Possibly the most discussed and most misunderstood and misinterpreted four paragraphs of state law regarding auctioneering is the UCC 2-328: Sale by Auction.
The UCC 2-328 as it is today, and as largely adopted verbatim by the states in the United States, is here:(1) In a sale by auction if goods are put up in lots each lot is the subject of a separate sale.
(2) A sale by auction is complete when the auctioneer so announces by the fall of the hammer or in other customary manner. Where a bid is made while the hammer is falling in acceptance of a prior bid the auctioneer may in his discretion reopen the bidding or declare the goods sold under the bid on which the hammer was falling.
(3) Such a sale is with reserve unless the goods are in explicit terms put up without reserve. In an auction with reserve the auctioneer may withdraw the goods at any time until he announces completion of the sale. In an auction without reserve, after the auctioneer calls for bids on an article or lot, that article or lot cannot be withdrawn unless no bid is made within a reasonable time. In either case a bidder may retract his bid until the auctioneer’s announcement of completion of the sale, but a bidder’s retraction does not revive any previous bid.
(4) If the auctioneer knowingly receives a bid on the seller’s behalf or the seller makes or procures such a bid, and notice has not been given that liberty for such bidding is reserved, the buyer may at his option avoid the sale or take the goods at the price of the last good faith bid prior to the completion of the sale. This subsection shall not apply to any bid at a forced sale.
If I had written these four paragraphs, mine would look like this:
(1) In a sale by auction if property is put up in lots each lot is the subject of a separate sale.
(2) A sale by auction is complete when the auctioneer so announces by the fall of the hammer or in other customary manner.
(3) Such a sale is without reserve unless the property is in explicit terms put up with reserve. In an auction without reserve, after the auctioneer calls for bids on property, that property or lot cannot be withdrawn unless no bid is made within a reasonable time. In an auction with reserve the auctioneer may withdraw the property at any time until he announces completion of the sale. In either case a bidder may retract his bid until the auctioneer’s announcement of completion of the sale, but a bidder’s retraction does not revive any previous bid.
(4) Unless at a forced sale, the auctioneer may not knowingly accept a bid on the seller’s behalf, nor may the seller make or procure such a bid.
Here’s the changes I am advocating:
2-328 (1) The UCC 2-328 was written with personal property in mind. By changing the word, “goods” to “property” the UCC 2-328 would be inclusive of real and personal property by default.
2-328 (2) Why do we allow the bid to be reopened anytime? Once the auctioneer denotes the item or lot is, “Sold!” then a contract is firmed with the high bidder. By allowing the auctioneer to unilaterally reopen the bidding under any circumstances seems unnecessary and disingenuous.
2-328 (3) An auction should denote to the public that the seller wishes to sell his property to the highest bidder, and not that me might want to sell his property to the high bidder. The default auction format should be “without reserve,” and not “with reserve.”
2-328 (4) Sellers should not be bidding on their own property at any auctions, unless the property is being sold without their consent. Further, seller bidding is often cited (unfortunately) as permission for the auctioneer to “run the bid,” to the seller’s acceptable amount.
Could these changes be made? Sure, any state could make these changes to their state law. Will they be made? Probably not. But, that’s okay. The UCC 2-328 isn’t broken; it just could be improved upon.
Mike Brandly, Auctioneer, CAI, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, Keller Williams Auctions and Goodwill Columbus Car Auction. His Facebook page is: www.facebook.com/mbauctioneer. He is adjunct faculty at Columbus State Community College and is Executive Director of The Ohio Auction School.
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