The Legality of Bidding at an Auction
We have all seen a movie with an auction scene. These scenes are very memorable and full of action. Such scenes usually have very well off people trying to flex their financial muscles by outbidding one another. They are usually depicted bidding on things like precious works of art, cars, and sometimes the most mundane things. Without a doubt, auction scenes in movies are good for entertainment. In real life, an auction is a serious business operation with legal implications. The Black’s Law Dictionary defines an auction as “a public sale of property to the highest bidder by one licensed and authorized for that purpose”. An auction, just like any other business operation, is all about contracts and contractual agreements that are binding and come with responsibilities that are impossible to dodge. In case you have forgotten, for a contract to be formed, there must be an offer (for the good or service), an acceptance (an agreement to the offer by the parties), and a consideration (money). The auction catalog released by the auctioneer calling for bids can be described as the offer i.e., an invitation to bidders to submit their offers. Each bidder makes an offer when they indicate their bid and finally, an acceptance of one of the offers happen when the auctioneer bangs the hammer and awards the bid. This is all a legally binding process. Don’t bid unless you know that you want the product that is up on the block. You just might have the highest bid!
You might be wondering how the terms of the contract are defined in an auction since the parties don’t sit down to execute documents. The terms of the contract for an auction sale are open for all to see. These terms and conditions are typically published on the website where you got the information about the auction in the first place. It can also be found multiple places usually. So, whether they are on the catalog of the auction house or they are printed on a piece of paper and handed over to the bidders as they enter the auction hall, the terms and conditions of the bidding contract are made clear. Immediately after you enter the auction hall (or log on to your computer for online auctions) and decide to participate by submitting a bid, you have agreed to the contract terms stipulated by the seller and they will be binding if you end up being the highest bidder and win the bid. This is why it is important to study the auction catalog and all the information published by the seller or auctioneer in respect of the item you’re interested in submitting a bid for. It is impossible to claim ignorance of these terms after you’ve made a winning bid. The contract will be binding and the court will enforce the contract. We here at Busy Beever publish the terms and conditions in multiple places so that it is easy for our customers to see. We are very transparent.
There are several reasons why a bid needs to be legally binding. Even though the real-life bidding process is not always as fun as it is in the movies, it can still be exciting – especially if it is your first time. If there is no legal backing for the bidding process then it will almost always be a waste of time. You would have people bidding who were merely looking for some excitement. The bidding halls would be filled to the brim with people that are looking to live out their favorite auction movie scene just for the thrill. It would be a blatant waste of time with many winning bidders claiming the bid was a mistake or making excuses to get out of paying. Practically, nothing would be achieved if the bid wasn’t legally binding.
Another example of when a bid is contractually binding is in the construction industry. People that work in the construction industry are more familiar with bidding and the legality of the entire bidding process because they go through this process so often. For extraordinarily high priced items in an auction or large project bids, the potential buyer is required to show that they are prepared to follow through with delivering on their end of the deal. If you turn out to be the lucky bidder whose bid for the project execution is favored you will fulfill the other leg of the contract according to the terms and conditions in the description. If someone were to try to back out of their end of the deal, the project sponsor or auctioneer to whom you have submitted a bid has the right to cite the bid and receive compensation legally. This is very important to the party that is auctioning the item off. They can have peace of mind knowing that all bids are going to be fulfilled. Some online auction platforms are starting to obtain the payment information of bidders, like credit card details, and they are authorized to execute a payment. With this information on file, the winning bidder can be charged immediately to settle payment for the bid amount. Out of all of the Auctioneers in Kansas and Missouri, we truly strive to be the most trusted.
A huge importance of making bids legally and contractually binding is to protect the winning bidder. There is often more than one person interested in an item up for bid and even though a winner has emerged, nothing is stopping other bidders from offering a higher price after the hammer hits the table. Sometimes, people only realize how much they want something until that thing is out of their reach. We all usually want what we can’t or don’t have. If a bid is not a legally binding contract, then the auctioneer will be at liberty to accept higher offers from interested buyers even after a bid has been won and awarded. This would be a great disservice to the winner of the bid. Here at Busy Beever, we would never do that to any of our Kansas City Auction goers. Overall, it is great that auctions are regulated by the law. In case you were wondering what the legal implications of submitting a bid during an auction was, this should clear your questions up.
If you have any other questions feel free to give us a call at (816) 820-1124!
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