Vern’s auction was nearly set.
Over 15 antique John Deere tractors plus other John Deere equipment and tools sat outside ready for tomorrow’s auction.
Vern went to bed the night before the auction expecting over 500 bidders arriving the next morning. And indeed they arrived with most of the interest in the nice lineup of antique John Deere tractors.
The auction began at 10:00 a.m. with some tools and small equipment and then at 11:00 a.m. Vern turned to begin with the tractors. The first up was a John Deere Model 60. After three more tractors, the next tractor was a nice John Deere Model 70.
Bidding started out at $500 and quickly reached $2,000. At this point our story begins to unfold as only Bill and Stanley are left as bidders on this tractor. Bill bids $2,100 and Stanley bid $2,200 … all the way back and forth to a final bid price of $3,900.
Vern declares Bill the winner of the John Deere Model 70 and turns his attention to the next tractor — a John Deere Model 720. Just then Stanley says, “Vern, you just sold that 720 … that’s Bill’s tractor.” Vern counters, “No Stanley, we just sold Bill that 70.”
“But I was bidding on the 720” Stanley says. “Not that 70.” Good news for Stanley since he still has a chance to buy that John Deere 720 and bad news for Bill since Stanley was the one who bid against Bill on the John Deere Model 70 — or did he?
It appears Stanley was bidding on the Model 720 against Bill who was bidding on the Model 70. Two bidders, with two different lots.
If we’re to believe Stanley, he thought the Model 720 was the lot Vern was taking bids on when actually Vern was accepting bids on the Model 70. It could be that Stanley’s bid caused Bill to pay $1,800 more than required. Can an auctioneer accept bids on two lots at the same time?
We explored the contracts formed while bid calling here: https://mikebrandlyauctioneer.wordpress.com/2014/08/11/bid-calling-is-just-numbers/. Implicit to the contingency of “a higher bid” is that such bid be on the property offered.
More generally, there is no contract if there is no mutual assent (a meeting of the minds.) Here, Stanley was offering on the Model 720 when the auctioneer was inviting offers on the Model 70.
However, our auctioneer Vern is taking Stanley’s bids unknowing that they are for the wrong tractor. Nevertheless, there is the widespread use the term, “last good faith bid” and if Stanley’s bid was to be deemed in bad faith, then possibly Bill would be awarded the John Deere Model 70 for $2,100 or void the sale altogether.
Further, normally the last good faith bid standard holds even if other genuine bidders bid against each other following the first bid made in bad faith. The question remains if a court would hold Bill to the $3,900 contract, allow him to be refunded $1,800 or even avoid the transaction, because this particular scenario has not been adjudicated.
What has been established by the courts is both that if the auctioneer takes fictitious bids and if the seller bids without authority, there is a remedy for the buyer.
Bill could argue two different points: One, that the bid of $2,200 could not void his bid of $2,100 because that offer was not a higher offer for the same lot and/or two, that there was no “$2,200” bid on his tractor at all, despite the auctioneer representing there was. Either seems reasonable, which sometimes is the standard.
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. He serves as Adjunct Faculty at Hondros College of Business, Executive Director of The Ohio Auction School and Faculty at the Certified Auctioneers Institute held at Indiana University.
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