Auctioneer payments: What to do when a client changes their mind

Auctioneer payments: What to do when a client changes their mind

11 November 2020

By Kirsten Craze

Getting paid is obviously an essential part of doing business, but the reality is that clients can flat out refuse to pay, or dispute a payment. That’s exactly what happened to auctioneer and REINSW Auctioneer Chapter Committee member Clarence White when one customer cancelled an auction at the last minute and subsequently wanted their money back.

Fortunately, the NSW Civil & Administrative Tribunal (NCAT) recently upheld that booking fee after Mr White demonstrated that the full terms and conditions - including his business’ change of mind policy - had been clearly articulated in the booking confirmation email. His advice to other industry professionals is to be transparent and keep a thorough paper trail.

Make sure vendors read the fine print

“The perpetual challenge for auctioneers is that once a time slot has been booked out, you’re locking that time away. You’ll then have other people ringing you saying, ‘Hey, can I book you at that time?’ And you have to say no. You’re pushing business away,” Mr White explained.

“So then when that person rings you less than a week out from auction day to cancel, that’s when you need to have terms and conditions in place that require payment. The fact is, you've secured that time and you've given away work that you could otherwise have been paid for,” he said.

The message that auctioneers, and selling agents, need to translate to vendors is that not only are they paying for the auction to be called, they are essentially paying for a time slot - whether they use it or not.

“What vendors must realise is that good auctioneers are busy and do book out, particularly on Saturdays. We try to offer some flexibility for campaigns that need to be pushed back or brought forward. But cancellation is a different story,” he said, adding that he offers a free reschedule on all auctions, subject to availability.

Proving the point at tribunal

The case that had Mr White heading to tribunal was one of a vendor who chose to cancel their auction four days from the allotted auction date in early March. He said it was worth noting the cancellation came well before COVID-19 restrictions had come into play.

“What was interesting about the original case was that there were a series of claims made like, there was no service provided, and that the auction was cancelled due to COVID-19. But we dealt with that very swiftly in the first part of the hearing. The auction date was actually three weeks before the government temporarily banned onsite auctions, so there was nothing stopping us conducting the auction at that time,” he said.

Had COVID-19 been the genuine reason behind the cancellation, then Mr White said it would have been a different story as he would not have been able to supply the service as advertised and as originally booked.

“I think the reality was the campaign hadn’t yet born fruit because the vendor had had a different idea on price than what the market was yielding. They'd gotten to auction week, and just didn't have any interest at that level. That's why the auction was cancelled,” he said.

He added that ultimately NCAT upheld that no refund was required. It accepted that the fee paid was indeed a ‘booking fee’ and that the auctioneer would have had little or no chance of re-selling their services at such a late stage.

The importance of a paper trail

“The ruling indicated that if a service is not able to be rendered as offered, or if the service was defective, then we know there's an obligation to provide a refund. But where the service has been booked, and the service is available as booked, then it is effectively a change of mind on the part of the consumer and therefore the business change of mind policy applies,” he said.

Mr White’s advice to Committee members is to have their terms and conditions clearly spelled out and to encourage agents to even have open conversations with vendors about the cancellation policy of the auctioneer.

“My first tip for an auctioneer would be to confirm every booking in writing so you've got a paper trail, or email trail. And on all my booking confirmations it has the terms and conditions printed. So if you come to a situation like this particular one and the tribunal asks what documents you would like to submit in support of your case then it’s all there,” he said.

“In this instance I was able to submit an email trail which showed the agent engaging me, it showed me confirming the booking on a particular date, and it showed the terms and conditions on that email which were clearly communicated.”

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