The UCC § 2-328 (Sale by Auction) only has nine sentences, but they all are widely misunderstood. Here we take a look at sentence #2, shedding some light on what it means. Here is this second sentence:
A sale by auction is complete when the auctioneer so announces by the fall of the hammer or in other customary manner.
We mentioned that these nine sentences are widely misunderstood. Here we venture into maybe the “most misunderstood” area. This second sentence implies that when the auctioneer says, “Sold!” it’s over, and that an auctioneer could use the word, “Sold!” or other manner (maybe “You win!” or bang a gavel) to indicate that any particular lot up for auction is now in contract with the seller agreeing to sell and the buyer agreeing to buy.
If we look at this second sentence alone, it seems fairly clear-cut. And I would argue that it is (or should be) about this clear-cut. Further, when auctioneers attempt to treat this “fall of the hammer” with discretion — bad things are likely to happen; what might appear to be helping the seller entertain a bid after “Sold!” is just as likely to put the seller just after the “v.” in a lawsuit.
Worse yet auctioneers attempt to use discretion in a capricious or arbitrary manner. I’m going to reopen the bid here in this case, but later not reopen the bid in another case. This type of behavior moves the needle from “likely being a defendant” to almost begging to be a defendant. We’ve argued that any voiding of a sales contract at auction should constitute consistent, uniform behavior so basically either always do it, or never do it.
So, we would ask you as an auctioneer to decide — do you want to always reopen the bid or never reopen the bid? Once you answer that question, you have your policy and then we recommend you stick to it (be consistent.) And we suspect we know your answer to this aforementioned question and that’s (likely) good for you and the auction industry as a whole: https://mikebrandlyauctioneer.wordpress.com/2017/07/28/the-integrity-of-the-bidding-process/
Lastly, we are well known to hold that any reopening (voiding contracts uniformly or capriciously) can only be done (should only be done) in one specific situation — that we’ll talk about that in our next article. Otherwise, inventing concepts such as “tie bids” or “missed bids” is foolhardy. We’ve written about so-called “tie bids” here: https://mikebrandlyauctioneer.wordpress.com/2016/07/28/terms-which-say-there-are-tie-bids/. We’ve written more than once about so-called “missed bids” including here: https://mikebrandlyauctioneer.wordpress.com/2016/08/11/what-is-a-missed-bid/
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, an Instructor at the National Auctioneers Association’s Designation Academy and Faculty at the Certified Auctioneers Institute held at Indiana University.