- Competent parties
- Mutual assent
Competent parties means that both parties to the contract are competent. Competency relates to mental competency meaning that one of the parties isn’t mentally incompetent. As well, common law in the United States suggests that someone must be at least 18 years old to be competent.
Mutual assent means the parties have a “meeting of the minds.” For example, at an auction, during bid calling, if the bidder thinks he is buying a flower frog, and the auctioneer is selling a kitchen cupboard, and says, “Sold!” then there is no contract — clearly no meeting of the minds.
Consideration means “something of value” and can be money, property, services, or a promise to do something or not do something. For example, the auction buyer promises to pay for the item, and remove it within the given terms, while the seller (auctioneer) promises to transfer title.
When do auctioneers enter into contracts? We’ll discuss this in greater detail later, but basically at every turn. Auctioneers enter into contracts with sellers, bidders and buyers throughout their careers.
What happens if we don’t have the three essential ingredients to a contract? Basically, there is no contract, but there are cases where, for example, a minor entered into an auction contract and the court involved ruled that only the minor could void the contract, and otherwise, the auctioneer would have to perform. The concept of “voidable” typically only applies to the party lacking one of the essential ingredients.
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.