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Auctioneers enter their sellers (clients) into contracts with buyers (customers) when bid calling.

When an auctioneer says, “I have $10, and I’d like $15,” he is stating that he currently has his seller in contract with a particular bidder at $10 for the item being sold, and is asking to get out of that contract with a higher bid.

If there is no higher bid, then the item is typically sold for the $10.

What legally is going on when an auctioneer is bid calling? Let’s take a look at the two types of auctions:

1. A without reserve auction:

In this type of auction, a collateral contract is formed between the seller and all the bidders, agreeing to sell the item without reserve. Then, the auctioneer asks for bids from his audience (invites the bidders to bid) and once he accepts a bid, say $10, then there is a contract formed. There are two contingencies in this contract:

(1) a higher bid
(2) the bidder retracting his bid

If a higher bid is received, and accepted by the auctioneer, then this contract for $10 is voided. As well, if the bidder wishes to retract (withdraw) his bid, he may and then the auctioneer has no bids, and must essentially start the auction over for that lot. If neither happen (no higher bid, and no retraction) then when the auctioneer announces, “Sold!” a contract is formed lacking either aforementioned contingency.

An important note about a without reserve auction: After the auctioneer invites bidders to bid, and no bid is made within a reasonable time, the item may be withdrawn by the auctioneer (withdrawn by the seller). However, once a bid is received, this right to withdraw the item no longer exists.

2. A with reserve auction:

In this type of auction, the auctioneer asks for bids from his audience (invites the bidders to bid) and once he accepts a bid, say $10, then there is a contract formed. There are three contingencies in this contract:

(1) a higher bid
(2) the bidder retracting his bid
(3) the seller withdrawing the item

If a higher bid is received, and accepted by the auctioneer, then this contract for $10 is voided. As well, if the bidder wishes to retract (withdraw) his bid, he may and then the auctioneer has no bids, and must essentially start the auction over for that lot. And, if the seller withdraws the item, then the auction is essentially voided. If none of these three contingencies occur, (no higher bid, no retraction, and no withdrawal) then when the auctioneer announces, “Sold!” a contract is formed lacking any of the aforementioned contingencies.

Mike Brandly, Auctioneer, CAI, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, Keller Williams Auctions and Goodwill Columbus Car Auction. His Facebook page is: www.face book.com/mbauctioneer. He is Executive Director of The Ohio Auction School.