MORE AUCTION RIGHTS

In the January/February, 1997 issue I devoted my column to "Auction Rights". Since that time I have referred to auction related matters in subsequent articles, as a result of questions and comments of readers. More recently, a subscriber has put a number of questions and concerns to me, to be addressed. I have taken the liberty of consulting with a well known auctioneer with whom I am acquainted and to whom I have personally consigned goods for auction. This article is accordingly primarily based upon comments I have received from John Simpson, Auctioneer(ICCA).

AUCTIONEER PERMITTING CONSIGNOR TO BID ON OR BUY HIS GOODS: The practice is illegal. As I indicated in an earlier article, the auctioneer is the agent of the consignor. A bid is an offer and it is up to the auctioneer to indicate acceptance. This is the law of contract in its simplest form...an offer and acceptance which forms a binding agreement. When the consignor bids or buys back, the practice is accordingly, in my opinion, a nullity since we are not dealing with two parties which is what is required in order for there to be a contract. Mr. Simpson indicates that it may be difficult to prove the consignor's involvement in the process. An auctioneer should not condone the practice. If it does happen, Mr. Simpson suggests that you approach the auctioneer with your suspicion or write a letter of complaint. Often the auctioneer has no idea who the consignor is and is unaware of this type of bidding. Sometimes the owner of the item does not even realize that he or she is bidding against himself, and just pops in a bid in the heat of the action. Mr. Simpson further advises that in a fast paced auction, the auctioneer does not have the time to take all these actions into consideration, and he may not want to break the rhythm of the sale. However, blatantly bidding up one's lots is controllable, and a good auctioneer, without affecting the rhythm of the sale, will try to ignore the bids, or as a last resort stop the sale and request that the owner not bid on his own items failing which no further items of the consignor will be put up for sale. Obviously, the entire sale could be jeopardized if the auctioneer is required to take such action. Mr. Simpson indicates that the best procedure an auctioneer can follow is to request consignors not to bid on their own items prior to the sale or, better yet, have the consignor sign an agreement to this effect.

THE AUCTIONEER BUYING BACK THE GOODS OR "CONTROLS" BIDS: Sometimes the auctioneer may be the owner of the goods, which is not unusual in circumstances such as where the auction house has purchased an estate. If he attempts to buy back the items in a bidding situation, without a posted reserve policy or announcement, then, according to Mr. Simpson, he or she is in an obvious conflict of interest which becomes a matter of concern. The more common scenario would appear to be where the auctioneer does not accept a bid towards an item owned by a consignor. The auctioneer has an obligation to work for the consignor, as his agent. The terms and conditions of the auction should state that the auctioneer has the right to not accept a (low) bid which may not be commensurate with the value of the article being offered. If there is no apparent interest in an item (an appreciable opening bid), the item may be passed from the block by the auctioneer. Sometimes when there is a single obviously very low bid, the auctioneer will announce that he is not required to accept a first bid. This may in fact be one of the terms and conditions of the auction. Mr. Simpson goes to great lengths to stress the importance of reading the terms and conditions pursuant to which the auction is being held. WHO IS DOING THE BIDING: A bidder as no "right" to know who has consigned the goods in the auction as this is privileged information, and often the sellers does not wish to have their names divulged. Where provenance may be important to the historical or monetary value of an item, the auctioneer may release some pertinent information to the purchaser, unless specifically requested not to do so by the consignor. I have been in attendance at a Simpson Auction where I have found it useful and interesting where Mr. Simpson has provided some historical background, including the name of the consignor. However, this is a matter between the auctioneer and the seller. The issue of greater concern is with respect to "friends" or "shills" in the audience. Mr. Simpson acknowledges that this was once a common practice, stating it is no longer commonplace. He advises that if you suspect that this is happening you should approach the auctioneer with your suspicions and gauge his response. This may result in his stopping the practice. If not, then you should refrain from attending his sales or keep an eye open for the occurrence of this practice and simply not bid when it is occurring. Mr. Simpson has indicated that he has noticed that many inexperienced auction customers are sometimes overly wary of persistent and frequent bidders to their own detriment. What often happens is that the "suspect" is simply a dealer who is buying many lots, or a person who just enjoys getting in on the action and bidding up a number of items, not really having a serious intention of purchasing anywhere close to the number of items upon which he is bidding. If you want to find out who is bidding against you, either stand at the back in order to observe the proceedings or at the side near the front of the hall. Mr. Simpson also advises following the auctioneer's eyes as he must make visual contact with bidders. This may be problematic if the auctioneer is using a spotter or accepting an absentee bid. Furthermore, since many attendees at auctions want some privacy sometimes the wink of an eye will be acknowledged as a bid by the auctioneer and you may experience difficulty in determining against whom you are bidding. The auctioneer is trained to pick up bids from individuals other than those who raise their hands high or call out.

ABSENTEE BIDS: Absentee bids should be kept absolutely confidential. Our reader expressed a concern about a bid being left for $300.00, and when the article comes up for sale, the auctioneer requests bids of $100.00 increments. The practice has not been used in the past throughout the auction, and the article sells for $400.00 to someone not in attendance. Such a scenario does not necessarily mean that anything underhanded is occurring. However, auctioneer practices vary in this area. Mr. Simpson states that sometimes the bidding is open to the floor at lower than the absentee bid and left to competitive bidding between the absentee bidder and floor and/or other absentee bidders. Theoretically the absentee bidder should win the bid at one increment higher than the second bid from the floor. In some cases when bidding is very competitive, the auctioneer may open the bidding at the absentee bid amount which can be overbid by the floor. You must trust your auctioneer in this situation. Most auctioneers should have a written absentee bid policy if they are accepting such bids. Mr. Simpson suggests that you ask for a copy of the policy. It will normally absolve the auctioneer and his staff from any liability with regards to missing your bid or failing to execute a bid on your behalf. Occasionally this happens in the heat of the bidding, even to the best of auctioneers, according to Mr. Simpson. I must admit that the area of absentee bidding has left me perplexed in certain situations, even though I have been attending auctions for well over thirty years. Our reader has asked about lodging a formal complaint respecting auction practices with government bodies. Mr. Simpson has indicated that prior to lodging any type of complaint it would be a good practice to ascertain if the practice being questioned by you is actually illegal. By unjustifiably lodging a complaint you might jeopardize a relationship with the auctioneer by spreading unjust rumors. Certainly if you disapprove of the "poor" practices, you should consider not attending the sales of this auctioneer. Mr. Simpson has pointed to the easiest way of avoiding problems. Simply ask the auctioneer for a copy of the terms and conditions for the sale. Most auctioneers at the beginning of the proceeding rattle off terms and conditions to inform bidders of the selling procedures. They may vary from one sale to another. A concerned professional auctioneer should have copies of the terms and conditions available for any bidder who wishes one. Furthermore, such a document should be posted at each sale. It should answer most of the questions regarding the practices and procedures of the auction. Mr. Simpson has also suggested that you approach the auctioneer prior to the sale to obtain clarification of any of the posted terms or if such a document does not exist, for the purpose of clarifying for yourself procedural matters such as reserve bids, consignees bidding on their own goods, absentee bids, and so on. A professional auctioneer should always be open to such inquiries and constructive criticism which is brought to his attention. With respect to complaining to government bodies, my experience is corroborated by the comments of Mr. Simpson. That is, going to the Better Business Bureau, the Police, or the Ministry of Consumer and Commercial Affairs will do little if anything to provide assistance. My experience has been that the particular regulatory body of the particular profession is the best place to go. Professions are extremely interested in maintaining integrity. Accordingly, if you have a complaint about a lawyer, you should go The Law Society of Upper Canada (Complaints Department). In our scenario, you should go to the Ontario Auctioneers Association. It may turn out that the particular auctioneer is not a member. However, the organization does carry considerable influence amongst peers as most reputable auctioneers in the Province are members, according to Mr. Simpson. It would appear that this organization is presently not a regulatory body. Mr. Simpson hopes that in the near future it will be self governing and self disciplining as is the case with The Law Society, The Ontario Real Estate Board, The Ontario Dental Association, and others. If any readers are interested in receiving the entire text of Mr. Simpson's comments respecting auction practices, I would be pleased to forward same upon my receipt of a stamped self-addressed envelope. Please write to Alvin Starkman c/o Banks & Starkman, 200 Ronson Drive, Suite 310, Toronto, Ontario, M9W 5Z9. Mr. Simpson can be reached at P.O. Box 400, Creemore, Ontario, L0M lC-JO, Telephone No. (705) 466-2207 and Fax No. (705) 466-2225. If readers have any specific concerns, issues or areas of law with which they would like me to deal in future columns, please let me know in writing and I will do my best to cover areas in future columns, subject to the dictates of the editor of The Upper Canadian.

 

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