auction, Auction Law, auctioneers, auctions, bid calling, bidders, breach of contract, contract, firm, John Paul Stevens, oral contract, real property, with reserve, withdraw, withdrawal, without reserve, wrong amount
I’ve been asked to consult with an attorney on an auction-related case, involving a dispute over the sale amount for a particular property at auction. I suspect I don’t have good news for him, but nevertheless he has asked for my opinion.
To generalize the question at issue, let’s say an auctioneer is selling real property at auction, and the bidding goes as such: “$120,000, $125,000, $130,000 … somebody give me $131,000? Sold for $130,000.”
However, in our case here, let’s say that auctioneer said, “$120,000, $125,000, $130,000 … somebody give me $131,000? Sold for $30,000.”
Obviously the difference in our second example is:
- The auctioneer says sold for wrong amount.
My client, this attorney, represents a buyer in such a case where the auctioneer said, “Sold!” for a much lesser amount than he should have. The attorney is arguing that since the auctioneer said, “Sold!” for a lesser amount, the contract that was created between the seller and the buyer is (as in our above example) $30,000 and not $130,000.
Let’s look at auction contracts. We’ve discussed such at:
While we’ve not explored this particular issue in previous articles, we’ve established considerable basis which can be used to shed some light on this question.
First, and foremost, when this auctioneer accepted the bid (accepted the offer) for $130,000 a contract was created. That contract was between the seller and this bidder, subject to either a higher bid or bidder retraction (or in the case of a with reserve auction, seller withdrawal). Withstanding no contingencies being exercised, the contract is firmed at the moment the auctioneer says, “Sold!”
In our case then, a contract existed for $130,000 between the seller and this bidder, and when the auctioneer said, “Sold!” it was firm (lacking the aforementioned contingencies).
Our position on the auctioneer denoting the wrong amount after, “Sold!” would be that it matters not what the auctioneer says after, “Sold!” as the contract is already formed at that point.
To illustrate this to my attorney client, I asked him, “What if the auctioneer had said, ‘Sold! for $230,000’ to your client? Would he be in contract then for $230,000 or $130,000?” The attorney acquired a curious look and replied, “Probably $130,000, right?”
The auctioneer cannot unilaterally change the terms of the contract to benefit his (or his client’s) interests. And, this isn’t because he can’t change the terms for his benefit — but rather he can’t unilaterally change them. So, those terms can’t be changed to his (or his client’s) detriment, either.
I would suggest this is a rare occurrence where an auctioneer, particularly on real property, denotes the wrong sales price following, “Sold!” However, we have good news for those auctioneers who find themselves pronouncing the wrong sale amount after saying, “Sold!” Such a pronouncement doesn’t override or undo the contract that already exists.
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.facebook.com/mbauctioneer. He serves as Adjunct Faculty at Columbus State Community College and is Executive Director of The Ohio Auction School.