The UCC § 2-328 (Sale by Auction) only has nine sentences, but they all are widely misunderstood. Here we take a look at sentence #3, shedding some light on what it means. Here is this third sentence:
Where a bid is made while the hammer is falling in acceptance of a prior bid the auctioneer may in his discretion reopen the bidding or declare the goods sold under the bid on which the hammer was falling.
We mentioned that these nine sentences are widely misunderstood. Here we continue to venture into maybe the “most misunderstood” area. This third sentence is all too often viewed as the “tie bid provision” despite it being anything but. This sentence actually permits the auctioneer to reopen the bid [or not] if a higher (not tie) bid is made as the auctioneer completes the sale.
Further, we emphasize here in this provision that this permission regards “as the auctioneer completes the sale” and not before nor after. As such, this sentence doesn’t address reopening of the bid if a bid comes in (but is not received/accepted) prior to completion, nor if a bid comes in after the completion of the sale (received or not.)
Is there case law here that we can analyze? There sure is: first, in Hoffman v. Horton, 212 Va. 565, 186 S.E.2d 79 (Va. 1972) and then again in Callimanopulos v. Christie’s Inc., United States District Court for the Southern District of New York, 621 F. Supp. 2d 127 (2009) courts ruled in regard to this reopening clause. As these cases have been regularly mischaracterized we clarified those rulings here in 2016: https://mikebrandlyauctioneer.wordpress.com/2016/08/05/two-confusing-auction-cases/
Despite any discussion regarding reopening the bid — anytime, for any reason — we ask somewhat rhetorically … is it ever prudent to reopen the bid? We offer that it is not. If auctioneers genuinely want to protect their sellers/clients, then when they say, “Sold!” they should leave that property as such, and move on to the next so-called lot. As we reviewed the UCC 2-328’s official comments in preparation for a trial some time ago, we noted what the intent of this sentence was as-written, and our advice for managing it: https://mikebrandlyauctioneer.wordpress.com/2017/03/23/when-can-auctioneers-reopen-the-bid/
Lastly, one subtlety that is often overlooked here in sentence #3, is that it is a bid made (and necessarily not received nor accepted) as the hammer falls is the qualifier. In other words, if an auctioneer said, “Sold!” and just then … was notified that a bid was indeed made between the “S” and the “D,” he would have the authority to reopen the bid, even though ill-advised.
We might then wonder how long an auctioneer conceivably has to reopen the bid after “Sold!” when a bid came in as the hammer fell? It would appear from our discussions with various prominent attorneys around the country that this right would have to be exercised in the moment — contemporaneously and not minutes, hours, days, months later … and further that any reopening is absolutely short-sighted and unwise.
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.