The UCC 2-328 is the most important 254 words for any auctioneer in the United States.
A particular 11 words are of interest today:
- In an auction without reserve, after the auctioneer calls for bids on an article or lot, that article or lot cannot be withdrawn unless no bid is made within a reasonable time.
Our question is: When is an auctioneer legally calling for bids?
Jamie is an auctioneer who is conducting a without reserve (absolute) auction of a single family home in Santa Clara, California. The auction is set to start at 1:00 p.m. As the start time nears, Jamie readies his sound system and prepares to make his opening announcements.
“Welcome everyone! Have all of you received a bid number and read over the terms and conditions for our auction today?”
Just then a bidder yells to Jamie, “Hey Jamie, I’ll start you out at $50,000 …” Jamie, somewhat startled, replies, “That’s great … but we’ve not quite called for bids yet as I have a few other announcements.”
Jamie continues with the additional announcements noting that the seller will be providing clear title, and the installed water softener remains with the property when this same bidder yells, “I’ll start you out at $50,000 …”
Jamie replies again that he hasn’t quite called for bids yet …
Jamie continues, “Folks, are there any other questions about our auction today? Seeing none, let’s get underway …”
Certainly expecting to hear from the now famous “$50,000 bidder” Jamie looks out towards the crowd. “I’ll start you out at $50,000” yells that same bidder.
At that very moment, a Santa Clara County Sheriff’s car screeches to a stop just across the street. The County Sheriff gets out and walks towards Jamie. “This auction is cancelled … I’ve got a court order in hand.”
Jamie repeats the Sheriff’s announcement, and begins to walk towards the Sheriff. “What’s the issue?” inquires Jamie. “I don’t know — we’ll sort it out tomorrow morning downtown.”
And the auction is cancelled.
The next morning Jamie finds himself standing in a Santa Clara County courtroom in front of Judge Darren Williams. Judge Williams reads from the order that a motion filed yesterday asks the auction of 928 Meridian Steet, Santa Clara, California to be delayed until a federal government title claim is cleared.
Jamie and his attorney are a bit surprised. This federal lien was settled about a month ago. Jamie’s attorney Trisha Pollock asks to approach the bench and she discusses the case for 15 minutes with the Judge. Despite Trisha’s pleading, Judge Williams announces that the auction is indeed cancelled, as this motion is upheld.
Just then Jamie hears a familiar voice. In the back of the courtroom is that “$50,000 bidder” at the auction yesterday, with someone who looks like maybe his attorney.
The bidder is Eddie Sams. Eddie’s attorney is Ralph Brown, who approaches the bench to talk with Judge Williams. After another 15 minute discussion, Judge Williams asks Trisha Pollock and Jamie to join him and Ralph Brown in chambers.
Judge Williams asks Trisha about the “$50,000 bid” that was made at the auction. Judge Williams proposes that the property be withdrawn, but Ralph says that the auction cannot be cancelled because at an absolute auction, once the auction is opened and there is a calling for bids — and a bid is made within a reasonable time — the property cannot be withdrawn.
“Was there a calling for bids?” asks Judge Williams. Trisha looks at Jamie who says, “I don’t believe so …” Yet, Raplh submits that indeed Jamie called for bids even though he maybe didn’t utter those words.
“How’s that possible?” asks Judge Williams. Ralph continues, “Your honor, the auctioneer clearly identified the subject property, and after going over the terms and conditions, there was nothing else left but to be open to offers. My client made an offer of $50,000 at that point, so the property cannot be withdrawn.”
Judge Williams looks down to his papers and after a few minutes says, “So, you’re proposing an implied calling for bids, versus an expressed calling?” “Exactly,” Ralph replies.
“Interesting,” Judge Williams says. “Let me consider and I’ll get back to you.”
About three weeks pass, and Trisha Pollock’s phone rings. “Judge Williams here Trisha. I’ve come to a conclusion on your auction case.”
Judge Williams continues … “Trisha, I was sitting in Vern’s the other night … in fact had just sat down. A new server came by and asked if I would be interested in a drink or an appetizer. I hadn’t expressly said, ‘I’m open to an offer’ but rather I put myself in a circumstance where it was clear I was open for offers. I’ll courier over my findings this morning. You have a good day.”
What had Judge Williams concluded? He concluded that if the article or lot is clearly identified, and there are no more material terms and/or conditions to pronounce, that article or lot (or property) is open for bid, and the auctioneer has by implication, “called for bids.”
Auctioneers have traditionally thought of, “calling for bids” as solely an expressed action. I suspect a narrow circumstance of implied, “calling for bids” has equal effect.
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.