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computerproblemAn online-only auction: An auction where, for example, property is opened for bid on Monday at 9:00 a.m. EST and bidding concludes on Friday at 9:00 p.m. EST with bids submitted electronically.

An absolute auction: An auction where once a lot (property) is put up for bid, and a bid is received within a reasonable time, the lot (property) cannot be withdrawn.

A significant problem: A computer crash or outage of some sort.

Given that for an absolute online-only auction, the auctioneer has opened the auction when the online-only auction begins, and bids are likely received within a reasonable time (or sometime prior to the “significant problem,”) the items (property) with bids cannot be withdrawn.

Yet, a computer crash or outage would likely be considered a withdrawal — even if short-term — similar to conclusions in decades of live auction case law.

It’s fair to say that laws in the United States, and in particular the UCC 2-328 have not kept up with technology. However, those are the applicable laws.

Some say that the solution is in the auctioneer’s terms and conditions. For example, the auctioneer could say that, “In the event of computer malfunction, the auctioneer reserves the right to …”

The problem with that so-called solution is two-fold: An absolute auction cannot have a reserve and terms and conditions cannot generally override state law.

We previously wrote about auction bidders agreeing to terms and conditions thus waiving rights granted by state law:

To address our two questions posed earlier:

    1. Can you have an absolute online-only auction? Yes.
    2. Should you have an absolute online-only auction? No.

A possible solution for those auctioneers wanting the benefit of an absolute auction and selling online-only: Maybe instead have a “with reserve” auction, but have the reserve at $0?

We explored that idea here: https://mikebrandlyauctioneer.wordpress.com/2010/08/13/can-the-auction-reserve-be-0-00/

Given the likelihood of a computer crash or outage, causing the auction items (property) to be viewed as withdrawn, it’s certainly better to be having a “with reserve” online-only auction, rather than a “without reserve” (absolute) online-only auction.

In fact, much better.

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.