- Created by: Former Member
- Created on: 03-12-19 18:50
'An offer of a unilateral contract by auctioneer (ie a promise to accept the highest bid) is accepted by the highest bidder'
At an auction without reserve, the claimant had made the only bid (of £200 each) for two engine analysers. The auctioneer considered this bid to be too low (on the basis that each machine was worth about £14,000) and withdrew the engine analysers from the sale. They were sold privately a few days later for £750 each.
The claimant sought damages alleging breach of contract by the auctioneer, since the claimant was the highest bidder at an auction without reserve. The claimant claimed damages of £27,600, being the difference between the value of both machines (£28,000) less the total amount of his bid (£400).
Held: The auctioneer was liable. Following Warlow v Harrison , at an auction without reserve there was a collateral contract between the auctioneer and the highest bidder based on the auctioneer's undertaking to sell to the highest bidder. By withdrawing the machines from the auction, the auctioneer was in breach of this contract, and was liable to pay the highest bidder the difference between the bid amount and the market price at the date of the auction of the goods withdrawn. The only evidence of market price was the manufacturer's list price for new machines—namely, £14,000 each.
SIR MURRAY STUART SMITH LJ: The judge held that it would be the general and reasonable expectation of persons attending at an auction sale without reserve that the highest bidder would and should be entitled to the lot for which he bids. Such an outcome was in his view fair and logical. As a matter of law he held that there was a collateral contract between the auctioneer and the highest bidder constituted by an offer by the auctioneer to sell to the highest bidder which was accepted when the bid was made. In so doing he followed the views of the majority of the Court of Exchequer Chamber in Warlow v Harrison (1859) 1 E & E 309 ... (p. 36)
[Counsel] on behalf of the defendant criticised this conclusion on a number of grounds. First, he submitted that the holding of an auction without reserve does not amount to a promise on the part of the…