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Is an absolute auction the same as a without reserve auction? Is a without reserve auction the same as an absolute auction?

In theoretical mathematics, if A = B and B = A, then A and B are the same thing, thus this question posed here about absolute auctions.

The UCC 2-328 describes only two types of auctions:

  1. With reserve
  2. Without reserve

No mention of the word, “absolute” at all in this doctrine.

Yet, in common usage with auctioneers all over the United States and territories, the word, “absolute” has come to mean an auction “without reserve.” And, if an auction is deemed “without reserve,” then it is commonly deemed an “absolute” auction.

Why this discussion, then, if it is so easily answered?

Some argue, and with some merit, that a without reserve auction has certain rules, such as no limiting conditions, no minimum bids, no reserve amounts, no withdrawal following an opening solicitation for bids and a bid within a reasonable time, and no seller bidding, etc.

Then, this argument continues that an absolute auction has no such rules, since the word isn’t used in the UCC 2-328, and is not used in any widespread fashion in states’ adoption of such.

Some states have adopted statutes that incorporate the word, “absolute” and define it to be an auction “without reserve.” These states more or less seem to say that the auction itself is indeed an absolute auction when it is advertised, and conducted without reserve(s). In other words, A = B because when we say “A” everyone thinks “B.”

So, here is our argument:

An absolute auction is a type of auction in common usage. People don’t generally require any further explanation such as, “You said it was absolute, but is there a reserve or not?” Since there are only two types of auctions, as defined in 49 states, and territories, then an absolute auction must be one or the other; it must be a with reserve auction, or a without reserve auction, since these are the only two choices. Seems obvious that an absolute auction can’t be a with reserve auction, since something selling “absolute” can’t have a reserve. And, it seems even more obvious that an absolute auction is one without reserve, which is the only other type of auction.

Per our first argument, A = B.

A without reserve auction is one of the two types of auctions, as defined in 49 states and territories. So, if an auctioneer is having a without reserve auction, could someone say he is having an absolute auction? If having an absolute auction is some other type of auction, different from a without reserve auction, then what kind of auction is that? There’s only one other kind …

Per our second argument, B = A.

Adding to all this, most all dictionaries, glossaries, books, manuals, articles … say something like this:

An Absolute Auction (per the National Auctioneers Association):

An auction where the property is sold to the highest qualified bidder with no limiting conditions or amount. The seller may not bid personally or through an agent. Also known as an auction without reserve.

Also known as … in other words, people know one to be the other.

Here’s how the Supreme Court of Virginia defined an auction without reserve in the case of Holston v Pennington 225 Va. 551, 304 S.E. 2d 287 (1983):

“The term ‘absolute auction’ is equivalent to the term ‘auction without reserve,’ a well-recognized term of art in the law of sales. It means that the property will actually be sold to the highest bidder at that time and place, that no minimum price will limit the bids, that the owner may not withdraw the property from sale after the first bid has been received, that the owner may not reject any bid or all bids, and that the owner may not nullify the sale by bidding himself or through an agent.”

Seems very simple, doesn’t it?

Okay, here’s the difficult issue. How many of you have seen ads such as “Absolute Auction, Minimum Opening Bid $150,000!” or a classic one I saw the other day which said, “Sells absolute without reserve” and then followed with “Opening bid: $500,000” And, there are ads in newspapers every day which say “Selling absolute, seller reserves right to confirm final bid price.”

Is the argument here that absolute means an auction which is a particular flavor of without reserve, which can indeed have a minimum opening bid, or seller confirmation? In other words, if we carefully use the word absolute, or include the word absolute, then we can indeed have a with reserve auction, even if we say it is without reserve?

How gullible, unaware and uneducated do these auctioneers think the public is? More of this particular discussion in my blog on Absolute Auctions.

Back to our topic here: Are they the same thing? We are a country based on common law, which derives from common usage and behavior. I would defy any court to distinguish between a without reserve auction and an absolute auction. And, maybe because there has been no such case, yet, proves no such case is needed.

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.