Can I Negotiate After an Auction By Bailey Compton 13 Oct 2023

Going going gone?

I was posed a question in training this week that I didn’t expect. I was training an auction course to a group of would-be agents.

I thought it was well-known that an auction is conducted to set the price. I explained that, there is a special relationship between the auctioneer and the participants.

I told the class of a case of Bell v Balls [1897] 1 Ch 663, where the judge said there was an implied contract with the vendor and purchaser. The vendor is promising that if the property sells above the reserve, they will sell at that price. Alternatively, a purchaser promises that, if they are the highest bidder at the fall of the hammer and above the reserve, they will purchase the property.

The case also stated that, this implied contract empowered the auctioneer to execute the contract on either party’s behalf.

I was then asked: “Can I negotiate with a purchaser after the fall of the hammer, even if it is above the reserve?” I thought I misheard, so I clarified the question.

I advised the student that the purpose of the auction was to set the market price. He said “but the vendor can refuse to execute the contract and put pressure on the purchaser”. His chin hit the table when I reminded him that the auctioneer’s duty is to execute the agreement and bind the parties.

I knew it existed! It demonstrated that some parts of our industry fail to honour the sanctity of contract.