absolute, auction, Auction Law, auctioneer, auctioneers, auctions, bidders, contract, no bid within, reasonable time, sagacious, sold, UCC 2-328, Vaughan v Menlove, withdraw, withdrawal, without reserve
Bib has held over 10,000 auctions in his career — mostly livestock, farm equipment and real property.
Today, Bib is holding an auction for the Estate of Fred Phillips. Marissa Phillips, Fred’s daughter, is the executor of her father’s estate, and has hired Bib to sell the Estate’s remaining farm equipment, tools and household items.
The auction is well attended, with over 500 bidders registered and many more in attendance. Bib’s known for his quick selling and sells 2-3 items a minute — even at 87 years old. As well, every one of Bib’s auctions are, “without reserve” and everyone knows that when it’s Bib’s auction, “it all sells.”
With about one-half of the auction complete, Bib asks for bids on a somewhat weathered antique anvil and block. Bib asks for an opening bid of $75 and hears nothing. He then asks for $50 and still nobody bids. Bib then asks $10 and nobody bids — and Bib says, “Well, since nobody wants it, we’ll leave it sit right here.”
Just then, a bidder yells out, “I’ll give you $5.00 to open it Bib …”
Bib replies, “Nope, we’re going to pass it, and move on to this tool chest.”
But, the bidder insists, “Bib, this is an absolute auction — you can’t no-sale anything here today … I’ll give you $5.00 for it.”
Bib stands his ground. “Sir, I’ve been an auctioneer longer than you’ve been alive … If I don’t get a bid on an item within a reasonable time, I can indeed pass it, and that’s what I’m going to do right here.”
Yes, Bib is right — exactly right in fact. The UCC 2-328 as adopted by all states except Louisiana states:
- 2-328 (3) Such a sale is with reserve unless the goods are in explicit terms put up without reserve. In an auction with reserve the auctioneer may withdraw the goods at any time until he announces completion of the sale. In an auction without reserve, after the auctioneer calls for bids on an article or lot, that article or lot cannot be withdrawn unless no bid is made within a reasonable time. In either case a bidder may retract his bid until the auctioneer’s announcement of completion of the sale, but a bidder’s retraction does not revive any previous bid.
Our question here today is, what does “reasonable time” mean?
Did Bib wait a reasonable time before he withdrew the anvil and block? Did the $5.00 bid come in before — or after — a reasonable time after the anvil and block was opened for bid? How long does Bib need to be open to offers before he can deem an item has be open for bids for a reasonable time without any bids, and withdraw the item?
West’s Encyclopedia of American Law says reasonable time is:
- In the absence of an express or fixed time established by the parties to an agreement or contract (especially one that falls under the purview of the Uniform Commercial Code [UCC]), any time which is not manifestly unreasonable under the circumstances. For example, if a contract does not fix a specific time for performance, the law will infer (and impose) a reasonable time for such performance. This is defined as that amount of time which is fairly necessary, conveniently, to do what the contract requires to be done, as soon as circumstances permit. The term “reasonable time” has other (related) applications: UCC 2-206(2) requires that acceptance of an offer be made within a “reasonable time” if no time is specified.
- The reasonableness or unreasonableness of time used or taken by a party may be the subject of Judicial Review in light of the nature, purpose, and circumstances of each case. In considering whether there has been unreasonable delay in performance, a court may also consider other factors such as prior dealings between the parties, business routine or custom within the trade, and whether there were any objective manifestations of expectation expressed between the parties.
Many feel that in the case of Bib withdrawing the anvil and block after 15 seconds or so would constitute very reasonable time, citing what is customary within the trade.
Auctioneers around the United States sell personal property at a pace of 2-3 items per minute. If Bib is selling items every 20-30 seconds or so, he’s quite likely receiving bids within a few seconds of opening an item, on average. For Bib (and most auctioneers,) waiting 15 seconds would be five-times as long as it usually takes to receive an opening bid.
And more good news for Bib. As West’s Encyclopedia of American Law infers, that $5.00 bidder had that amount of time which is fairly necessary and conveniently, to do what the contract requires to be done, as soon as circumstances permitted.
In this case, Bib extended a collateral contract to all bidders to sell the anvil and block. Did the $5.00 bidder (or any other bidder) act within the amount of time fairly necessary and conveniently, as soon as circumstances permitted? It would seem not.
What amount of time is not reasonable? If Bib had said, “Somebody give me $75 for this anvil and block … well, let’s just pass it,” does that constitute reasonable time? I suspect most courts would rule that only a few seconds would not constitute enough time to fairly and conveniently bid.
Lastly, the famous English court case Vaughan v Menlove (1837) 132 ER 490 (CP) spoke of a “reasonable person.” The court essentially noted that rather than judging individual behavior, courts should rather gauge behavior compared to a man of ordinary prudence. In other words, it isn’t what the $5.00 bidder considers reasonable, but what a bidder of ordinary prudence would consider reasonable.
The UCC 2-328‘s use of the words, “reasonable time” constitute a circumstantial and uncertain value. Therefore, in a without reserve (absolute) auction, bidders are cautioned to bid as soon as they can to guard against items being withdrawn — and sagacious auctioneers will wait at least a bit beyond a reasonable time to withdraw an item.
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.