Do you advertise that you’re “Selling to the highest bidder?” If so, then you should indeed be, “Selling to the highest bidder.” Yet, is “Selling to the highest bidder” an absolute auction?
This probably isn’t an absolute auction, as likely the most famous auction case (ever?) noted that “Selling to the highest bidder” was a “with reserve” auction: Drew v. John Deere Company of Syracuse, Inc., 19 A.D.2d 234, 241 N.Y.S.2d 267, 269-270 (1963).
So, if “Selling to the highest bidder” is a “with reserve” auction, then an auctioneer could set minimum bid increments? It certainly has been held that a “with reserve” auction can reserve certain minimum increments …
However, if your advertisement said, “Selling to the highest bidder” wouldn’t you have to do that? For instance, if you had a bid of $75,000 and the minimum increment was $1,000 ($76,000) and someone offered $75,500, wouldn’t you be required to accept that bid?
It seems to us that advertising you are “Selling to the highest bidder” could indicate to some (including John Drew) that your auction is absolute, but even if it’s “with reserve” you would indeed have to sell to the highest bidder.
What the Drew v. John Deere Company of Syracuse, Inc., 19 A.D.2d 234, 241 N.Y.S.2d 267, 269-270 (1963) case indicated is that the John Deere 3010 didn’t really have to sell (with reserve,) but it didn’t clarify if any minimum bid increments could be set.
So, “Selling to the highest bidder” is not absolute, so it’s “with reserve” and in with reserve auctions minimum bids can be set, but not if the auction is advertised as “Selling to the highest bidder?” It appears so.
If you’re puzzled, there are different types of “with reserve” auctions: https://mikebrandlyauctioneer.wordpress.com/2011/03/26/with-reserve-auction-choices/. You can have a “with reserve” auction but not control the minimum size of the increments.
Lastly, there’s usually someone claiming that if you must accept any higher bid, bidders will bid in 1 cent (or maybe less?) increments from now “until the cows come home” … but they won’t. We explored this absurd claim here: https://mikebrandlyauctioneer.wordpress.com/2019/11/15/auction-law-and-absurd-results/.
What’s our summary here? Simply if you advertise that you are “Selling to the highest bidder” (which the auctioneer did in our aforementioned case) that you better be “Selling to the highest bidder” (and this 3010 was) and if you want to dictate the (smallest) increments, don’t advertise in this fashion.
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.