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While teaching a CLE (continuing legal education) class for attorneys, I was asked about the phrase, “Suggested opening bid,” and in particular coupled with an absolute auction.

For instance, a newspaper advertisement, online advertisement and/or sign which said, “This is an absolute auction with no minimum bid, reserve, or right to reject the high bid — but we suggest you open the bidding at …”

Today, I’ll address basically two questions in this regard, with my analysis:

  1. By suggesting an opening bid for an absolute auction, does such advertising represent misrepresentation or a potentially deceptive practice?
  2. Does the suggesting of an opening bid at an absolute auction constitute the legal “commencing” of the auction?

I wrote about nominal opening bids …

Does “suggesting” an opening bid commence the auction? In an absolute auction … what if a bid is received?

I wrote about asking for bids prior to auction …

We’ve previously said that auctions only and strictly begin when the auctioneer so denotes “in unmistakable language.” Such might be, “Folks, the auction is underway and who’ll open the bid on this first item …”

Why suggest an opening bid? I suppose auctioneers want to hint as to the value of the property — or tease the public with what hopefully is a value below perceived value.

Does suggesting it potentially open the auction? I don’t think so, as a printed advertisement with a date/time of an auction, and a “suggested opening bid” clearly is not using unmistakable language to open the auction prior.

However this practice of having an absolute auction with a suggested opening bid seems aberrant. An absolute auction would normally have a suggested opening bid — at the auction, proclaimed by the auctioneer — but not prior in advertising.

At best, suggesting an opening bid in an absolute auction is confusing. Is the suggested opening bid a minimum? Is this not really an absolute auction? Does that advertised suggestion necessarily need to match the actual suggestion at the commencement of the auction?

Mixing an absolute auction with any type of minimum, reserve or other such limiting condition is illegal in the United States. Given the limited actual value of such a proclamation, I advised these attorneys that the benefit was not worth the potential cost (liability.)

These 45 attorneys agreed.

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.