Auction bidder buys, takes … and doesn’t pay
Our discussion today regards a [hopefully] somewhat infrequent occurrence at personal property auctions. A bidder registers for the auction, bids, buys, removes, thus taking possession and control of the subject property but doesn’t pay.
The question we tend to get is, “This is theft, right?” We typically answer, “Probably not, and likely only a contract breach.” However, could a contract breach rise to a criminal matter?
There is of course legal discussion regarding that question; in other words, can a civil breach of contract rise to a criminal violation? Law Professor Monu Bedi of DePaul College of Law wrote a wonderful analysis of this topic in 2012: https://readingroom.law.gsu.edu/cgi/viewcontent.cgi?article=2667&context=gsulr
Professor Bedi concludes that in society today, some contract breaches can result in criminal charges when there is fraudulent inducement and/or in essence pre-contract intent to breach (and thus no mutual assent and maybe no contract at all.) Said another way, private matters between contracting parties (civil) can sometimes rise to the level of harming society in general (criminal.)
William E. Stoner of Stoner Grannis, LLP wrote an shorter treatise on when a contract breach becomes criminal due to fraud (intent to inflict financial harm:)http://stonergrannis.com/when-a-breach-of-contract-becomes-fraud/
It is important to note that this is distinctly different that a buyer buying, not taking (possessing/controlling) and not paying … as we discussed here: https://mikebrandlyauctioneer.wordpress.com/2017/11/16/at-auction-can-we-force-sellers-to-sell-buyers-to-buy/
The gist of this analysis is that if there was no fraud (including fraudulent inducement,) no lack of genuine intent to contract and no other criminal activity, then a bidder who becomes a buyer and takes that item of personal property without paying is likely only liable in a civil matter, and not a criminal one.
Lastly … as an auctioneer it’s best to check with two people to decide your next steps in the case of an in-possession-non-paying-buyer: your client and possibly your attorney if the value of the subject property is material.
This article has been posted with permission from the author.
The original image and article 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 of Business, Executive Director of The Ohio Auction School, an Instructor at the National Auctioneers Association’s Designation Academy and Texas 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.