131 So. 849 (1930), 171 La. 686, auction, Auction Law, auctioneer, auctioneers, auctions, bid calling, fall of the hammer, manifestly unreasonable, Ragusa v. Greco, reopen, terms and conditions, UCC 1-302, UCC 2-328
I’ve told auctioneers for years that it’s good to be on the “right side of the law.” That is, if you’re sued, you want to have evidence that you followed the law. Today, we explore something else I’ve told auctioneers for years — staying out of court is even better than winning.
We’ve discussed the legal issues, merits and otherwise the prudence of following the UCC 2-328 more strictly and not modifying it per the UCC 1-302 for risk of those customizations being deemed unreasonable — specifically manifestly (obviously) unreasonable.
Our most basic argument in this regard stems from an auctioneer reserving the right to reopen the bid at essentially any time for any reason, but not extending the same right (any time, any reason) to the high bidder to void that same contract.
How is it reasonable I can reopen the bid but you can’t, outside of the UCC 2-328’s famous narrow allowance “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?” While it is reasonable to some, it is obviously unreasonable to most auction bidders.
How do we come to the conclusion that most bidders consider unilateral reopening of the bid beyond the UCC 2-328 unreasonable? We’ve sat beside and testified for these bidders in courtrooms all around the country, and we’re privy to some high-profile court cases where once the bid was reopened (or by policy could have been) — there was resulting litigation.
For example, in:
- Ragusa v. Greco, 171 La. 686, 131 So. 849 (1930) a high bid was not reopened, but “would have been” and as a result a beneficiary party was not happy. Lawsuit.
- Hoffman v. Horton, 212 Va. 565, 186 S.E.2d 79 (Va. 1972) auctioneer reopened the bid and previous high bidder was unhappy. Lawsuit.
- Kline v. Fineberg, 481 So. 2d 108 (Fla. Dist. Ct. App. 1986) the bid was tentatively reopened but then overruled by a supervisor. Lawsuit.
- Callimanopulos v. Christie’s Inc., 621 F. Supp. 2d 127 (2009) Christie’s reopened a high phone bid and that phone bidder was unhappy. Lawsuit.
See a pattern?
Is there an auctioneer policy that would have resulted in none of these cases even going to court? There is indeed. A policy that once “Sold!” the bid will not be reopened. Of course, one could have a policy that the bid will be (can be) reopened at any time for any reason but any guesses what the typical reaction might be? We don’t have to guess.
Any evidence of an auctioneer with a clear policy of not reopening the bid after “Sold!” being sued by a late, missed or other bidder? Seller suing? For sure, there’s no absolute way to avoid a lawsuit, so even if these “other bidders” or seller sued — what would be their success rate? However, we call your attention again to Ragusa v. Greco, 171 La. 686, 131 So. 849 (1930), where this so-called missed bidder (Nunez) did not pursue any damages.
The brilliant auctioneer/presenter/singer/songwriter/evangelist Aaron Traffas wrote about this reopening of the bid from the customer perspective, and came to our same [reasonable] conclusion. I highly recommend you read his stance here: http://www.auctioneertech.com/2016/sold-doesnt-mean-sold/.
Further, if you are one who says you “may reopen” (and as such reopen or not reopen arbitrarily) then we invite you to review some of attorney Steve Proffitt’s thoughts on that subject: https://mikebrandlyauctioneer.wordpress.com/2016/12/05/what-may-be-auctioneers-terms-conditions-worst-word-choice/.
So, in summary auctioneers should remember that losing in court is the worst, winning in court is better, but staying out of court is best.
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.