assign, assignable, assignee, assignor, auction, auction expert witness, auctioneer, auctioneers, auctions, contracts
Given that auctioneer bid calling (and online “bid calling”) obviously creates contracts, our question today involves if a high bidder could assign his contract to another registered bidder?
For example, a high bidder (A) is at $10,000 and this bidder (A) and another registered bidder (B) decide that the high bidder (A) will assign his $10,000 contract to this other bidder (B.)
Since both A & B are properly registered (and not arbitrarily nor capriciously registered as some have advocated,) it would seem the seller and the auctioneer couldn’t necessarily rightly object.
More generally, contracts are assignable unless (1) the contract says it’s not assignable or (2) it’s a personal service contract of some nature. Here, why would the seller or auctioneer care if A purchased this lot for $10,000 or B purchased this lot for $10,000?
However, if these two bidders A & B agreed to this assignment under illegal premises, such as A would stop bidding for some consideration from B, this would obviously violate the Sherman Antitrust Act.
We’ve written about the Sherman Antitrust Act numerous times including here 12 years ago: https://mikebrandlyauctioneer.wordpress.com/2011/07/04/price-fixing-at-auction/. Fines and prison time can result from violations of this act.
In our many years as an auctioneer and real estate broker, we’ve seen only a few assignments on the personal property side, but seen many on the real property side, especially with family members and business entities.
In fact, I was bid calling just the other night when a high bidder said he wanted me to put another bidder in for his bid (who had bid late, and as such that offer was not accepted.) Sensing no illegal activity, I quickly noted this other bidder the high bidder for the same amount.
Maybe worth noting here that there is no provision for “late bids” of the same amount after, “Sold!” despite being told this is something for all auctioneers to consider … except in Kentucky where there is no practical way of resolving.
Otherwise, the UCC 2-328 indicates an auctioneer may (or may not) reopen the bid when a higher bid comes in while the hammer is falling in acceptance of a prior bid.
Should auctioneers memorialize that bid-calling contracts are not assignable? Certainly, if they don’t want them assigned, they should. One exception we propose is to allow any real property buyer to assign their contract if they wish. https://mikebrandlyauctioneer.wordpress.com/2022/03/01/because-its-your-policy/.
Lastly, assignability doesn’t relieve the original party (assignor) of liability if the assignee doesn’t perform. In other words, if the new high bidder didn’t pay, the original bidder would be responsible for payment.
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.
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It’s a matter of terminology. I would humbly submit that a Bid Calling Contract is not assignable, but a Sales contract is.
The Title of your post refers to a Bid Calling Contract which in my mind refers to a contract between a Seller and an Auctioneer for Bid calling services. The Contract between the Auctioneer and the Buyer (a Verbal Contract that we all know is enforceable) is actually an agreement between the Seller and the Buyer to purchase a particular item. The Contract is executed by you, the Auctioneer as the Agent of the Seller.
But the Bid Calling Contract is an agreement between an owner of property and an Auctioneer for the services of the Auctioneer in offering for Sale that property. Clearly a Personal Services Contract. As you correctly state, personal services contracts are not generally assignable.
Example: George hires you to sell his valuable collection of Revolutionary War Era Silver settings. He does this because of your superior bid calling skills, your unique knowledge of this type of property, and your unmatched knowledge of the Auction method of marketing.
You decide to assign the Contract to Mike Hanley who has mediocre bid calling skills at best and knows nothing of Revolutionary War Era Silver settings.
George cries foul and will win, as this was a contract based on your particular set of skills and knowledge of this property.
But as you also correctly analyze if Mike Hanley shows up at the Auction, buys the Silver and assign that contract to his good friend Rick because he was on a smoke break when you conducted the Auction, that is completely proper. George gets his money so why would he care unless some sort of collusion is going on?
Mike Brandly, Auctioneer, CAI, CAS, AARE said:
Michael, I think we largely agree perhaps.
1. The auctioneer’s contract with the seller is a personal services contract that the auctioneer couldn’t likely assign, and the seller could not.
2. When an auctioneer is bid-calling, I hold those contracts between the seller and bidders. Bidders could assign, but sellers could not.
3. Once the seller and buyer are in contract for a lot, the buyer could assign, but the seller could not.
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