There is very little that gets the attention of an auction buyer more than being awarded the property (the “bid”) and then suddenly (or not so suddenly) being notified you’ve not won the bid, and may have to bid again … I can only imagine being told I’ve won the lottery only to be told a few minutes later I’ve not won, and someone else has.
An attorney calls and asks, “Can I describe a situation to you?” Apparently, an auctioneer has said, “Sold!” to a high bidder, completing the sale [§ 2-328 (2)] and then subsequently reopened the bid suggesting this previous high bidder must bid again. This attorney then said he had read an article by Steve Proffitt from December 3, 2009, for which his situation was similar.
This article titled “Who Would Have Thunk It?” contained this following passage:
… As we’ve seen, the statute states that such a sale is final, and there is no provision that gives either party (seller or buyer) unilateral authority over the contract for sale. The only authority for an auctioneer to lawfully “reopen” the bidding is found in the second sentence of section 2-328 (2) which reads: ‘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.’
Note again, coincidently, the sixth word in this sentence, ‘while.’ ‘While’ connotes that something is ongoing and not ended, which is the opposite of the sixth word in the statute’s first sentence in paragraph (2): ‘complete.’ so a bid made ‘while the hammer is falling in acceptance of a prior bid’ gives the auctioneer discretion to either sell the lot to the prior bidder or continue the bidding. This authority exists solely because the auctioneer has not yet announced, or signaled, that a sale has been made. Once the auctioneer communicates that a sale is ‘complete,’ there is no authority for the auctioneer to continue the bidding.
Consequently, neither the auctioneer nor the buyer could act unilaterally to void the contract for sale so that this lot could be reoffered for additional bidding. If this were the case, what would a contract for sale made at auction be? It would be nothing but a hollow illusion without any enforcable ‘glue’ to bind the parties to their respective rights and responsibilities to each other. As the reader asked me, ‘How can any bidder have confidence in the auction process when the auctioneer can reopen bidding on a previously sold lot?’ No bidder could …
We’ve previously written about confidence [or the lack of] in the auction process: https://mikebrandlyauctioneer.wordpress.com/2012/03/19/court-auctions-does-money-trump-principle/. Isn’t it more important to have integrity in the auction process overall than one more bid? What do bidders tend to do when they know, “Sold!” means just that?
We also wrote specifically about the integrity of the bidding process here: https://mikebrandlyauctioneer.wordpress.com/2017/07/28/the-integrity-of-the-bidding-process/. This attorney argued that his client was owed the property for the final bid before the bidding was reopened — because the auctioneer did not have the right (in this case) to reopen the bid. We agreed.
With an increase in online auctions, and electronic bidding, we’re seeing even more instances of the winning bid being reopened with a bid subsequent following the software completing the sale. It’s as if integrity doesn’t matter, and worrying a disenfranchised bidder may not participate ever again is just the cost of doing business.
However, this issue is amplified as property values increase, as this deprived bidder likely takes legal action, almost always costing the seller and auctioneer far more than the gain from reopening the bid. In these cases, it’s to the seller’s benefit to say, “Sold!” and mean it. The best choice is to stay out of court: https://mikebrandlyauctioneer.wordpress.com/2018/07/26/auctioneers-you-want-win-in-court-or-stay-out-of-court/.
You as an auctioneer can risk reopening the bid after completion of the sale, but we emphasize this is a risk you can easily avoid. In fact — attempting to modify the basic tenets of the UCC § 2-328 at all, and making the wrong choices within this treatise — represent imprudent and unnecessary risk: https://mikebrandlyauctioneer.wordpress.com/2018/08/01/when-has-the-ucc-2-328-been-a-bad-idea/.
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, and an Instructor at the National Auctioneers Association’s Designation Academy and Western College of Auctioneering. He is faculty at the Certified Auctioneers Institute held at Indiana University and is approved by The Supreme Court of Ohio for attorney education.