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No sooner than we write about the UCC 2-328 and how it applies to real estate, we are asked today by an attorney if the UCC 2-328 applies to online auctions. In turn, we asked that attorney, “Why wouldn’t it?”

Despite there not being any licensing law for online auctions in most states, there is contract law and related statutes which courts use to make decisions. One such body of law is the UCC 2-328.

The UCC 2-328 was finally firmed as to language about 1952. Since then, all states have adopted the UCC 2-328 into their state law except for Louisiana. Louisiana courts rule as if it was adopted, interestingly enough, so one might fairly perceive the UCC 2-328 applies in all 50 of the states in the United States.

The UCC 2-328 doesn’t include the word, “online” and thus doesn’t address specifically if it does or does not apply to online auctions. For that matter, the UCC 2-328 doesn’t include the word, “live auction” either, but is applied to live auction litigation cases every day in the United States.

I’ve noted that some say that since many states don’t define an “auction” in their license law statutes to include online auctions, an online auction would not be considered an “auction,” but rather just an “online market.”

I would disagree however, as the word “auction” is well established and fairly generic in describing competitive bidding resulting in something being sold. Common law would suggest the word, “auction” can be used to describe a method of selling, absent actually defining it as such in state law. Further, the UCC 2-328 is typically adopted separate from associated license law.

In fact, I find the 2010 case:

    Donald A. Simmons and Leslie Simmons v. Danhauer & Associates, LLC and Proxibid, Inc., The United States District Court for the District of South Carolina, Case # C.A. No. 8:08-CV-03819-JMC

In this case, the UCC 2-328 was specifically used to determine an online auction was to be characterized as a “with reserve” auction.

The District Court noted “In an auction with reserve the auctioneer may withdraw the goods at any time until he or she announces completion of the sale. See S.C. Code Ann § 36-2-328 (2009); N.C. Gen. Stat. §25-2-328 (2009)”

Does the UCC 2-328 apply to an online auction? In a courtroom in the United States, chances are nearly certain it does.

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 is adjunct faculty at Columbus State Community College and is Executive Director of The Ohio Auction School.