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All too often, a high bidder retracts his bid, and the previous bidder is made the high bidder without his knowledge or consent. Is there a worse cause for this same result?

There is .. when the auctioneer is “running” the bid (taking fictitious bids) and gets caught with no bidder, and attempts to in essence back up to put the [only] other bidder back in as the high bidder.

For instance, Larry is the high bidder at $250,000 and then the auctioneer takes a fictitious bid for $260,000 and Larry bids $270,000. With another fictitious bid of $280,000, Larry bids $290,000. Yet another fictitious bid of $300,000 and Larry declines to bid again.

At this very moment, the auctioneer is asking for $310,000 indicating that $300,000 is the current high bid when it’s not. Ultimately the auctioneer says “Sold!” to Larry for $290,000 (or indicates he’s on at $290,000 and now asks for a bid of $300,000) but in either case, Larry is deemed to be the buyer at $290,000.

But Larry isn’t the buyer at $290,000 unless he has knowledge of such a current bid and consents to the bid being made a high bid for him. You see, the auctioneer indicated someone bid $300,000 … what happened to that bid?

In this case, the $300,000 bid was fictitious. As a result, an auctioneer cannot force Larry to buy this lot for $290,000. The auctioneer could say “Sold!” for $300,000 to a fictitious bidder number (to accompany the fictitious bid) and move on; there aren’t many other good options at this point.

Of course, if this auction is “with reserve” the auctioneer could simply no-sale the lot (withdraw the lot) but if this is an absolute auction, the seller can’t place bids outside of a “forced sale” — and in either case, purely fictitious bids are prohibited.

“Fictitious bids” are prohibited? They are ever since the Supreme Court of the United States in Veazie v. Williams, 49 U.S. 134 (1850) ruled fictitious bids (puffing) “a fraud and avoids the sale.” Given this case, it’s unlikely Larry could be obligated to purchase this lot for any amount over his initial bid of $250,000.

The principle for Larry having the option to purchase this lot for $250,000 involves the buyer (bidder?) having the option to void the sale or take the lot at the last good faith bid. Read here Law Professor Drew Kershen’s worthy analysis regarding: https://mikebrandlyauctioneer.wordpress.com/auction-publications/drew-l-kershen-horse-tradin/.

While this type of thing isn’t widespread in the auction business, it is far too prevalent in some areas, markets, and with some particular auctioneers. It’s no wonder some have been disenfranchised with auctions: https://mikebrandlyauctioneer.wordpress.com/2018/06/18/how-the-auction-industry-lost-at-least-one-bidder/.

This whole issue is based on a general concept akin to the “leap (jump)-a-high” craze — as if we as auctioneers can make bidders bid whatever we want: https://mikebrandlyauctioneer.wordpress.com/2023/01/26/apparently-little-known-bid-calling-basics/.

Lastly, when an auctioneer says, “I have $300,000 and I want $310,000” who else hears that? I’ll tell you who else besides anyone paying attention — in particular the seller and the consignee. Would either rightly expect $300,000 for this lot? Maybe so.

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, Brandly Real Estate & Auction, 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 has served as faculty at the Certified Auctioneers Institute held at Indiana University and is approved by The Supreme Court of Ohio for attorney education.