We’ve argued a somewhat strict interpretation (practicing our textualism?) of the UCC § 2-328 and the limited right the auctioneer has to reopen the bid. Today, we expose that we are not hardly alone in this assertion.
Of the few court cases involving this issue, what has resulted is a somewhat mixed message about reopening for so-called tie-bids, missed-bids and the like. Even state legislatures have wrestled with what this all means, or should mean. We’ve previously written about these topics here:
Yet, what did the drafters of the UCC intend? For one, they hoped to harmonize rules of commerce around the United States, proving uniformity to the laws governing transactions particularly across state lines. In regard to our subject today, what did the drafters of this particular law want this law to mean? One could look at the “Official Comments” to get some insight:
The auctioneer may in his discretion either reopen the bidding or close the sale on the bid on which the hammer was falling when a bid is made at that moment. The recognition of a bid of this kind by the auctioneer in his discretion does not mean a closing in favor of such a bidder, but only that the bid has been accepted as a continuation of the bidding. If recognized, such a bid discharges the bid on which the hammer was falling when it was made.
As can be seen, these official comments suggest the reopening can only take place if a bid is made at that moment and not before, nor after that moment; as I’ve been known to say, not before the “S” nor after the “D.”
If you don’t like these official comments, or cite courts which have more or less ignored them, maybe it’s time we here in the United States gave them their appropriate weight. It appears to us that there is no question what the UCC § 2-328 reopening provision was meant to allow — and not allow.
Further, if you want to read more about the UCC’s Official Comments and their relevancy, here is the opinion of attorney Sean Michael Hannaway (currently Supervisory Attorney for the United States Air Force) writing for the Cornell Law Review in 1990: http://scholarship.law.cornell.edu/cgi/viewcontent.cgi?article=3463&context=clr
We don’t really have to wonder what a case at the Supreme Court of the United States regarding reopening the bid would look like — especially with the courts predominate conservative tilt as of late. However, is such a case forthcoming? That would be stunning, but welcome.
Nevertheless, we thought you might find this interesting as we were researching this topic (again) in preparation for a trial appearance, and the attorneys working with me were glad to hear of some substantiation of strict interpretation. It appears our client is in a good position to win a sizable verdict, although no decision has been made as of this writing.
And if you are an auctioneer, let me suggest arbitrarily so-called reopening the bid is the absolute worst policy, and so given the choice of always reopening or never reopening, which do you think would be the best strategy? Even within the UCC § 2-328’s allowances, reopening the bid has little overall merit.
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 and Faculty at the Certified Auctioneers Institute held at Indiana University.
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