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ohioauctioneerI teach a lot of auctioneer continuing education around the United States.

Most recently, I’ve asked a particular question during these classes and sense virtually no consensus as to the answer.

The issue regards the UCC 2-328 and the words “put up” in regard to when property is sold without reserve.

The exact passage is here:

Such a sale is with reserve unless the goods are in explicit terms put up without reserve.

In the United States — except for Louisiana — all auctions are with reserve unless otherwise explicitly put up as without reserve. So what does “put up” mean?

There seems to be at least four theories about when property is put up [without reserve] for auction: When …

    1. The seller signs the contract.
    2. It is advertised for auction.
    3. Such is announced/disclosed at the auction.
    4. That particular property is presented for bids.

We believe any one of these circumstances might be interpreted by a court as “putting up” property for auction.

When the seller signs a contract for property be sold, is that putting it up for auction? When that advertising is placed, is that putting it up for auction? When the auctioneer announces such, is that putting it up for auction? When that particular property is offered, is that putting up?

We interpret this ” … explicit terms put up without reserve” isn’t the same as simply putting up property for auction. Clearly, putting something up for auction involves identifying the property and inviting offers, where putting something up without reserve would involve something more intrinsic to the wishes of the seller.

A county court only a few years ago in a case for which we were consulted concluded that putting property up for auction was essentially accomplished by the seller and auctioneer signing the contract — similar to a home being considered put up for sale (listed) at contract signing in a traditional brokerage environment.

Furthering this court’s view, it seems once the contract is signed indicating the property is to be sold without reserve, the auctioneer would have no choice but to do so; conducting the auction in a with reserve fashion would constitute a breach of contract.

And relatedly, if the contract says property is to be sold with reserve, then the auctioneer must follow that legal direction as well. In other words, as the contract is written the auction must be conducted.

For any auction, it is important there is a clear, consistent format maintained from contract signing to “completion of the sale.” Any other plan is ill-advised regardless of what you believe constitutes putting up property without reserve.

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 Hondros College of Business, Executive Director of The Ohio Auction School and Faculty at the Certified Auctioneers Institute held at Indiana University.