Rachel and her son Chris like to attend auctions. Rachel normally has the weekend off, and although Chris has moved away to college, he can usually get back for a Saturday auction.
With a large estate auction near Rachel’s home scheduled for next Saturday, Rachel calls Chris to see if he can return home. He can.
The day of the auction arrives, and Rachel and Chris register for a bid card in the kitchen of the auction location.
They begin their preview when Chris sees a Falk Stadelmann oil lamp sitting on a table near the barn. Chris and his mother have over 20 Falk Stadelmann oil lamps, and this one is in great condition.
Rachel and Chris continue their preview as other bidders arrive; it appears upwards of 250 are in attendance. Then, at 10:00 a.m. the auctioneer starts the auction and introduces himself and his staff.
The auctioneer starts out selling various glassware and pottery items. After about 30 minutes, the auctioneer turns to the table where the Falk Stadelmann lamp is located.
Rachel and Chris move toward that table, and ready themselves to vie for the lamp. Chris tells his mom she should bid as much as $100, if necessary.
As the auctioneer’s young ringman holds up the Falk Stadelmann lamp, mistakenly saying, “We have a ‘Fall Stedman’ lamp here …” the auctioneer asks for a $50 opening bid.
Rachel holds her bid card up and yells, “$10!” The auctioneer continues to ask for $50, and then shortly after lowers his ‘suggestion’ to $25.
Chris then yells out, “$15!” and the auctioneer says, “I’ve got you sir, at $15, who’ll give me $20?”
The bidding continues between Chris and another bidder, with Chris ultimately being deemed the buyer at $65.
Rachel and Chris take their lamp with them as they walk over to the church food tent. “I wonder why he didn’t take my $10 bid?” Rachel asks her son. “I’m not sure you bid mom … he certainly didn’t appear to recognize it.”
Valerie overhears Rachel and Chris’ conversation, and says,“A bid is when it is spoken, whether or not the auctioneer hears it or acknowledges it.”
Bill, another bidder says,“A bid is only a bid when it is accepted by the auctioneer, otherwise it is only an offer.”
Darlene, just eating the first bite of her raspberry pie, says,“I don’t think so, Bill … a bid is when the bidder utters the bid amount, and then that becomes an offer when it’s accepted by the auctioneer.”
And, thus our question today: When does a bid become a bid?
Bidding at an auction is analogous to basic contract law, as premised in the principles of common law from England. Once an auctioneer accepts a bid from a bidder, a contract is formed as a result of offer and acceptance.
The flow of bid calling at an auction involves:
The auctioneer invites offers“Look at this lamp, folks … somebody give me $50.”
A bidder tenders an offer“I’ll bid $15!” with that offer communicated to the auctioneer
The auctioneer accepts that offer“I have $15 and I’d like $20.”
Once this $15 is communicated to the auctioneer, it becomes a bid. That bid becomes a bid when it is formed, expressed and communicated.
Let’s look at some examples:
An auctioneer has a bid of $100 and is asking for $125 and a bidder says he would like to bid $50. This $50 offer is heard by the auctioneer (and thus a bid) but is not accepted since it is lower than his current bid of $100.
An auctioneer has a bid of $100 and is asking for $125 and a bidder says he would like to bid $150. The $150 offer is not heard by the auctioneer (and thus is not a bid) and ultimately with no other bids, the items sells for $100.
An auctioneer has a bid of $100 and is asking for $125 and two bidders say $125 at the same time. The auctioneer hears both bidders (thus both are bids) but can only accept one, thus rejecting the other.
An auctioneer has a bid of $100 and is asking for $125 and a bidder says he would like to bid $125. The $125 offer is heard by the auctioneer (and thus a bid) and the auctioneer accepts the offer of $125 and asks for $150.
An auctioneer is asking for a bid of $100 and a bidder says he would like to bid $25. The $25 offer is heard by the auctioneer (and thus a bid) but the auctioneer rejects the bid and continues to ask for $100.
There is a difference here based upon if the auction is with reserve or without reserve, and if this is an initial bid or subsequent bid: http://mikebrandlyauctioneer.wordpress.com/2011/04/21/the-initial-bid-at-an-absolute-auction/
The auctioneer is the offeree and the bidder(s) is (are) the offeror(s). It can’t be the other way around because if the auctioneer offered, all a bidder would have to do is accept, and the auction (for that item) would be over.
What we’re suggesting here (and what common law dictates) is that a bid is an offer. In that respect, we could change our question today to: When does an offer become an offer? It becomes such when it (in part) becomes expressed and communicated.
Further, what about bidders who say nothing, but instead just nod or hold their bid card up? These are bids too … as they typically constitute an affirmative response to an invitation to offer a certain amount, expressed by implication (action) and communicated by that nod of a head or the like.
However, a bidder standing behind the auctioneer nodding his head or raising his bid card, for example, would not constitute a bid if the auctioneer didn’t see the nod or other action on the part of the bidder; such action lacking communication would not rise to the status of a bid. Of course, a bid spotter or other person might communicate the amount or affirmation, and then it would be considered a bid.
Lastly, auctioneers can also accept offers (bids) by implication, rather than specific expression. For example, when some auctioneers receive a bid of $15, they merely say, “Now give me $20” signaling that the $15 bid has been accepted.
Did Rachel bid $10 on that Falk Stadelmann lamp? If the auctioneer heard it — then yes, she did.
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. His Facebook page is: www.facebook.com/mbauctioneer. He serves as Adjunct Faculty at Columbus State Community College and is Executive Director of The Ohio Auction School.
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