I more or less expected this phone call. While I’ve discussed this topic many times in classes across the United States, it’s actually never come up in litigation … until now.
An attorney called and asked me if his client-auctioneer had to right to withdraw a property after receiving a bid on the property in an absolute auction and if I would serve as an expert witness in his case.
Generally, of course, the answer is, “No, he didn’t have that right” given this bid came in within a ‘reasonable time.’ We wrote about this topic in detail here: https://mikebrandlyauctioneer.wordpress.com/2017/10/30/the-ucc-2-328-sentence-6-of-9/
However, in this case, the (single) bid that was placed was retracted. Then his client-auctioneer withdrew the property. Another bidder cried foul because his subsequent bid was not accepted, and the property was not sold.
I didn’t have good news for this attorney. The UCC 2-328 doesn’t say that with no bids the property can be withdrawn, but rather, “unless no bid is made within a reasonable time.” the property may be not withdrawn.
In other words, as soon as this bid was made (and even if not accepted,) the legal right to withdraw the property was extinguished; it in no way reappeared when when the retraction was made.
Another question of course would be, “What if there were no further bids?” It would seem to me that with no bidding following the retraction, the auctioneer would have no choice but to withdraw the property … so long as it was open for further bidding for a reasonable time.
Auctioneers should know that prior bids are not revived in the case of a high bidder retraction, but those bidders could bid choose to bid again. We wrote about the lack of “revivals” at auction here: https://mikebrandlyauctioneer.wordpress.com/2009/12/09/dont-look-for-a-revival-at-an-auction/
What happens, when in an absolute auction, a bid is made within a reasonable time? The property must (if possible) sell to the highest bidder. That is, independent (regardless) of any bidder retraction.
Mike Brandly, Auctioneer, CAI, CAS, 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, Executive Director of The Ohio Auction School, an Instructor at the National Auctioneers Association’s Designation Academy and America’s 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.