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Photograph courtesy of Art & Visual Materials, Special Collections Department, Harvard Law School Library

Photograph courtesy of Art & Visual Materials, Special Collections Department, Harvard Law School Library

In the United States, an extraordinary amount of study and writings have been completed concerning contract law.

Our system here is primarily of common law, derived from preceding English law.

For auctioneers, contracts are everywhere.

Auctioneers sign contracts with sellers, enter into contracts with bidders, and oversee the formation and completion of contracts between sellers and buyers.

Probably no other individual has provided more writing and foundation for modern-day contract law than Harvard Law School Professor Samuel Williston. Among his numerous publications, Williston authored “Commercial Law” for the American Institute of Banking with the assistance of Richard D. Currier and Richard W. Hill in 1921.

Williston explained in this promulgation, as well as in numerous other works, the subtle but important difference between a “with reserve” auction and a “without reserve” auction.

Another state of affairs involving preliminary invitations is presented by auction sales. The auctioneer puts goods up for sale, a bid is made, the auctioneer gets no other bid, and then says, “I will withdraw this from sale.” Is the auctioneer liable? Has he made a contract to sell that article to the highest bidder? When the transaction is analyzed, is this what the auctioneer says in effect: “I offer to sell these goods to the highest bidder?”

If this is the correct interpretation, then when the highest bidder says, in effect, “I agree to buy them,” there would be a contract. On the other hand, if what the auctioneer says is in effect like what the advertiser says: “Here are some goods for sale, what do you bid, gentlemen,” then the auctioneer is not making an offer himself. He is inviting offers from the people before him, and until he accepts one of those offers from the bidders before him there would be no contract; and until then the auctioneer could withdraw the goods.

And that is the construction put upon the auction sale — that the auctioneer is not making an offer, but is simply inviting offers. Even if the auctioneer promises that he will accept the highest offer, that is, that he will sell to the highest bidder, his promise to accept the highest bid, not being paid for, would not be binding upon him were it not for a statute in some States which, in the sale of goods, would make an auctioneer bound to keep a promise to sell without reserve, that is, to the highest bidder, if he made such a promise.

I have quoted Williston numerous times over the years, and his thoughts on the key differences between offering and inviting offers is paramount for auctioneers — as well as the general public — to understand.

Contracts are formed, for better or worse, by one party offering — and which party is doing that is of chief concern.

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. He serves as Adjunct Faculty at Columbus State Community College, Executive Director of The Ohio Auction School and Faculty at the Certified Auctioneers Institute held at Indiana University.