MBE Rules · Contracts
Auctions
UCC §2-328
The rule
In auctions with reserve the seller may withdraw goods before the hammer; without reserve the goods cannot be withdrawn after bids open, and a seller's planted bids allow the buyer to take at the last good-faith bid.
In plain English
In an auction with a reserve price, the seller can withdraw the item before the bidding ends if they are not satisfied with the bids. However, in an auction without reserve, once bidding starts, the seller cannot withdraw the item, and if they place fake bids, the buyer can win the item at the last legitimate bid.
Worked example
At a reserve auction, the seller decides to withdraw a painting before the bidding reaches the reserve price of $1,000. In contrast, at a no-reserve auction, the seller cannot withdraw a vintage car once bidding starts, even if the highest bid is only $500. The car is sold to the highest bidder at $500.
Memory hook
In reserve auctions, sellers can back out; in no-reserve, they’re stuck with the last bid.
The trap
Exams may confuse students by presenting scenarios where the seller's ability to withdraw is ambiguous, especially in mixed auction formats. Watch for details on whether the auction is with or without reserve.
How examiners test it
Questions often involve fact patterns where the seller's actions during the auction lead to disputes, requiring candidates to identify whether the auction was with or without reserve.
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