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UCC § 2-328 (Sale by Auction) only has nine sentences, but they all are widely misunderstood. Here we take a look at sentence #4, shedding some light on what it means. Here is this fourth sentence:
Such a sale is with reserve unless the goods are in explicit terms put up without reserve.
Seems clear enough … all auctions (except in Louisiana) are with reserve unless they’re not — unless they are explicitly without reserve? So, how does an auctioneer/seller explicitly change the type of auction? The courts have been explicit in how: Say the auction is without reserve or say the auction is absolute or something much like it, or otherwise, you’ve not really explicitly changed the type.
We previously noted this in regard to the landmark case Drew v. John Deere Company of Syracuse, Inc., 19 A.D.2d 234, 241 N.Y.S.2d 267, 269-270 (1963) which affirmed that anything other than without reserve or absolute was not sufficient — including “selling to the highest bidder.” We wrote more about this here: https://mikebrandlyauctioneer.wordpress.com/2013/02/15/the-words-selling-at-auction/
Secondly, this fourth sentence implies there are only two types of auctions — not three, not four, not five nor more. There’s no “absolute over a certain minimum bid” or “absolute with seller confirmation” etc. Just two types — one or the other — as we noted here: https://mikebrandlyauctioneer.wordpress.com/2009/11/15/different-types-of-auctions/
Third, auctioneers cannot actually change type of auction once a lot (property) is put up for auction; they can actually only cancel the current auction and restart it as the other type (if with reserve or without reserve and no bid has been made within a reasonable time.) We talked about this in more detail here: https://mikebrandlyauctioneer.wordpress.com/2015/06/03/changing-the-type-of-auction/
Lastly, it’s important to have the type of auction noted in the contract between the auctioneer and seller align with the type of auction being advertised and the type of auction conducted. And again … the choices are with reserve or without reserve and there are no hybrids nor mixing of the two.
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, RES Auction Services and Goodwill Columbus Car Auction. He serves as Distinguished Faculty at Hondros College of Business, Executive Director of The Ohio Auction School, an Instructor at the National Auctioneers Association’s Designation Academy and Faculty at the Certified Auctioneers Institute held at Indiana University.
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