We hear it all the time: At auction … “How can we bind the bidder without binding the seller?” or said another way, “Can an offer be irrevocable?”
As most know, in contract law offers basically remain open until acceptance, rejection, revocation, expiration, operation of law, death, illegality or countered (rejected). In other words, for most offers the offeror can withdraw his offer unless (and up until) it is accepted.
Previously, we discussed the misconceptions of so-called irrevocable offers here: https://mikebrandlyauctioneer.wordpress.com/2017/12/18/can-your-bidders-offer-bid-be-irrevocable/
So how could an offer be irrevocable otherwise? A certain way would be to accept it. Accepted offers can’t be revoked by either party unless the contract has a provision otherwise. And that’s our treatise today.
If you are an auctioneer wanting to bind the bidder but not the seller — quite yet — accept the offer subject to something. That “something” could be “subject to approval by the county trustees,” “subject to probate court approval,” “subject to seller confirmation” or subject to anything in the seller’s control.
Let’s say for example you as an auctioneer have a high bidder at $3,600,000 and a runner-up bidder at $3,500,000 and your seller accepts the $3,600,000 but wants to bind the $3,500,000 bidder in case the high bidder doesn’t perform. The solution? Accept the $3,500,000 bid subject to the $3,600,000 contract being deemed void.
Of course the bidders (and particularly this runner-up bidder) would have to consent to such either in the terms and conditions of the auction and/or agree to this clause when the backup offer is executed. Otherwise, this runner-up bidder could very likely not be bound to a backup position (thus his/her offer being deemed irrevocable.)
Certainly if desired you would want your (skilled) attorney to draft the language of these terms and conditions as well as this “subject to” provision. Using an attorney allows a better chance of the language being enforceable and you have an advocate if you need one.
Wanting to bind (make irrevocable) an auction offer? There are far better ways than bluffing with an unenforceable provision.
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.