Absolute Banner, Reserve Fine Print
At a surplus equipment auction, the catalog and banner read 'ABSOLUTE AUCTION - EVERYTHING SELLS TO THE HIGHEST BIDDER.' The terms on page 2 say 'All items offered with reserve; seller may withdraw any lot.' Lot 214, a 2019 skid steer, was advertised as absolute. Bidding opened at $18,000 and reached $31,500. The auctioneer said 'I have $31,500, going once...' then the seller's representative shook his head; the auctioneer withdrew the lot and sold it privately to the underbidder for $33,000. The high bidder tenders $31,500 and demands the machine. The seller says the page-2 reserve controls and that the auctioneer had no authority to sell below $34,000. The high bidder is a dealer who says he relied on 'absolute' and lost a rental contract.
1. Is the sale with or without reserve? Explain how the catalog, banner, and page-2 terms are reconciled under UCC Article 2.
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UCC Article 2 governs auction sales of goods. Under UCC 2-328, an auction is with reserve unless the goods are explicitly put up without reserve. Here the banner and catalog say 'ABSOLUTE,' which ordinarily means no reserve and no seller withdrawal after a bid. Page 2 says all items are with reserve. Courts reconcile by asking which term is conspicuous and specific. The 'absolute' language is the specific, prominent representation for this sale and conflicts with a general boilerplate term; ambiguity is construed against the drafter, the seller/auctioneer. Also, a seller may bid at a reserve auction only if notice is given; no such notice appears. The auctioneer's withdrawal after a $31,500 bid and private sale to the underbidder is inconsistent with an absolute sale. The most defensible reading is that Lot 214 was without reserve, so the seller could not withdraw merely because the reserve was unmet. The private sale strengthens the high bidder's claim.
2. What are the high bidder's remedies and the auctioneer's exposure, and what should the auctioneer have done at the podium?
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High bidder. Because the lot was without reserve, the auctioneer was obligated to sell to the highest bidder once a bid was accepted, subject to the fall of the hammer. The bidder can demand the machine at $31,500 or, if it is gone, cover damages under UCC 2-712 plus incidental losses; specific performance is possible but weaker for a production-model skid steer. The lost rental contract may be consequential and recoverable only if foreseeable and proven. Auctioneer/seller exposure. The seller's instruction not to sell below $34,000 conflicted with the absolute advertising. The auctioneer should have announced the reserve before bidding, posted it conspicuously, or refused the absolute label. Selling privately to the underbidder after a public withdrawal creates deception and licensing exposure. Podium fix. Stop the sale, state the reserve discrepancy, withdraw the lot before bids if reserve is not met, and document. After the fact: preserve the bid log, tender the machine or negotiate, and disclose the error to the seller and board.