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A210-15Auctioneers work as agents for sellers (and/or themselves.)

They market real and personal property and then coordinate the realization of the highest bid generally through a competitive manner.

This competitive manner involves creation of contracts, which most know involve a meeting of the minds formed by offer and acceptance.

Our question day is, “Can an auctioneer reject an offer?”

The answer is, “Certainly” — depending upon the circumstances; let’s take a look.

There are two types of auctions in the United States: With reserve and without reserve. We explained these two types here:

Given any auction is only one of the two types (and not neither nor both,) here’s the law regarding when an auctioneer can reject an offer.

With reserve auction

    • Anytime prior to the “fall of the hammer” (or the word, “Sold!”) any offer may be rejected
    • Anytime the offer is not higher than a previously accepted offer, or counter to terms, the offer must be rejected
    • Anytime after the “fall of the hammer” (or the word, “Sold!) any offer — except the one accepted — must be rejected

Without reserve auction

    • Anytime prior to the “calling for bids” any offer may be rejected
    • Anytime after the “calling for bids” if no bid is received within a reasonable time any offer may be rejected
    • Anytime the offer is not higher than a previously accepted offer, or counter to terms other than minimum increments, the offer must be rejected
    • Anytime after the “fall of the hammer” (or the word, “Sold!) any offer — except the one accepted — must be rejected

The key difference between these two types of auctions in this regard is the without reserve auction prohibits the rejection of an offer between the calling for bids and the reasonable time of no bid received, so long as it’s higher than any previously accepted offer and not counter to terms other than minimum increments.

The “minimum increments” issue is material. In a with reserve auction, minimum increments are permitted, such as requiring the next bid to be at least a certain fixed amount more than the prior bid. However, in a without reserve auction, minimum bid increments are not permitted; so long as the higher bid is higher by any amount it cannot be rejected.

Lastly, we say that in a with reserve auction, any offer may be rejected prior to the “fall of the hammer.” While that it true, rejecting a higher offer and then with the fall of the hammer firming a previous lower offer, or rejecting a higher offer and then withdrawing the lot altogether, would be unconventional.

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.