Most people probably know that someone can’t be “forced” to sign a contract binding their performance rendering it invalid (or at minimum voidable.) So, can an auctioneer’s terms & conditions say that if the high bidder retracts his or her bid, you the previous bidder are now bound as the high bidder?
Since bid calling involves contracts, once a bidder is outbid, his bid (contract) does not exist. If this high bidder retracts his bid (which contract law suggests he can,) is the prior bidder now the high bidder if he doesn’t want to be? He’s not.
This is partially a UCC § 2-328 issue, in that this state law says the prior bid is not revived in the case of retraction. But this is also a basic contract issue, in that requiring someone to contract is almost assuredly not going to result in a valid enforceable contract.
For that matter, could an auctioneer just point to any particular registered bidder and say, “You are the high bidder at $1,000,000” if he didn’t actually offer that? Here, the auctioneer would be forcing a bidder into a contract without that bidder’s consent.
We have also written about the misconception that an auctioneer can make bidders bid any amount desired. This defies offer-acceptance sequence: https://mikebrandlyauctioneer.wordpress.com/2023/01/26/apparently-little-known-bid-calling-basics/.
Even if you claim the UCC § 2-328 can be modified (which it can) but only cite that right, it’s important to note per UCC § 1-302 that the obligations of good faith, diligence, reasonableness, and care prescribed by [the Uniform Commercial Code] may not be disclaimed by agreement. Such modifications cannot be manifestly unreasonable.
Could an auctioneer’s terms and conditions provide that the bidder agrees to be the high bidder again if there is a higher bid retraction? Maybe. Contracts have to have specifics and this becomes particularly difficult if this same backup bidder has then bid on other items after being outbid.
A better solution might be to make the backup bidder the high bidder again (with consent) with sufficient notice that if the bidder didn’t want to be the high bidder, that bid could be retracted. We discussed the absurdity of not allowing retraction: https://mikebrandlyauctioneer.wordpress.com/2021/09/10/we-shouldnt-let-bidders-retract-their-bid/.
Is forcing someone to be the high bidder against their will manifestly unreasonable? I’m willing to guess it would take no time at all to find a judge or jury to conclude it is. When your high bidder retracts his or her bid, you have no bids unless there is clear consent.
Lastly, if you as an auctioneer think you can do absolutely anything because you have been told you can modify state law, think again. It’s not just UCC § 1-302 (a) but rather also UCC § 1-302 (b). We discussed in more detail here: https://mikebrandlyauctioneer.wordpress.com/2022/03/10/only-the-first-sentence-of-%c2%a7-1-302/.
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 formerly at 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 Auction 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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