What Price Auctions Without Reserve?
| Date | 01 May 2001 |
| Published date | 01 May 2001 |
| Author | Frank Meisel |
| DOI | http://doi.org/10.1111/1468-2230.00331 |
CASES
What Price Auctions Without Reserve?
Frank Meisel*
The decision of the Court of Appeal in Barry vDavis (t/a Heathcote Ball
(Commercial Auctions) & Co) and Others1brings clarity to an important area,
which has been left uncertain for nearly one hundred and fifty years.
It is trite law in auction sales that the advertising of a sale by auction constitutes
only an invitation to treat, that a bid constitutes the contractual offer, and that a
contract for sale of a lot is effected on the fall of the hammer or other customary
means which constitutes acceptance of the offer. It is also the case that any bid that
is exceeded by a higher bid which is taken by the auctioneer thereupon lapses and
that, in accordance with general contractual principles, a bidder may withdraw a
bid at any time before acceptance. All of this may give way to specific provision in
the auction conditions.
It has proved difficult to fit into that structure the legal significance of an auction
sale which is expressly made ‘without reserve’. If a lot is so advertised and the
auctioneer refuses to sell to the highest bona fide bidder, either by withdrawing the
lot after the bidding has commenced or by accepting a bid on behalf of the seller, he
prevents a contract of sale of the goods or land in question arising. Does this render
the disappointed ‘buyer’ without remedy against the auctioneer or seller? The
answer given by the majority of the judges in the nineteenth-century case of Warlow
vHarrison2(albeit obiter) was that the unsuccessful buyer could recover against the
auctioneer for breach of a collateral contract to sell without reserve. Martin B said3
it seems to us that the highest bona fide bidder at an auction may sue the auctioneer as upon
a contract that the sale shall be without reserve. We think the auctioneer who puts up the
property for sale upon such a condition pledges himself that the sale shall be without
reserve; or, in other words, contracts that it shall be so; and that this contract is made with
the highest bona fide bidder, and, in case of a breach of it, that he has a cause of action
against the auctioneer.
Until Barry vDavis there was, however, no authoritative ruling on the issue and
the problem of quantification of damages for breach of such a contract similarly
had remained unresolved. The facts were as follows. The defendant auctioneers
were instructed to sell two new Alan Smart engine analysers by Customs and
Excise who had acquired them in lieu of the manufacturer’s VAT liability. The
sellers instructed the auctioneers to sell them without reserve and they were so put
up for sale. The auctioneer who took the sale, Mr Cross, tried to start the bidding at
£5000. There was no bid. He descended to £3000. Still there was none. Eventually
the claimant bid £200 for each machine. Mr Cross decided that he could not let
ßThe Modern Law Review Limited 2001 (MLR 64:3, May). Published by Blackwell Publishers,
108 Cowley Road, Oxford OX4 1JF and 350 Main Street, Malden, MA 02148, USA.
468
* Senior Lecturer, University of Birmingham. The advice and assistance of my colleagues George
Applebey, Richard Goldberg and John Miller is gratefully acknowledged
2 (1859) 1 E & E 309.
3ibid 316–317.
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