The Absolute Auction That Wanted a Reserve
A charity hires auctioneer Denise to sell 40 donated items at a fundraiser billed in the printed program as an 'absolute auction-everything sells to the highest bidder, no minimums.' The charity's director privately tells Denise that one item, a signed guitar, 'must bring at least $2,500 or we can't justify the donation,' and asks her to 'start it at $2,500 and if nobody bites, just pass it.' Denise knows the program says absolute. At the sale, bidding on the guitar stalls at $1,900. Denise is unsure whether to declare it sold, pass it, or announce a reserve on the spot. The charity is a client, the bidders are the public, and the printed program has already been distributed.
1. What does the 'absolute auction' designation require of Denise, and can she impose a reserve on the guitar now?
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An absolute auction means the property is sold to the highest bidder regardless of price; there is no reserve and the seller may not withdraw the item because the price is too low. Denise cannot impose a reserve on the guitar at the podium. Doing so after advertising an absolute sale would contradict the terms on which bidders relied and could expose both Denise and the charity to claims and to licensing/regulatory scrutiny. The director's private instruction does not override the public terms. Denise's correct course is to sell to the highest bidder at $1,900. If she had a concern, it needed to be resolved before advertising-by not labeling the sale absolute or by excluding the guitar from the absolute sale and disclosing that in the program.
2. Denise wants to keep the charity happy without misleading bidders. What should she do at the podium and afterward?
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At the podium, Denise should follow the advertised terms: announce clearly that the sale is absolute, take the final bid, and sell the guitar at $1,900. She should not make statements implying a minimum or 'we'll see' discretion. Afterward, she should explain to the director that an absolute sale cannot be converted to a reserve once advertised, and document the conversation. If the charity wanted a floor, the fix was prospective: change the advertising, or sell the guitar outside the absolute designation with clear disclosure. Chasing a phantom bidder or 'shill' bidding to reach $2,500 would be worse-it deceives the public and can taint the entire sale. Denise's license and reputation depend on the advertised terms matching the conduct of the sale.