AUCTION

auction,n.  A  sale  of  property  to  the  highest  bidder.  •  Under  the  UCC,  a  sale  at  auction  is

complete  when  the  auctioneer  so  announces in  a  customary  manner,  as  by  pounding  a  hammer.

UCC § 2-328. — Also termed auction sale. [Cases: Auctions and Auctioneers    1. C.J.S. Auctions

and Auctioneers § 3.] — auction,vb.

auction without reserve.An auction in which the property will be sold to the highest bidder,

no  minimum price will limit bidding, the  owner  may  not withdraw property after the  first bid is

received,  the  owner  may  not  reject  any  bids,  and  the  owner  may  not  nullify  the  bidding  by

outbidding  all  other  bidders.  •  In  an  auction  without  reserve,  the  owner  essentially  becomes  an

offeror, and each successively higher bid creates a contingent contract, the highest bid creating an

enforceable  agreement.  —  Also  termed  absolute  auction.  See  WITHOUT  RESERVE.  [Cases:

Auctions and Auctioneers    7. C.J.S. Auctions and Auctioneers §§ 2, 8–17.]

auction with reserve.An auction in which the property will not be sold unless the highest bid

exceeds  a  minimum  price.  See  WITH  RESERVE.  [Cases:  Auctions  and  Auctioneers    7.  C.J.S.

Auctions and Auctioneers §§ 2, 8–17.]

Dutch auction. 1. An auction in which property is initially offered at an excessive price that is

gradually  lowered  until  the  property  is  sold.  2.  An  auction  in  which  several  identical  items  are

offered  simultaneously,  one  to  a  bidder,  and  sold  to  the  highest  bidders  for  the  amount  of  the

lowest  winning  bid.  3.Securities.  A  method  of  tendering  stock  shares  whereby  a  corporation

provides a price range, shareholders indicate how many shares they will sell and at what price, and

the  corporation buys however  many shares it wants at the lowest prices offered. — Also termed

Dutch-auction   tender   method.[Cases:   Auctions   and   Auctioneers      7.   C.J.S.   Auctions   and

Auctioneers §§ 2, 8–17.] 4.Securities. An auction  of securities, usu. other than stock, in which a

security’s price is gradually lowered until it meets an acceptable bid and is sold. 5.Securities. An

auction  of a new issue  of stock in  which there is a stated  minimum  price  per share, but bidders

may offer a higher price for any number of shares until the highest price offered becomes the final

price  at  which  all  the  shares  issued  will  be  sold.  —  Also  termed  (in  sense  4)  offer  for  sale  by

tender.

knock-out auction.An  auction  at  which  two  or  more bidders  have  agreed  in  advance not to

bid against one another. • At common law, knock-out auctions were not forbidden, on grounds that

a person could not be constrained to make an offer. But most jurisdictions now have statutes that

(1) forbid dealers (those who buy at auctions with the intention of reselling to others) from giving

or offering an inducement to abstain from bidding at an auction, and (2) penalize the person who

seeks such an inducement from a dealer.[Blacks Law 8th]