The parties to an auction sale are the bidder and the owner of the goods. The auctioneer simply provides a service and is not a party to the contract between the buyer and the seller. The general rule is that the auctioneer’s request for bids is an invitation to treat, and each bid is an offer. Each bidder’s offer lapses as soon as a higher bid is made, and an offer is accepted by the auctioneer (on behalf of the seller) on the fall of the hammer. Any bidder may therefore withdraw a bid before the hammer’s fall, and the auctioneer may also withdraw the goods on behalf of the seller before that point.
Advertisement of an auction
An advertisement that an auction is to take place at a certain time is a mere declaration of intention and is not an offer which those who attend at the specified time thereby accept.
Auction ‘without reserve
In many cases, sellers at an auction specify reserve prices – the lowest prices they will accept for their goods. If nobody bids at least that amount, the goods are not sold. An auction ‘without reserve’ on the other hand means that the goods will be sold to the highest bidder, however low their bid.
An advertisement that includes without reserve becomes an offer from auctioneers to the public at large, that is if the auction is held they will sell to the highest bidder. The offer is accepted when a person makes a bid and when doing so assumes that there is no reserve. That acceptance completes a contract, which is separate from any contract that might be made between the highest bidder and the owner of the property being sold.
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