This issue arises not only in online auctions, but live auctions as well. The high bidder prior to the lot being denoted, “Sold!” wishes to retract his bid. For instance, the high bid is $130,000 and the auctioneer is asking for $135,000 and the high bidder says, “I wish to retract my bid …”
State law around the United States suggests when the auctioneer takes the $130,000 bid, the prior $125,000 bid is voided — disappears. Further, this same state law suggests if the $130,000 bidder retracts his bid, the prior $125,000 bid is not revived.
While this is not terribly problematic in a live auction, it can be more difficult for the seller/auctioneer in an online auction. Some auctioneers have put in their terms that in the event the high bidder retracts his bid, the prior bid is made the high bidder — contrary to state law.
However, this state law (UCC § 2-328) can be treated as a gap filler so long as all obligations of good faith, diligence, reasonableness, and care prescribed by [the Uniform Commercial Code] may not be disclaimed by agreement per UCC § 1-302.
We wrote about the often overlooked slippery slope of modifying the UCC § 2-328 given virtually any modification typically violates the obligations of good faith, diligence, reasonableness and care otherwise prescribed: https://mikebrandlyauctioneer.wordpress.com/2020/04/23/gap-filling-and-were-just-stopping-for-one-drink/.
For instance, if we obligate the prior bidder as the high bidder in the case of bidder retraction, what is this new high bidder rewarded for this duty? Particularly in an online event, is he relieved of other purchases he made subsequent to being outbid so that he can pay for this subject item? Can the auctioneer still take a higher bid at this point?
It seems to us quite reasonable that when a bidder is outbid, he has no further obligation to that subject property and is free to bid again, bid on other items and/or withdraw from the auction event per his wishes. Being suddenly unilaterally obligated to an property again seems unreasonable (lacking reasonableness.)
What’s an auctioneer to do? Certainly in the event of high bidder retraction, the prior bidder could be revived with the option to remain the high bidder or not — and in fact, with enough time and notice, not retracting that new high bid could imply acceptance of his new position. Of course, this new high bidder could retract his bid as well …
The problem would be if an auction was to close in, say one minute, and the high bidder retracted his bid, that prior bidder would not have enough time nor notice to make an informed decision to accept his purchase or retract his bid. Maybe online, any bidder retraction should extend the subject property materially and send an email to or otherwise notices all other prior bidders?
Obviously not all prior bidders — in the event of a retraction — would be bothered by being the high bidder again at their previous high bid. It seems reasonable to give those bidders that option, but not that obligation, just like live auctions have done for decades.
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, RES Auction Services, 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 is faculty at the Certified Auctioneers Institute held at Indiana University and is approved by The Supreme Court of Ohio for attorney education.
Comments