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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 #9, shedding some light on what it means. Here is this ninth sentence:
This subsection shall not apply to any bid at a forced sale.
This ultimate sentence of the UCC 2-328 is probably the most straightforward of all these sentences. It notes that that the previous sentence (described here: https://mikebrandlyauctioneer.wordpress.com/2017/11/06/the-ucc-2-328-sentence-8-of-9/) does not apply when there is a “forced sale.”
What is a forced sale? Per Black’s Law Dictionary (ISBN 0-314-15199-0, 2nd Reprint — 2007, 8th Edition, Bryan A. Garner, Editor in Chief) such a sale is the opposite of a voluntary sale where the sale is made freely with the seller’s consent.
Common examples of forced sales include foreclosures, repossessions and other court-ordered auctions. In these situations, the seller is not freely agreeing to the auction, and his consent is not necessary.
Therefore, this last sentence of the UCC 2-328 negates the prior sentence in that the seller can bid without any buyer (bidder) recourse and without any disclosure — no matter the type of auction — in a forced sale.
We wrote more detail about forced sales here in 2010: https://mikebrandlyauctioneer.wordpress.com/2010/02/20/what-is-a-forced-sale-in-regard-to-auction-law/. As well, we wrote about who is (and who isn’t the seller) here: https://mikebrandlyauctioneer.wordpress.com/2017/02/16/at-an-auction-whos-not-the-seller/
The implications of this last sentence couldn’t be more clearly demonstrated than at vehicle “repossession” (repo) auctions, storage lien auctions and foreclosure auctions in the United States — which are open to the public; they are open to the public because the vehicle’s (equity) owner — and therefore basically anyone — has a right to bid.
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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