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Where did all the auction-related — and auctioneer-related — law in the United States come from? Where does the UCC 2-328 trace its roots?

While the United States has developed many such auction and auctioneer laws, English (United Kingdom) courts in the 1700’s and 1800’s decided some basics of auctioneering which are essentially the laws in the United States to this day.

Most notably, three such (1789, 1859 & 1873) cases concerning auction bid-calling and contract formation come from English courts:

  • Payne v Cave (1789) 3 TR 148

    In this case, Mr. Cave made the highest bid for Mr. Payne’s goods at an auction. But then, Mr. Cave changed his mind and he withdrew his bid before the auctioneer brought down his hammer.
    It was held that the Defendant was not bound to purchase the goods. His bid amounted to an offer which he was entitled to withdraw at any time before the auctioneer signified acceptance by knocking down the hammer.

  • Warlow v Harrison (1859) 1 E & E 309
    In this case, the Defendant, an auctioneer, advertised the sale without reserve of a horse by public auction. The Plaintiff attended the sale and bid 60 guineas. The horse’s owner bid 61 guineas. The Plaintiff refused to make any further bid and the Defendant (who, it appears, did not know that the bidder was the owner) knocked down the horse to the owner for 61 guineas. The Plaintiff claimed that the horse was his since he was the highest bona fide purchaser at an unreserved sale. In his pleadings the Plaintiff alleged that the Defendant was the Plaintiff’s agent to complete this contract. Held: on the pleadings the Plaintiff had no claim since there was no agency relationship between the Plaintiff and the Defendant. The pleadings required amendment.
    The sale was announced to be ‘without reserve.’ This, according to all the cases both at law and equity, means that neither the vendor nor any person in his behalf shall bid at the auction, and that the property shall be sold to the highest bidder, whether the sum bid be equivalent to the real value or not. We cannot distinguish the case of an auctioneer putting up property for sale upon such a condition from the case of the loser of property offering a reward
    Upon the same principle, it seems to us that the highest bona fide bidder at an auction may sue the auctioneer as upon a contract that the sale shall be without reserve. We think the auctioneer who puts the property up for sale upon such a condition pledges himself that the sale shall be without reserve; or, in other words, contracts that it shall be so; and that this contract is made with the highest bona fide bidder; and, in case of a breach of it, that he has a right of action against the auctioneer.

  • Harris v Nickerson (1873) LR 8 QB 286

    In this case, the Defendant placed an advertisement in London papers that certain items, including brewing equipment and office furniture, would be placed up for auction over three days in Bury St. Edmunds. The Plaintiff obtained a commission to buy the office furniture and expended time and expense to travel to Bury St. Edmunds to bid for the office furniture. On the third day, the lots for the office furniture were withdrawn. The Plaintiff sued for loss of time and expense. The judge at first instance found in favor of the Plaintiff. Leave was given to appeal to the High Court.
    The Plaintiff submitted that the advertisement constituted a contract between themselves and the Defendant that the latter would sell the furniture according to the conditions stated in the advertisement, and that accordingly the withdrawal of the furniture was a breach of contract. The Defendant submitted the advertisement of a sale did not constitute a contract that any particular lot or class of lots would actually be put up for sale.
    The court held unanimously that the advertisement did not constitute an offer, but rather was a mere declaration of intent. Blackburn, J. founded his judgment on public policy grounds, calling it a “startling proposition” that “any one who advertises a sale by publishing an advertisement [would become] responsible to everybody who attends the sale for his cab hire or traveling expenses”. Quain and Archibald, JJ. also drew public policy arguments, emphasizing that there existed no authority on which to base a decision that the Defendant be liable to indemnify all those who attended his auction. The court upheld the appeal.

For those auctioneers operating in the United States, a quick summary of each might be useful. However, this being English case law, it would not apply formally to any cases being heard in the United States; interesting nonetheless.

  • In Payne v Cave (1789) 3 TR 148 , the courts ruled just as the UCC 2-328 (3) notes that the bidder may retract his bid up until the “fall of the hammer.”
  • In Warlow v Harrison (1859) 1 E & E 309, the courts held that at a without reserve auction, the property offered must sell to the highest bidder, and the seller may not bid. U.S. courts have differed slightly on this issue, but basically this is law in the United States.
  • In Harris v Nickerson (1873) LR 8 QB 286, the courts ruled as the UCC 2-328 (3) notes [in a with reserve auction] that the seller could withdraw property offered at auction — up until the “fall of the hammer.”

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.