Bid calling and the mailbox rule
In a series of recent simulcast auctions, I served as one of two auctioneers (bid callers) with over 600 online bidders and as many as 150 live bidders participating. It was indeed a pleasure working with Mark Younger and his staff helping our client sell over 3,300 lots.
Several times during these recent auctions, it must have appeared to some that I was reopening the bid when a bid came in late (after Sold!) from the online community outbidding another online bidder. In these instances, I had uttered to the live crowd “Sold!” but that had not been communicated (posted) yet to the online bidders.
Not surprisingly I received more than one text message asking essentially, “Tie bid? Really?” Thus our topic today: When is the contract firmed in a strictly online/simulcast auction environment? We discuss today bid calling and the mailbox (posting) rule in regard to such an auction and the acceptance of offers.
First, bid calling at auctions involves the creation of contracts. We discussed these contracts in detail here: https://mikebrandlyauctioneer.wordpress.com/2009/11/21/does-bid-calling-form-contracts/
As well, we recently wrote about simulcast auctions and how bid calling is to be managed with live and online bidders bidding on the same lot (property.) That treatise is here:https://mikebrandlyauctioneer.wordpress.com/2018/09/03/simulcast-auctions-how-they-work-and-how-they-dont/
Generally speaking in the United States, contract acceptance is valid when posted (mailed — thus the mailbox rule) while rejection is valid when received. Said another way, merely constructive notice is required for contract acceptance while actual notice (as in delivered) constitutes one way to reject a contract.
So when an online bidder bids in a simulcast auction and the auctioneer says, “Sold!” the lot (property) is not sold yet unless the status is posted on the online platform. When another online bidder bids thereafter without such posting, that bid can be accepted as the prior contract has yet to be firmed.
Certainly if an auctioneer said, “Sold!” to a live bidder no following bids could be accepted as the contract acceptance was posted (constructively noticed … and actually noticed) to the live bidder outside of the UCC 2-328’s famous narrowexception.
Likewise, it would appear that saying, “Sold!” to an online bidder before posting such on the online platform would allow a live bidder’s higher offer to be accepted as the online contract has yet to be firmed. Of course, this would also allow the online bidder (or any bidder) to bid again/more.
Simulcast auctions are not for the inexperienced auctioneer as there are contract subtleties which present significant opportunity as well as substantial risk — and this type of contract formation is only one of these such nuances.
This article has been published with permission from the author.
The original article and image can be found here.
Mike Brandly, Auctioneer, CAI, CAS, 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, Executive Director of The Ohio Auction School, an Instructor at the National Auctioneers Association’s Designation Academy and America’s Auction Academy. He is faculty at the Certified Auctioneers Institute held at Indiana University and is approved by the The Supreme Court of Ohio for attorney education.