The Estate Ring and the Late Bidder
Marlene is the licensed auctioneer for the estate of a deceased farmer. The will authorizes her to sell 'all farm equipment at public auction, with confirmation by the personal representative.' She runs a live, unreserved auction with no reserve announced. At the ring, a tractor is bid up to $18,400. Marlene calls 'going once, going twice,' and as she begins 'sold to number 214,' a bidder at the back raises a paddle and shouts $18,600. Number 214 has already begun walking toward the cashier. The personal representative, standing nearby, says, 'Take the higher bid, it's better for the estate.' Marlene hesitates. Her written terms, posted at the gate, state that the auctioneer's call of 'sold' concludes the sale and that the auctioneer may reopen bidding at her discretion before the fall of the hammer only.
1. Has a contract of sale formed with bidder 214 at the moment Marlene says 'sold'? Explain, including the effect of the posted terms.
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Yes, in the ordinary course a contract forms when the auctioneer accepts the highest bid by the fall of the hammer or the call of 'sold.' The bidder's offer is accepted at that moment, and the posted terms merely restate the common-law rule; they do not create a new one. The shout of $18,600 came after acceptance, so it is a new offer that has not been accepted. Marlene cannot simply reassign the item to the late bidder without addressing the existing contract. The personal representative's instruction to 'take the higher bid' does not by itself undo the completed sale; the PR's confirmation power is a condition of the estate's authority, not a license to disregard an accepted bid.
2. Can Marlene reopen the bidding? What should she do, and what risks attach to each option?
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Reopening after a clear call of 'sold' is risky. Her own posted terms limit reopening to the period before the fall of the hammer, so reopening now would contradict her terms and expose her to a claim by bidder 214 for breach or for the difference in price. If she honors the sale to 214, she may face criticism from the PR but is legally safest. If she believes the call was ambiguous (e.g., she had not finished the word 'sold'), she may have grounds to argue no acceptance occurred, but she should document exactly what was said and when. Best practice: honor the sale to 214, explain to the PR that the contract had formed, and note the late bid in the record. If the PR insists, the estate-not Marlene personally-should seek the buyer's agreement to rescind.