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The Estate That Was Advertised "Absolute"

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The Estate That Was Advertised "Absolute"

Halden Auctions advertises a 240-lot estate sale in print, on its website, and on two yard signs as "ABSOLUTE AUCTION - every lot sells to the highest bidder, no minimums, no reserves." Twenty minutes before the 9:00 a.m. start, the estate's attorney hands Halden a note. The estate authorizes Halden to bid up to $2,000 on a 1968 tractor "to protect the family," and asks Halden to let the attorney's nephew, who is helping clean out the barn, bid on the tool lots. The tractor opens at $1,200 to two bidders. Halden's clerk also reports that a phone bidder left a $1,900 maximum bid and a voicemail saying he "expected to be called back before the tractor sold."

1. How should Halden handle the two requests in the attorney's note, and why?

Read the worked answer

Both requests must be refused as framed, and the refusal documented.

1. The "protective" bid on the tractor.

  • The sale was advertised as absolute. That is a promise to the buying public: every lot sells to the highest bidder, with no reserve and no seller bidding designed to prop up the price.
  • A seller-directed bid to "protect the family" is a reserve in disguise. Buyers who read "absolute" bid aggressively precisely because they believe the seller cannot bid them up; allowing it deceives them about the real state of demand.
  • Even in a with-reserve sale, a bid taken on the seller's behalf is improper unless the auctioneer clearly announces that the bid is on the seller's behalf. In an absolute sale there is no way to announce it that makes it honest - the advertisement and the announcement would contradict each other.
  • Response: decline in writing (a text or email before the sale is enough), state that the sale is advertised absolute and cannot include seller bidding, and note that if the estate wants a floor, the sale must be re-advertised as with reserve and postponed.

2. The nephew bidding on the tool lots.

  • A relative of the seller may bid, but only as a genuine buyer with no special information or advantage, and the relationship should be disclosed to the auctioneer and, where it could affect appearance, announced.
  • Halden should not let the nephew clerk, carry lots, or handle money on the same lots he bids on, and should not accept the nephew's bids if he is acting as the estate's agent in the cleanout rather than for himself.
  • Response: get it in writing what capacity the nephew is bidding in; disclose the relationship; keep his bids arm's-length and documented.

2. Suppose Halden instead runs the tractor to $2,000 using bids "off the wall" that no real bidder made, then knocks it down to a real bidder at $2,050. What has he done, and what are the consequences?

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That is fictitious bidding - commonly called chandelier bidding - and it is a misrepresentation of the state of the bidding.

What is wrong with it:

  • Every bid announced from the block represents to the room that a real person has committed to that price. A bid taken "off the wall" is a fiction, and bidders who raise their own bids in response are being manipulated by a phantom competitor.
  • In this scenario it is worse than a generic fiction: the phantom bids were used to push a real bidder from somewhere under $1,200 up to $2,050 - a price the bidder may not have paid against genuine competition.
  • It compounds the absolute-auction problem: the advertisement promised no seller influence, and the seller's agent was in fact driving the price.

Consequences:

  • Discipline against Halden and the company for misrepresentation and for conduct that defrauds or misleads the public.
  • Civil exposure. The bidder can argue the sale should be rescinded or the price adjusted, and the estate's attorney - who directed the bid - is not a shield; Halden knew what he was doing.
  • Reputational/contractual fallout with future sellers and with the online platform if the sale was simulcast.
  • Criminal exposure in extreme cases of fraudulent bidding schemes.

What Halden should do instead: open the tractor at a price supported by a real bidder or a real absentee bid, take only genuine bids, and if bids stall at $1,200, sell it at $1,200. That is the price of having advertised "absolute."

3. How should Halden handle the phone bidder's $1,900 maximum bid?

Read the worked answer

Handle it as an absentee bid, under the terms stated before the sale - not under the bidder's assumption.

  1. The written terms control. Halden's registration materials and website should state how absentee and phone bids are executed: whether they are opened at the lowest competitive increment, whether the auctioneer executes them against live bidders, whether phone lines are guaranteed, and the deadline for leaving a maximum bid. If those terms were published, Halden follows them.
  2. A $1,900 maximum is an instruction, not a sale. Halden may execute it against live bidders up to $1,900. If live bidding reaches $2,050 without the phone bidder, the phone bidder loses - a maximum bid is not a guarantee of a call-back.
  3. The voicemail expectation does not create a duty. "I expected to be called back" is not a contract term. But if Halden's own advertising promised call-backs, Halden must follow its own terms; if it did not, the bidder's expectation is his own.
  4. Document it. Log the time the bid was received, the amount, the clerk who handled it, and how it was executed. If the phone bidder later complains, the log is the defense.

The judgment point: a maximum bid entered before the lot opens must be honored up to its limit. One that arrives after the lot is sold is a would-be bid that missed the deadline. Halden should state the rule before the sale, apply it the same way to every absentee bidder, and write down what happened.