I have read virtually every article, book and blog regarding auction law and/or customary practice that exists.
And I’ve sure seen some pretty wacky (and careless, even reckless) legal reasoning concerning auctions lately …
Yet, in all my years of studying the auction industry, I have never heard an argument in court quite this wacky — crazy. I feel compelled to share it with the auction community today.
In a recent case, a defendant’s attorney was arguing that they had the right to treat bidders differently — specifically have different or unique terms for various bidders at the same auction. We wrote about that here: https://mikebrandlyauctioneer.wordpress.com/2016/12/12/auctioneer-discretion-and-control-in-registering-bidders/
I responded to this assertion while serving as an expert witness. My answer was that you cannot have unique or different terms for different bidders for any particular (lot) property.
Much to my surprise, this attorney then asked me if disallowing any bidder from participating in an auction violated laws prohibiting “restraint of trade?” I believe my response was something along the lines of, “You can’t be serious?”
For those unfamiliar, (per Black’s Law Dictionary, Eighth Edition, Bryan A. Garner, Editor in Chief) restraint of trade is:
1. A limitation on business dealings or professional or gainful occupations. 2. Antitrust. An agreement between or combination of businesses intended to eliminate competition, create a monopoly, artificially raise prices, or otherwise adversely affect the free market. – Restraints of trade are usu. illegal, but may be declared reasonable if they are in the best interests of both the parties and the public.
Of course, a seller and auctioneer can set auction registration requirements which are in their best interest, and these same requirements must be reasonable for the bidders and the public, or they won’t participate — thus injuring the seller/auctioneer.
Further, there is absolutely no legal precedent that dictates that auctions have to be open to everyone, independent of their ability to meet the registration requirements or capacity to pay — only that those minimum requirements (and thus the terms and conditions) are consistent and reasonable.
Equally noteworthy is the definition of restraint of trade in that it is illegal unless reasonable — as in the best interests of everyone involved. Our prior discussions regarding reopening a so-called missed bid used the nearly identical premise — as can be seen here: https://mikebrandlyauctioneer.wordpress.com/2016/08/11/what-is-a-missed-bid/
Can/should you treat registered bidders differently other than by bid price? No. Can/should you treat members of the public different by having registration requirements which would necessarily allow some to participate, and others to not participate? Of course.
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, RES Auction Services 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.