Mark PestronkQ: My agency offered to provide air and deluxe hotel for a Caribbean trip to the winner of a local nonprofit organization's silent auction. We agreed to be paid whatever the auction winner bid, minus our contribution to the nonprofit, as long as it was over a certain minimum price. We provided our terms and limitations to the organization, which then made a table exhibit that, unknown to us, omitted some of the restrictive terms that we required. The auction winner contacted us and requested very expensive arrangements that were arguably consistent with the wording of the table exhibit. When we told the winner that the arrangements were so far beyond the scope of what we could offer without a huge loss, the winner became irate and claimed that he had been defrauded. Must we honor the arrangements demanded by the winner? If so, do we have any claim against the nonprofit for not communicating all our terms to bidders?

It may help you to know that, in my experience, your problem arises almost every time expensive trips are offered at silent auctions. The winner wants more than the agency was prepared to offer, and he often gets his way at the agency's expense.

There seems to be something almost preordained about these kinds of disputes. The winner gets excited and expects a really great deal that he could not get otherwise, and you have to dampen his enthusiasm.

Even in cases where the nonprofit correctly posts all the terms and limitations, the chances are overwhelming that the bidder will not have read them closely or, if he has, will not recall them later.

Legally, the issue is whether there is a contract between you and the auction winner and, if so, whether the terms of that contract are what was written on the table exhibit, as opposed to the more restrictive terms and conditions that you gave to the nonprofit before the auction. The answer to both questions is, unfortunately, "yes."

The reason that the table exhibit's terms bind you is that the nonprofit was acting as your authorized sales agent, and the nonprofit therefore had the right to bind you to the deal it had made. Just as an airline must usually honor a ticket that you issue at too low a fare (although the airline can later hold you responsible by sending you a debit memo), you must honor your agent's commitments.

If you refuse to do what the winner asks, he could theoretically buy the requested arrangements elsewhere and successfully sue you for the difference. So the chances are good that you will end up doing what the winner wants, especially if he is a good client or could harm your reputation in the community.

I have no doubt that you have a legal claim against the nonprofit, which clearly misrepresented what you were offering. However, you probably will not pursue such a claim, because you do not want to be known as someone who sues charities.

Instead, you will probably vow never to do this again, which might be a good idea. Otherwise, you need to make sure that the nonprofit correctly lists all your terms and limitations, and you need to make sure that the winner gets a copy of them.

Mark Pestronk is a Washington-based lawyer specializing in travel law. To submit a question for Legal Briefs, email him at [email protected]. 

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