However, combining an absolute auction with selling choice brings us to an interesting legal question.
Our question today regards the following situation:
- Auctioneer Darren conducts an absolute auction of collectible fountain pens. He has ten (10) such pens up for bid and offers, “choice” to the highest bidder.
- The bidding begins at $5.00 and continues $10, $15, $20, $25, $35, $50, $75, $125, $130, $135 and no further bids are made.
- The highest bidder (at $135) chooses four (4) of the fountain pens. Auctioneer Darren then withdraws the other six (6) fountain pens from the auction.
Another bidder in attendance at this absolute auction cries foul. “You can’t withdraw those other fountain pens” he says, “This is an absolute auction and those pens were put up for bid.”
Auctioneer Darren counters, “Yes, you’re right, but no bid was made on those six fountain pens, and therefore we have the right to withdrawal them.”
The UCC 2-328 Article 3 states, in part:
- In an auction without reserve, after the auctioneer calls for bids on an article or lot, that article or lot cannot be withdrawn unless no bid is made within a reasonable time.
Who’s right here?
The other bidder is essentially claiming that a bid was received on those other fountain pens within a reasonable time after the bidding was opened.
Auctioneer Darren is essentially claiming that after the bidding was opened on those ten (10) fountain pens, there is no evidence of any bids on the other six (6) and therefore they can be withdrawn.
- Is it reasonable to assume that a bid was made on all ten (10) fountain pens? Would it seem likely that the $5.00 bidder was bidding on all the fountain pens?
- Is it reasonable that Auctioneer Darren has no evidence of any other bids on the remaining fountain pens and therefore retains the right of withdrawal?
We could expand on our story a bit and say that the aforementioned “other bidder” not only cries foul, but also says to Auctioneer Darren, “I was the $5.00 bidder, and I would have taken all the fountain pens at that price.” Of course, do we know that this was the intent at the time of bidding or a revision of the actual intent?
However, more generally, does a bid for the right to purchase at an absolute auction constitute a bid on any particular item, or all items available? Since the $135 bidder could have take all ten (10) fountain pens then was a bid received on all those fountain pens?
Finally, did the initial bid of $5 for choice of fountain pens terminate the right of withdrawal entirely?
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.