transaction or the sale of any other type of property.

A Fiduciary can not represent two different parties with opposing intents. The primary fiduciary is to the client that has contracted the auctioneer to sell (act on their behalf for the sale of) their goods.

Some have attempted to imply that the Terms and Conditions of Sale implies a fiduciary duty. This is not the case, as the FTC’s Fair Trade Act specifically demonstrates that it is only an agreement for the terms of the sale and creates no other duty upon the seller (or their agent) as a representative of the buyer, as they are opposing parties until the final agreement has been reached. The Terms & Conditions (terms of their agreement) for an auction are only the conditions of finalizing the transaction, which both, the buyer and the auctioneer (seller’s fiduciary agent) are agreeing to as part of the sale, with only price being the final factor and determined upon the call of “Sold”. Therefore, the auctioneer has only “perfected a sales agreement” (that’s how a lawyer would state it) with the buyer on behalf of the seller (the principal fiduciary).


IRS Tax Refund? WOW! I Don’t Think So…

October 9, 2007

OK… while this is a little off-topic for this weblog, I couldn’t resist! The following is a spam phishing scheme that got into my inbox. Besides the fact that I knew it was fake because the IRS isn’t going to contact me through this email address, there were a couple of other minor things to indicate that something wasn’t quite right… like the url in the “click here” was not the IRS website! (unless they’ve moved their offices to .ru <which I believe is Russia?> – I removed the url to protect anyone from accidentally clicking on it) See if you can spot the other one…

After the last annual calculations of your fiscal activity we have determined that
you are eligible to receive a tax refund of $268.32.
Please submit the tax refund request and allow us 2-3 days in order to
process it.

A refund can be delayed for a variety of reasons.
For example submitting invalid records or applying after the deadline.

To access the form for your tax refund, please click here

Note: For security reasons, we will record your ip-address, the date and time.
Deliberate wrong inputs are criminally pursued and indicated.

Regards,
Internal Revenue Service

Yep! That’s right… You could be INDICATED! I think the sender should be INDICTED for stupidity, as this only INDICATED to me that the sender is also illiterate!! While I found this amusing, I also realize that there are a lot of other folks that will fall for this scheme, which is not so amusing. We hear about Identity Theft a lot these days… this is one example of Why It Happens! Out of excitement, greed or just plain ignorance, someone clicks the link and provides this scammer with all of their personal information and their bank account info (for the “IRS” to deposit their “refund”) and in only a few days or weeks they find their bank account empty and possibly new credit cards issued in their name with charges on them for all kinds of stuff. Not only are they robbed, but now they spend a lot of time and effort trying to clear their name and credit.

If you get ANYTHING that you didn’t specifically request in your Inbox… DELETE IT, IMMEDIATELY!! If you OPEN it and THINK it might be real… DON’T click the link provided. Instead, Google the REAL website and look for information about the subject… OR check out http://www.snopes.com for information about all kinds of scams. They also cover all those other fake emails that tell you to “pass it on to all your friends” (please don’t send them to me, as I’ve already seen most of them and deleted them without bothering my friends). If it’s been on the web, Snopes.com probably has the facts about it… bookmark the site and use it often!!


Ebay Class Action Lawsuit?

September 25, 2007

This was found in my Weblog Spam folder. While it may be a valid question, the fact that it originated from an Australian server and the guy is in New Jersey is probably why it got tagged. However, I also found it a little suspicious that his website has a link to Mr. Auction Vendetta’s blog (maybe a friend??? who knows). It’s been four days since a sent this guy an email and have receive no response.

Anyway, here’s his question/comment, followed by my reply.

I came across your website as I am fascinated with auction law and the auction process. I used to sell on Ebay. Since you are into electronics, you may find this fascinating and ripe for a class action lawsuit. Ebay claims they list items for 3, 5, 7, or ten days, but in fact this is not accurate. When a user posts an item, it takes upwards of 4 hours for the item to be found on the auction site. Thus a 3 day auction is really more like a 2 day and 20 hour auction.

Is is possible to be updated as to your new blog posts? Also, as an auctioneer, besides Ebay, would you be able to recommend any good dealers of Star Wars collectibles?

Thanks,
Rick

—My reply—

Rick,

Your post in the Auction Law blog was detected as “spam”. I am assuming that it is because the IP you were logged in under was in Australia (part of the Asia Pacific Network, which has a high rate of spammers). Looking at your website, it appears that the phone number is in New Jersey. So, I guess I’m a little confused, unless you’re using one of the random identity servers.

To get updates, if you are logged into WordPress/Weblog, you will find a “Blog Info” button in the top right corner and you can just click “Subscribe to Blog”. You can also use an rss reader.

I don’t do much on Ebay, except buying occasionally. I’ve listed a few items over the last 10 years, but I’ll usually sell my items through a live auction. Most items tend to do as well, if not better than on Ebay. Of course, there are the exceptions.

As far as my electronics background… while I still find myself fixing my own computers when I have to, I’m trying to forget as much as I can about it. That is my past and while it was a good career, it’s not what I do today. Your idea of a lawsuit based on Ebay‘s posting criteria… I would recommend talking to a lawyer. However, I personally don’t think it would have much of a chance of winning. Keep in mind, it says “days”, not “hours” (you’ve got to think about how a lawyer can rationalize it). So, if it was posted on a particular day, given a “reasonable” period of time for the computers to respond to the massive amounts of data that are being submitted, the listings are still posted for the “stated number of days”. It’s kind of like waking up at 5:00AM or 8:00AM… in the evening, you look back and you still had “your day”. (OK, maybe that isn’t the greatest explanation, but you get the idea.) Anyway… like I said, you would probably want to talk to a lawyer. There’s always one somewhere that will take on just about anything. (I’ve got two in my family.)

Finally… STAR WARS!!!! Sheesh… You already missed it! In the past few months, we have done two auctions with lots of Star Wars (& some Star Trek) collectibles. It’s not something we do regularly… we just happened to have two large consignments come in. Of course, we get stuff like that off & on, but not normally enough to feature an auction. But, then again, it would be a long trip from New Jersey… and one of the reasons I don’t do much on Ebay is I don’t care for the packing and mailing. At least, at a live auction, they just carry it out after they’ve paid for it.

You can also find live auctions listed on AuctionZip.com and search for items you’re interested in.


Auction Laws in the U.S.A.

August 18, 2007

In the U.S., there is no federal law regulating auctions (Thank goodness). Regulation is left up to individual states, as this is how the U.S. Constitution was intended. States have differing requirements on licensing, education, bonding, fees and other aspects of conducting an auction. While, not all states require licensing, most states do have laws and/or regulations covering the auction industry. The Uniform Commercial Code (U.C.C.) was the original basis for auction laws in all states, except Louisiana which only enacted part of the Code.

The Uniform Commercial Code is often quoted when people talk about auction laws, but the U.C.C. is not actually law. A group of lawyers worked on drafting the Uniform Commercial Code for over 10 years (1941-1951) to complete the proposed statute and get it approved by the American Bar Association. The U.C.C. is just a general “code of commerce” that has become a precedent of law, but the Uniform Commercial Code has no legal significance, except that 49 states have drafted most of the U.C.C. into their own laws. The first state to adopt it was in 1951 and the 49th state to adopt it was in 1967. Why only 49 states? Louisiana law is typically based Napoleonic law, while the other 49 are based on English law. (So, Louisiana just has their own way of doing things.)

You can see what the Uniform Commercial Code says in regards to auctions at: U.C.C. § 2-328. Sale by Auction

In addition to the basic Uniform Commercial Code (or parts of it) in each state’s business law, each state may have their own additional laws, modifications or administrative rules that also govern auctions and may also vary somewhat from the actual U.C.C., as originally drafted. You can find a list of State Auction Laws & Auctioneer Licensing Information in the top menu & right-hand column of this page.

If there is no link to your state, then your state may not have state licensing requirements for auctioneers. However, this doesn’t mean that your state does not have laws regulating auctions. If you have information or links to webpages outlining the laws, let me know and I will update the information after verifying the information.