We’ve studied the UCC 2-328 extensively and written several articles about it over the years.
It remains today the most misunderstood 254 words in the auction world — by far.
The UCC 2-328 says lots of things: There are only two types of auctions, the high bidder may retract his bid, the auctioneer may reopen the bid, etc.
Today, we summarize 13 things the UCC 2-328 doesn’t quite say nor qualify, and our thoughts concerning. Are these the only 13 things the UCC 2-328 doesn’t say? Not hardly, but these here are often discussed.
- Can someone bid a negative bid?
- It’s long been thought the lowest offer (bid) a bidder could tender is one cent. What about less than that? What about less than zero cents? I think a negative number bid is legitimate.
- Retraction while the hammer is falling?
- The code talks about the auctioneer reopening a bid if a bid is made as [while] the hammer is falling. Likewise, can the high bidder retract as the hammer is falling? I believe this same right might well extend to the high bidder.
- Can the auctioneer withdraw beyond receiving a bid after reasonable time?
- At absolute auction, a lot can be withdrawn after no bid is made within a reasonable time. Does this right of withdrawal remain after a bid is accepted subsequent to this deadline? I appears to me the code allows withdrawal after the reasonable time.
- Does it apply to online auctions?
- The code was written in regard to live auctions. Do these same rules apply to online auctions? It seems clear it applies to all auctions.
- Does it apply to real estate?
- The code was written in regard to personal property at auction. Does it apply equally to real property? It seems clear it applies to all auctions.
- How long is “reasonable time?”
- The code uses the words “reasonable time.” How long is that? It can be gauged by how long other events take at this same or similar auction.
- What does “put up” mean in regard to a without reserve auction?
- The code uses the words “put up.” What constitutes putting something up for auction? I believe it all starts with the contract signing.
- Who has the right of withdrawal? Seller? Auctioneer?
- The code notes property can be withdrawn under certain circumstances. Who holds that right? Clearly the auctioneer can exercise this right, but the seller maintains that right as well.
- When is property considered “up for bid?”
- When does the code suggest something is “up for bid?” What signals the start of the auction? An auction starts when the auctioneer actually or constructively notes it starts.
- When is an auctioneer legally calling for bids?
- What particular action constitutes the auctioneer calling for bids? It seems clear an auctioneer is calling for bids when he actually calls for bids or implies he’s open for bids.
- What bid is identified as the “last good faith bid?”
- A buyer has a right to property for the last good faith bid in certain circumstances. How is the last good faith bid established? The last good faith bid is the last bid before the first bid made in bath faith.
- Can you change the type of auction?
- Before the auction starts? Yes. However, once it’s underway, such a change is at best ill-advised or worse illegal.
- Does any initial bid have to be accepted at an absolute auction?
- Seemingly any bid would have to be accepted initially. However, the code only indicates when a bid is made, an absolute auction cannot be withdrawn, but not that the bid must be accepted.
Relatedly, we wrote about the 15 most misunderstood things regarding the UCC 2-328 here: https://mikebrandlyauctioneer.wordpress.com/2013/09/02/the-15-most-misunderstood-things-about-the-ucc-2-328/
An understanding of the UCC 2-328 is paramount for every auctioneer in the United States. The costs for ignoring or not understanding the UCC 2-328 can be substantial, and are largely avoidable with some study of this important treatise.
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.