Bill is the high bidder at $1,000 and the auctioneer is asking for a bid of $1,100.
The auctioneer sees Aaron wave, and takes that as a bid of $1,100.
The auctioneer then asks Bill for a bid of $1,200. Bill declines to bid $1,200 and no other bidders bid $1,200.
The auctioneer points to Aaron and says, “Sold!” for $1,100.
Aaron says, “I wasn’t bidding, I was waving at my brother … sorry!”
The auctioneer asks Bill, “Are you still good at $1,000?” and Bill says, “Nope.”
The auctioneer says, “Let’s start over … who’ll give me $500?”
Despite how common this might be, it may well be contrary to oral auction contract law.
When Bill is the high bidder at $1,000 there is a contract between the seller and Bill for $1,000. There are only two (three) ways in which this contract may be upset: A higher bid or bidder retraction (or seller withdrawal.)
Even though the auctioneer accepted Aaron’s wave as a bid for $1,100, it was in fact not a bid at all. Therefore, it would not qualify as a higher bid, upsetting the bid with Bill. So, at that moment Bill is still the high bidder at $1,000 even as the auctioneer asks him to bid $1,200.
Further, as the auctioneer says, “Sold!” thinking Aaron is the high bidder, the contract with Bill (and necessarily not Aaron) is firmed.
Generally, I hear one of four arguments against this theory:
Contracts must have mutual assent (a meeting of the minds.) Since the auctioneer thinks the property sold to Aaron for $1,100 when in fact Bill is the high bidder at $1,000 — there is no meeting of the minds.
- However, the auctioneer is not a party to this contract. Bid calling contracts are formed between sellers and buyers.
- Prior bids are not revived once a higher bid is accepted. Since a bid of $1,100 was accepted, the $1,000 bid is void, and is not revived once the $1,100 bid is deemed invalid.
- However, the auctioneer didn’t receive a bid of $1,100 so there is no higher bid made.
- The auctioneer is asking Bill to bid $1,200, suggesting that the auctioneer is telling Bill he is out. If Bill is on for $1,000, he can’t be out and required to bid $1,200 to be back in as the high bidder.
- However, just because the auctioneer tells Bill he is out doesn’t make him out. Bill is in fact the high bidder at $1,000.
- The auctioneer said, “Sold! for $1,100 to Aaron.” No way this is sold to Bill for $1,000.
- However, it doesn’t matter what the auctioneer says after “Sold!” because the contract is already formed at that point; the auctioneer cannot unilaterally then change the amount and/or buyer.
Does bid calling form contracts? Certainly, as we discussed here: https://mikebrandlyauctioneer.wordpress.com/2009/11/21/does-bid-calling-form-contracts/
What if the auctioneer says, “Sold!” for the wrong amount (or the wrong bidder?) We discussed here: https://mikebrandlyauctioneer.wordpress.com/2010/12/25/auctioneer-says-sold-for-wrong-amount/
Lastly, what if the auctioneer didn’t say, “Sold!?” If Bill is on for $1,000 and Aaron’s wave is accepted as $1,100, and then the auctioneer asks Bill for $1,200 … what if Aaron at that moment, says, “I wasn’t bidding … I was waving?”
In this case Bill is still on at $1,000 since that contract is never voided with a higher bid. However, if Aaron did bid $1,100 and then retracted his bid, Bill would not be on at $1,000 as no prior bids are revived.
We wrote about high bidder retraction here: https://mikebrandlyauctioneer.wordpress.com/2009/12/04/can-the-auction-bidder-say-never-mind/
“Sold!” to the previous bidder? Not really; sold to the high bidder.
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.