Can your bidder’s offer (bid) be irrevocable?
Bid calling is made up of offers and acceptances — which forms contracts from the first bid until the last. We discussed this in more detail here:https://mikebrandlyauctioneer.wordpress.com/2014/08/11/bid-calling-is-just-numbers/
A twist on this offer and acceptance is that some auctioneers want the bidder to offer, and require that offer remain open (incapable to be revoked) for a certain period of time, until accepted or rejected later — a.k.a. a firm offer. This is contrary to basic contract law in the United States and counters the UCC 2-328as well.
The UCC 2-328 sentence #7 as we discussed here (https://mikebrandlyauctioneer.wordpress.com/2017/11/02/the-ucc-2-328-sentence-7-of-9/) states that bidders may retract (revoke) their offer until the completion of the [auction] sale.
Further, all offers are revocable at any time prior to acceptance, even those offers that purport to be irrevocable on their face. However, the one exception to the unenforceability of irrevocable offers is a merchant firm offer. Here are more specifics on merchant firm offers:
“In the United States, an exception is the merchant firm offer rule set out in Uniform Commercial Code – § 2-205, which states that an offer is firm and irrevocable if it is an offer to buy or sell goods made by a merchant and it is in writing and signed by the offeror. Such an offer is irrevocable even in the absence of consideration. If no time is stated, it is irrevocable for a reasonable time, but in no event may a period of irrevocability exceed three months. Any such term of assurance in a form supplied by the offeree must be separately signed by the offeror.”
You rightly might wonder who is (what is) a merchant? Generally, one is a “merchant” only for the purposes of the business in which he is regularly engaged. A farmer, a software company representative, a grocery store proprietor … but not just anyone walking down the street. Therefore, an auctioneer’s typical bidder/buyer would not be considered a merchant.
Lastly, two parties could in essence agree to keep an “offer” open for a period of time — which would constitute a contract (an option contract) rather than an offer. Such a contract would have to contain an exchange of consideration to be valid — which would typically be paid by the offeree (the auctioneer/seller) to secure the option to accept for a specific fixed period of time.
Are you an auctioneer accepting bids (offers) which you are considering irrevocable? If it’s an offer, it’s almost assuredly revocable. However, if it’s an option (contract) what consideration are you providing to your optionor in these instances?
The original article and image can be found here.
This article has been publsihed with permission from the author.
- 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, an Instructor at the National Auctioneers Association’s Designation Academy and Faculty at the Certified Auctioneers Institute held at Indiana University.