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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 #7, shedding some light on what it means. Here is this seventh sentence:
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.
What might appear as a fairly straightforward sentence may well shed some of this light on more than merely the subject of “retraction.” The word “bidder” is first used here and is singular (along with “bid”) meaning there is apparently only one (no ties?) and further that all [previous] bid(s) are gone … don’t exist.
More specifically, if the high bidder retracts (withdraws) his bid there are no bids at that moment. For instance, if a bidder bids $1,000,000 and the next bidder bids $1,100,000 and then retracts his $1,100,000 bid, the $1,000,000 bidder is not back in (not revived.)
Instead, once this bid for $1,100,000 is made, it extinguishes the $1,000,000 bid. That prior bidder is not in contract with the seller, just like all the other bidders except the high bidder. However, that previous bidder — or any other bidder — could be [again] the high bidder at $1,000,000 if desired; that is typically the auctioneer’s suggestion following a retraction.
Further, could a retraction be made “while the hammer is falling …?” We think so, especially because of this sentence’s use of the words “completion of the sale.” As well, it would appear equitable in regard to the auctioneer’s right to reopen during this same time period. We wrote more about that here: https://mikebrandlyauctioneer.wordpress.com/2011/12/11/retraction-made-while-the-hammer-is-falling/
Lastly, this sentence begins with “In either case …” which refers to it being immaterial whether the auction is with reserve or without reserve. In other words, in any auction, the high bidder may retract his bid prior to the completion of the sale.
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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