auction, Auction Law, auctioneer, auctioneers, auctions, bid calling, bidders, breach of contract, contract, disputed bid, National Auctioneers Association, reopen, terms and conditions, tie bid, UCC 2-328 (2)
John Stephen Proffitt III (widely known as Steve Proffitt in auction circles) — attorney at law and auctioneer — proposed openly and consistently that auctioneers do not have the right to reopen the bid at auction.
For instance, let’s say you as an auctioneer have Rita as the high bidder at $3,000 and your ringperson has Betty as the high bidder. You say, “Sold!” to Rita for $3,000 and a contract is formed, but Betty thinks she’s the high bidder. You reopen the bid and allow Betty to bid $3,250 …
Steve commented on this scenario with the following writing January 1, 2007:
I recently gave a seminar … during which I hit a familiar theme on this topic – the fantasy of “tie bids” and “disputed sales.” The infamous “tie bid” involving bidders in an auction is nothing but an imaginary creation conjured up long ago in some auctioneer’s imagination and passed through the generations to just about every other auctioneer in the country – or at least it seems to me that many of them have followed the “rule” at one time or another. This “rule” that, after making a sale, an auctioneer has the right to reopen the bidding to two or more bidders who each think they have the highest bid for a lot is no rule at all. Instead, it is a violation of both contract law and the Uniform Commercial Code (“UCC”).
Of course Steve was well aware of Kentucky Revised Statutes (state law) 330.220 and the Uniform Commercial Code 2-328 (2) which both under certain circumstances allow reopening of the bid.
His reply to my rhetorical question concerning? “Sure … and I like my chances arguing against both.” In fact, I tend to like his thinking which he explained as follows:
When an auctioneer cries, “Sold!” on a bidder’s high bid, the auctioneer is acting as an agent for the seller. The result is that a contract for sale is instantly formed between the seller and the buyer. This contract has legal force. The auctioneer’s authority as an agent for the seller is to form the contract with the buyer. Once the contract has been formed, the auctioneer disappears from the selling equation. This is because the auctioneer is not a party to the contract. The parties to the contract for sale are the seller and the buyer. So how could an auctioneer set aside a contract to which he is not even a party? He cannot.
Steve did cite the Uniform Commercial Code 2-328 (2) in that he proposed:
The UCC [2-328 (2)] bluntly makes … [this] … point: “A sale by auction is complete when the auctioneer so announces by the fall of the hammer or in other customary manner.” The word “complete” means … complete. It does not mean “maybe,” “could be,” “might be,” “what do you want it to be,” “think about it and then decide,” or anything other than … COMPLETE!
Since Steve’s death December 25, 2015, there has almost been a concerted effort to counter much of what he held … but especially about reopening bids — as if making the auction industry more confusing, muddled and inconsistent was the goal.
We as auctioneers are all about maximizing the seller’s position. However, if every auctioneer had a policy of saying, “Sold!” and meaning it — bidders and buyers would know that was the rule and bid accordingly.
The auction marketplace is already rife with differing terms, conditions, payment methods, buyer’s premiums and the like, and only worse with some auctioneers reopening bids and others not — and far worse than that — with some auctioneers reopening and not reopening bids at the same auction event.
As a frequent auction expert witness, I can assure anyone reading this that reopening the bid causes aggrieved auction bidders (buyers) and often litigation; on the other hand, leaving the bid where first, “Sold!” minimizes confusion and is almost never litigated.
We’ve written extensively about “missed bids,” “tie bids,” and the like including here: https://mikebrandlyauctioneer.wordpress.com/2017/03/23/when-can-auctioneers-reopen-the-bid/ where we explored the UCC 2-328’s official comments.
Mr. Proffitt did write about circumstances where auctioneers were tempted (and felt legally able) to reopen the bid — of course recommending they not: https://mikebrandlyauctioneer.wordpress.com/2018/12/31/why-are-we-looking-for-tie-bids/. However, he was convinced he could persuade a court otherwise.
We also wrote in 2018 that the UCC 2-328 hasn’t ever really been a bad idea: https://mikebrandlyauctioneer.wordpress.com/2018/08/01/when-has-the-ucc-2-328-been-a-bad-idea/ and Steve Proffitt agreed (choosing “may not reopen”) as he expressed, “I just wish all auctioneers would learn and follow [this rule] in their sales. That would be a good thing no matter how it is accomplished.”
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.