Auctioneers are presented with these situations, and usually have one or more of the three following questions:
- “Can I take his bid?”
- “If he ends up being the buyer, can he get out of paying?”
- “Should I refuse his bid?”
As we’ve previously noted, bid calling is a series of contracts: https://mikebrandlyauctioneer.wordpress.com/2014/08/11/bid-calling-is-just-numbers/. Further, contracts require three essential ingredients as we wrote about here: https://mikebrandlyauctioneer.wordpress.com/2009/12/01/the-essential-elements-of-any-contract/
Material to our discussion today, let’s establish that a contract requires competent parties and mutual assent (a meeting of the minds.) Lacking either, we either have a void or voidable contract, depending upon the circumstances.
Competence is a legal standing more than a medical condition. Typically, probate courts have jurisdiction to deem someone incompetent (as well, those under 18 are by default incompetent) and appoint a guardian. Just being forgetful, absentminded or even impaired by alcohol or drugs almost never suggests incompetence.
Mutual assent requires that both parties to the contract comprehend the terms. The courts have been fairly consistent that if one party is impaired by alcohol or drugs and they brought that condition on themselves without the other party forcing such condition, and the other party didn’t know of the impairment and didn’t take unfair advantage, that mutual assent will be deemed to exist.
So, back to our earlier auctioneer questions; can or should an auctioneer take this bid and will the buyer have recourse to get out of the contract? The answer depends first on what the auctioneer and seller have agreed to in their contract.
If the auctioneer provides the knowledge and receives the consent of the seller to unilaterally decide if a bidder is too impaired to have a bid accepted, then the auctioneer can make that call. However, the other issue is refusing a bid from someone who is perceived as impaired when that bid should be accepted.
It would seem to me fairly simple — take the bid if in question as it’s much easier to resolve this by reversing the transaction than not taking the bid and trying to explain why not — without the ability to reverse the transaction.
Could another high bidder (buyer) have a valid claim for damages by an auctioneer/seller taking bids against him from a a drunk otherwise impaired bidder? We’ll discuss that in a future blog post. For now, the answers to our aforementioned questions above are:
- Yes, certainly.
- Maybe, but likely not.
- Probably not.
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 Distinguished Faculty at Hondros College of Business, Executive Director of The Ohio Auction School and Faculty at the Certified Auctioneers Institute held at Indiana University.