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Auctioneer Bidding… Is it Legal?
Auction House Bidding & Selling
Auctioneer/Seller Withdraws an Item with Bids. Is It Legal?

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1,361 Responses to Your Questions & Comments

  1. Ward Eisinger says:

    My children participate in 4-H and sell their animals at an Auction at the County Fair. This past year the Auction was taken over by the parent organization for the 4-H clubs in the County and they implemented new rules for the auction, that they are now requiring the children to agree to be bound by.

    There are two rules that seem to favor the buyer over the seller, which raises issues of why 4-H would want to saddle their youth with the risk of the sale and absolve the buyers from any risk. The rules also serve to minimize the risk to the parent organization as well.

    Rule 1: “If a sale animal dies after the auction but before being processed at the plant the buyer will be contacted and given the choice of a replacement animal of like quality and size or their money refunded. The [Name Redacted] fund will contribute up to $2500 for the replacement of the animal. If the replacement cost of the animal is more than $2500, the seller will be responsible for the difference (difference to be withheld from sellers proceeds). If the buyer chooses to be refunded, the buyer will be refunded from the sale proceeds and the seller will be paid from [Name Redacted] fund for the sale cost of the animal, payment not to exceed $2500.”

    It is important to note here that animal transport is arranged by the Auction, not the seller, and that some livestock sold at the auction will sell for close to $20,000. Also some animals do not go to a processing plant and may be used in a petting zoo or other arrangement and animals that die within a few days of the auction are again the responsibility of the seller even though the animal has been relocated to another venue and is no longer under the seller’s care.

    The more troubling rule is:
    Rule 2: “If a buyer fails to pay their invoice, every effort will be made to collect monies owed with letters and statements. If those efforts fail after 5 months, the [Name Redacted] Auction Committee will pay out to the sellers fair market value according to the September USDA Report not to exceed $2500 per animal.”

    The Auction will withhold a 5% fee for running the auction, but the parent organization refuses to take legal action in the event of a buyer failing to pay after 5 months, even though the buyer received the animal and failed to abide by the auction rules for payment. I perceive this as a conflict of interest for the parent organization since the buyers are likely to be corporate buyers that may also be donors to the parent organization.

    Regardless it is my understanding that the sale through the auction process represents a sales contract between the buyer and the seller. The Parent organization arranges the auctioneer, is supposed to vet the buyers, collect the money, and transmit the funds to the seller once all of the auction payments have been made. Five months seems like a crazy payment period for a consumable commodity. Compensating at a price significantly less than the value of the animal or the agreed auction price seems troubling, if not illegal.

    I attended an Auction Committee meeting where these rules were discussed along with the cost for kids to purchase their pedigreed show animals ($200+) for a piglet. Market price last year for swine in September was about $0.50 per pound. Pigs in the auction will weigh from 260-325 lb. So market price for these pigs would have been $130-$162.5. In other words the Auction Committee is comfortable forcing kids to take a loss on the animals without even considering the costs of feed, and the time and effort to raise and show an animal. Pigs typically sell for about $2 per pound at the auction which again shows that they are valued higher than market rate on the day of the auction.

    The auction is in Maryland and I understand that auctioneers are not required to be licensed in Maryland, but is the operator of the Auction allowed to set rules that seem to contradict the idea of the auction as a contract of sale?

    I am trying to figure out why the Parent organization is unwilling to insure and/or bond the auction. Would that be something they could do?

    Your answer would be greatly appreciated.

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