Sad Silent Auction Winners – In Legal Terms

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hans magelssen /

December 27, 2012; Source: Travel Weekly

There are so many ways to create problems for one’s self when fundraising. One kind of problem with a lot of potential fallout occurs when you are auctioning a service in return for the highest donation. In this case submitted as a question to Mark Pestronk, a lawyer specializing in travel law, a travel agency donated a trip complete with a list of restrictions but the nonprofit who auctioned the service did not disclose the restrictions. Now the donor who placed the winning bid is angry and the travel agency (the other donor) feels hung out to dry.

Pestronk commiserates with the writer, but says that he has observed this to be a very common occurrence whenever expensive trips are offered at silent auctions. The winner expects something more than was on offer by the travel agency and often the difference ends up being covered by the agency. He says this happens even when the restrictions are clearly laid out. In many cases, the excitement level is so high that the restrictions get overlooked.

Pestronk says, “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’.” He says that the nonprofit is, in the case of a silent auction, acting as the travel agency’s sales agent and that “if you refuse to do what the winner asks, he could theoretically buy the requested arrangements elsewhere and successfully sue you for the difference.

Of course this sounds like one of those minor nightmares that can consume way too many hours and create bad will all around. Pestronk ends his article by advising (travel agencies) against such donations or to be very, very careful about disclosure. We would take the opportunity to advise nonprofits to work hard to ensure that donor/bidder expectations for services offered at silent auction are accurate to the donor/service providers’ expectation.—Ruth McCambridge