It seems to me that when the UCC 2-328 was written, it was to essentially make bid calling somewhat consistent in the United States, and in some ways, level the playing field between the seller and bidders (buyers.)
One such “playing field” issue is that outside of seller withdrawal, the buyer may retract his bid anytime before the property is deemed sold, and the auctioneer — on behalf of the seller — may accept a higher bid anytime before the property is deemed sold.
For example, if Frank is the high bidder at $750 on a Smith & Wesson M&P9 9mm handgun, he can excuse himself from that bid by retracting his $750 bid, and the seller (via the auctioneer) may excuse himself from that bid by accepting a higher bid, so long as either precedes the falling of the hammer.
- A sale by auction is complete when the auctioneer so announces by the fall of the hammer or in other customary manner. Where a bid is made while the hammer is falling in acceptance of a prior bid the auctioneer may in his discretion reopen the bidding or declare the goods sold under the bid on which the hammer was falling.
From this, as we’ve discussed in auctioneer continuing education classes across the United States, this allows the auctioneer to accept (or not) a bid which comes in “while the hammer is falling.” Our question today is: Is this same right extended to the bidder who wishes to retract his bid “while the hammer is falling?”
Let’s say Frank is the high bidder on this Smith & Wesson M&P9 9mm handgun at $750 and just as the auctioneer utters the word, “Sold!” Frank retracts his $750 bid. Our questions are:
- Must the auctioneer hold Frank to this $750 sale price?
- Can the auctioneer unilaterally accept/reject Frank’s retraction?
- Must the auctioneer accept Frank’s retraction?
If we assumed in the spirit of leveling the playing field, that the retraction is to be treated the same as a higher bid, then the auctioneer can either allow the retraction, and start the bidding over, or bind Frank as the high bidder at $750 — and it is the auctioneer’s choice alone.
Yet, the UCC 2-328 makes no reference to this situation.
If we refer to basic contract construction, if an offeror retracts (withdraws) his offer [and is communicated] before the offeree accepts the offer, the acceptance cannot be binding upon the offeror.
Our question then remains, however, if the retraction at auction “while the hammer is falling” is indeed considered a valid retraction? We ask since a higher offer made “while the hammer is falling” can be accepted or not.
By applying basic contract construction to both a higher bid and retraction, it would seem that the higher bid would be binding upon the seller so long as the hammer did not fall completely. Too then, these same rules would apply to retraction. But the UCC 2-328 is not written this way.
If Frank yells to the auctioneer, “I retract my bid” just as the auctioneer is announcing this Smith & Wesson M&P9 9mm handgun, “Sold!” to Frank for $750, what must (or what can) the auctioneer do?
I suspect the retraction is binding, and the auctioneer cannot hold Frank to this $750 contract. I also suspect a court case will eventually clarify this issue.
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.