More specifically, “Auctioneer reserves the right to reject any bid from any bidder?” We would ask, does “bidder” mean “registered bidder?” In other words, a bidder who has satisfied the registration requirements?
Further, we would ask if the auctioneer is bound to sell to the highest bidder? If so, can a higher bid from a registered bidder be refused? Additionally, this implies “for any reason” so could this unilateral power be used to decline an offer from a bidder so that the auctioneer’s sister can purchase the lot instead?
It’s likely that any auction seller expects their property to be sold to the highest bidder, and not for some amount less. I would guess most auctioneers would expect the same when acting as a seller?
From a legal standpoint, it seems to us, if:
A bidder is properly registered, then his or her higher bid should be accepted.
Selling without reserve, the property must be sold to the highest bidder.
Of course, in a with reserve auction, property doesn’t necessarily need to be sold to the highest bidder. However, a higher bid from a registered bidder would almost assuredly be in the seller’s interest regardless of the reserve.
If an auctioneer wants to decline (reject) a bid from a particular bidder, then it would be best to not register that bidder. Yet, whatever reason cited should be in the terms and conditions so as to treat every bidder with this same criteria.
Auction registration constitutes creating a contract, with the bidders earning the “right” to participate as a bidder, with the implied duty of good faith and fair dealing. https://mikebrandlyauctioneer.wordpress.com/2021/12/13/lyon-leach-lerch-fair-dealing/.
This is in contrast to registration requirements of which some or all are capricious and arbitrary. Certainly, a term or condition such as “Auctioneer reserves the right to reject any bid from any bidder” is subjective.
We have held that firm registration requirements need to be set for each auction, and then bidders are treated to those fixed terms. If a bidder satisfies the requirements, he can register — and if not, he cannot. Any higher bid from a registered bidder should be accepted.
Importantly, a terrifically small increase over the current bid could conceivably be refused — such as a 1 cent increase on a $100,000 property: https://mikebrandlyauctioneer.wordpress.com/2022/09/26/absolute-auctions-and-de-minimus/. Of course, at with reserve auctions, reasonable minimum bid increments can be established.
In summary, however, this “Auctioneer reserves the right to reject any bid from any bidder” appears to be pointed at issues other than bid increments — and this type of reservation clearly seems to us curious on its face.
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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