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We have discussed the UCC 2-328 extensively in classes around the United States, as well as in several articles contained within this blog. One such UCC 2-328 subject keeps being discussed (asserted) and we explore further here.

Our topic today attempts to [again] explain our contention that the UCC 2-328 allows an auctioneer discretion to reopen the bid if a bid is made “while the hammer is falling” in acceptance of a prior bid. We contend this is textually somewhere between the S and the D in the word “Sold!”

In 1972, The Virginia Supreme Court may have shed the most material light on this subject by ruling in the famous auction case Hoffman v. Horton, 212 Va. 565, 567, 186 S.E.2d 79 (1972). Here the Court ruled that an auctioneer may reopen the bidding if a bid was made “prior to or simultaneously with his final “fist in his palm.” We note here again that this isn’t extraordinary — in that the bid can indeed be reopened if a bid is made “while the hammer is falling” including prior or simultaneously with when the hammer has fallen.

So, in this 1972 case we contend this “fist in his palm” is essentially the “D” in “Sold!” in today’s market (although this auctioneer did say, “Sold!” but then struck the palm of his left hand with his right fist — signaling completion of the bidding.) As well, it appears to us that the court viewed “Going once for $177,000.00, going twice for $177,000.00, sold for $177,000.00” as essentially the same as the “S” in “Sold!” today.

In other words, “Going once, going twice, going thrice … Sold! … and a fist in the hand was presumably this auctioneer’s customary closing. So, if an auctioneer’s customary closing is “Sold!” (as it should be) then does that express that the hammer is falling — has fallen — akin to “Going once … fist in palm?” We think so.

Further, as we review the second (preceding) sentence of the UCC 2-328, we see that a sale by auction is complete when the auctioneer so ANNOUNCES by the fall of the hammer or in other customary manner. This indicates that the fall of the hammer is an intentional, deliberate, expressed, action by the auctioneer to complete the sale … necessitating it has a beginning and an end.

If you agree that this action of completing the sale at auction is a defined act signaling such, then when does it start and end? If an auctioneer says, “I have $500,000 and I want $510? $510? $510? Sold! for $500,000” how would any auctioneer denote how the auctioneer completed the sale? How would any auctioneer describe the fall of the hammer, where the buyer and seller were in a firm contract to buy/sell?

If you’re an auctioneer or otherwise a learned auction participant reading this then I suspect your answer to these two previous questions was the word, “Sold!” The just previous expression by this auctioneer was $510? and the following expression by the auctioneer denoted the final price … therefore the hammer didn’t begin to fall until after the $510? and it had fallen by the time the auctioneer said “for $500,000.”

Importantly, we are talking about reopening per the UCC 2-328, and not claiming (and maintaining the opposite, actually) there are such things as missed bids or tie bids. We wrote about so-called missed bids here: https://mikebrandlyauctioneer.wordpress.com/2016/08/11/what-is-a-missed-bid/. We wrote about so-called tie bids here: https://mikebrandlyauctioneer.wordpress.com/2016/07/28/terms-which-say-there-are-tie-bids/. While we humbly submit these are both good reads, the essence of both these articles is: You can’t have terms and conditions citing missed bids or tie bids because such things don’t exist.

Lastly, why are we as auctioneers reopening bids at all? For one significant item, say a $10,000,000 home with a bid of $10,100,000 as the hammer is falling … I’d still likely not reopen (but might) weighing the additional $100,000 against a probable lawsuit.

At almost all other auctions, reopening the bid only trains (encourages) bidders to bid last-second, thus extending the auction-event time and in total likely reducing the seller’s net position with people leaving the auction for other obligations. And of course, by not reopening the bid, auctioneers can train (encourage) bidders to bid promptly — and what seller/auctioneer doesn’t want that?

And, of all the lawsuits and related consulting we’ve completed in the last eight years — over 30% have involved reopening the bid after, “Sold!” in some manner. In every one of those cases, there would have been no litigation whatsoever if the auctioneer had not reopened the bid … and what seller/auctioneer doesn’t want that?

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 Texas Auction Academy. He is faculty at the Certified Auctioneers Institute held at Indiana University and is approved by the The Supreme Court of Ohio for attorney education.