Contract Law: Sale by Auction; Undeclared Reserve Price
<p>What is the correct position: during an auction, the Auctioneer accepted a bid but when the client returned to pick up the sold item, the Auctioneer declined to get the money saying the accepted price was fall below the reserve price. Can the bidder who won sue for breach of contract?</p>
<p>NB: The Auctioneer did not mention that there was a reserve price on the item.</p>

<p>Generally, the bids are the offer which the auctioneer may, but is not bound to, accept. (<em>Chitty on Contracts</em>, § 4-025). Many Sale of Goods Acts specify that the &quot;<strong>sale is complete when the auctioneer announces its completion by the fall of a hammer</strong>&quot; (see <a href="https://www.ontario.ca/laws/statute/90s01#BK60" rel="nofollow noreferrer">Ontario's Sale of Goods Act</a>; see also <em>Chitty on Contracts</em>, § 4-025). If the auctioneer is not going to accept the bid, the auctioneer may withdraw the lot.</p>
<p>If the property is put up for auction <em>subject to a reserve price</em>, no contract is formed if the auctioneer mistakingly purports to accept a bid lower than the reserve price (<em>Chitty on Contract</em>, § 4-026).</p>
<p>Any after-the-fact declaration of the existence of a reserve bid has no bearing on the formation of the contract.</p>
<p><strong>The only thing that matters is whether the property <em>is put to auction</em> subject to a reserve price</strong>.</p>
<ul>
<li>If it <em>is not put up subject to a reserve price</em>, then the contract for sale is formed with the highest bidder when the auctioneer announces the completion of the auction.</li>
<li>If the property <em>is put up subject to a reserve price</em>, then no contract is formed, even where there is purported acceptance by the auctioneer.</li>
</ul>

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