Formation: auctions Flashcards
Reserve auction
Unless specifically announced otherwise, an auction is with reserve, meaning that the seller has the right to withdraw an item from sale at any time before the auctioneer announces the completion of the sale.
The auctioneer must accept whatever is bid for the item being auctioned.
Completion of an auction sale
An auction sale is complete when the auctioneer announces its end, such as by the fall of the auctioneer’s hammer or in any other customary way.
When a bid is made contemporaneously with the falling of the hammer, the auctioneer may, at her discretion, treat the bid as continuing the bidding process or declare the sale completed at the fall of the hammer.
Retraction of bids
In both reserve and no-reserve auctions, a bidder may retract her bid until the end of the sale:
- As with any other revocation of an offer, the bidder must convey his withdrawal to the auctioneer;
- So long as the withdrawal is communicated to the auctioneer prior to the auctioneer announcing the completion of the sale, the auctioneer must allow the bidder to withdraw his bid.
Bids by sellers
When an auctioneer knowingly accepts a bid by the seller or on her behalf, or procures such a bid to drive up the price of the goods, the winning bidder may avoid the sale or, at her option, take the goods at the price of the last good-faith bid prior to the end of the auction.
Exceptions:
(1) A seller may bid at a forced sale;
(2) A seller may bid if she discloses her ownership interest and specifically gives notice that she reserves the right to bid.
Higher bids
The auctioneer’s acknowledgement of a higher bid operates as a rejection of the lower bid.
Thus, the withdrawal of a higher bid does not automatically reinstate the next lower bid.
No-reserve auction
In a no-reserve auction, after the auctioneer calls for bids on the goods, the goods cannot be withdrawn unless no bid is received within a reasonable time.
Retraction of bids: earlier bids
A retraction does not revive any earlier bids.
