7.2 Terms and Conditions, Registration, and Contract Formation

7.2 Terms and Conditions, Registration, and Contract Formation

Three layers: The seller contract authorizes the auction. The bidder-registration terms govern participation. The completed lot creates the sale of the particular goods.

Present Terms Before Bidding

A bidder should receive the terms before the first bid. For online events, display them before registration and preserve the version accepted. For live events, provide printed or electronic terms and repeat material conditions in the opening announcement.

Core subjects include:

• reserve or without-reserve status;
• seller bidding when permitted;
• bid increments and recognition;
• buyer's premium and taxes;
• payment method and deadline;
• inspection and condition;
• pickup, shipping, storage, and abandonment;
• title documents and regulated-property conditions;
• risk of loss and insurance;
• default and resale remedies; and
• dispute or outage procedure.

A hidden term is difficult to enforce and can be deceptive. A unilateral change after bidding begins requires clear notice and may not be permissible if it changes an existing bargain.

Registration and Assent

A signed bid card, signed agreement, or well-designed clickwrap record can show assent. The file should connect the bidder identity, accepted terms version, date and time, and bidder number.

A link buried at the bottom of a page with no affirmative action is weaker than a clear checkbox stating that registration constitutes agreement. Accessibility and readable presentation are part of sound disclosure.

Identity controls should be proportionate. Verify name, address, payment information, entity authority, and any deposit. For firearms, alcohol, vehicles, or exempt purchases, collect the separate evidence required by those systems.

Formation Under § 2.328

For goods, a sale by auction is complete when the auctioneer announces completion by the fall of the hammer or another customary manner. If a bid is made while the hammer is falling, the auctioneer may reopen bidding or declare the goods sold under the bid on which the hammer fell.

A bidder may retract a bid until completion, but retraction does not revive a previous bid. At a reserve auction the seller may withdraw until completion. At a without-reserve auction, the different withdrawal rule applies after bids are called.

These formation rules do not answer every downstream question. Title and risk of loss follow the agreement and §§ 2.401, 2.509, and 2.510. “Hammer equals risk in every auction” is wrong.

Warranty Terms

“As is,” “with all faults,” and inspection provisions can exclude implied warranties under § 2.316 when used properly. A written merchantability disclaimer must mention merchantability and be conspicuous.

A disclaimer does not safely erase a specific contradictory representation. Advertising a diamond as lab-certified natural and then relying on “as is” after it proves synthetic creates express-warranty and DTPA issues.

Attribute seller-provided information where appropriate, but attribution is not permission to repeat a claim the auctioneer knows is false. Correct material catalog errors before offering the lot.

Premium, Tax, and Payment

State whether the premium is calculated on the hammer price and whether the percentage varies by bidding channel or payment method. For taxable tangible personal property, the required premium is generally part of sales price under Tax Code § 151.007.

State accepted payments, funds-availability rules, chargeback treatment, and when possession can transfer. Do not state a payment-card fee in a way that conflicts with Chapter 604A.

Removal and Default

Use realistic pickup periods and identify storage, loading, and safety responsibilities. An abandonment or forfeiture clause should be drafted and applied under contract law; an auctioneer should not simply take paid goods after an arbitrary deadline with no notice.

For default, the terms may authorize commercially reasonable resale and recovery of a deficiency and incidental damages, subject to Article 2 and the contract. Avoid a penalty so extreme that it is unenforceable.

Example

A merchant equipment dealer sells a lathe for pickup, with terms stating risk transfers only when the buyer receives it. The hammer completes the sales contract, but the stated risk provision and merchant-seller rule mean the auction company should not tell the buyer risk passed seconds earlier merely because the gavel fell.

Memory Rule

Formation is not title, and title is not risk. Read each term and statute separately.

Version Control

Number or date every terms version. If a lawful correction is necessary, record the old and new wording, time of notice, affected bidders, and announcement. Version control prevents a later screenshot from being mistaken for the terms actually accepted.