1984, auction, Auction Law, auctioneer, auctioneers, auctions, bid calling, bidders, drunk, good faith bid, impaired, intoxicated, knowledge, last good faith, last good faith bid, seller, UCC 2-328, University of Arkansas School of Law
Today, we explore the rights (if any) a high bidder may have if someone drunk or otherwise impaired bids against him.
We broached this subject about a year ago here: https://mikebrandlyauctioneer.wordpress.com/2016/05/05/auction-bidder-drunk-high-or-otherwise-impaired/
The situation is this: A high bidder wins a piece of artwork at a benefit auction for $14,000. Later he learns that there were basically only two bidders: himself and another bidder who was drunk. The intoxicated bidder later admitted he had no idea what the bid was — or even what was selling …
We wonder if the high bidder (buyer) might have a valid claim for damages due to an auctioneer/seller taking bids against him from a drunk or otherwise impaired bidder? Would the taking of bids from someone drunk amount to taking bids which were not in “good faith?”
If the good faith argument holds, the UCC 2-328 suggests that any bids following a bad faith bid are all in bad faith. So, if this other [drunk] bidder started bidding at $8,000, then the high bidder might be able to claim title for $7,500 (the prior bid,) $6,500 less than his high bid of $14,000.
For those questioning the UCC’s last good faith claim, the legal community as a matter of course concurs that all bids following a “bad faith” bid are in bad faith. One such source for this opinion was a study published in 1984 by University of Arkansas School of Law.
However, does this argument change if the high bidder knows (is knowledgeable that) the other bidder is drunk? The bid would still be in bad faith if it was in an uninformed case — but would knowingly bidding against anyone in any known or obvious state of mind invalidate any monetary claim?
Or, would it not invalidate it, as when the seller is bidding in an auction without disclosure, it doesn’t matter if the other bidder knows (or doesn’t know) the other bidder is indeed the seller — other than when the high bidder is knowledgeable (or becomes such) he can state his claim.
I tend to think if an auctioneer/seller took bids from an clearly intoxicated bidder without the other bidder being aware, that such high bidder may have a claim, or at least might have a strong enough possible claim to result in some sort of settlement — but I’ve not seen a court case resolve this question yet.
Lastly, can an auctioneer take a bid from someone who is incompetent? Contracts require competent parties, so from a mentally-incompetent standpoint, any bids (offers/attempts to contract) from incompetent adults would be void (or voidable) on their face. We’ll explore this in more detail in the coming months …
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.