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Genty v. Chirichillo

A-3782-98T5 (N.J. Super. App. Div. 2000) (Unpublished)

AUCTIONS—When a seller reserves the right to reject auction bids, the sale is not “without reserve.” Merely authorizing property to be listed for bidding purposes with an auctioneer does not conclusively bind the owner to a subsequent contract of sale.

An auction was held with respect to certain parcels of real estate held by a combination of owners. The listing agreement with the auctioneer provided that the commission would be based on a price that was acceptable to the sellers, and that the properties were to be sold subject to their confirmation. The advertisements prepared by the auctioneer stated that all sales were subject to approval and acceptance by the sellers and their attorney. The successful bidder acknowledged that he received the Auction Terms and Conditions and Fact Sheet. One of those terms stated that the property was to be sold to the highest bidder, “with final price subject to confirmation by the owners.” It also stated that if the owner was unable to convey title, the successful bidder would be entitled only to the return of its deposit and the parties would be mutually released. Further, oral statements made at or before the time of the auction and statements made in any sales catalog, etc. were for information only and buyers were required to verify the information. The actual terms of sale would be governed by the contract of sale. Apparently, after a bidder successfully claimed three of the parcels, the various owners, members of an extended family, could not agree as to whether the prices were acceptable. Eventually, after some discussion, some of the owners signed contracts for each of the lots, but with respect to no single lot did all the owners of that lot sign the contract of sale. The successful bidder argued that the non-signers should be bound to the contract of sale because they had signed the listing agreement with the auctioneer. By that theory, they implicitly authorized the other co-owners of the property to sign the contract of sale on their behalf. The Court rejected that argument, pointing out that although not all individuals needed to sign the very same documents and that signing a written agreement that would meet the tests of the real estate statute of frauds could be accomplished by signing various parts of a contract, the listing agreement was a separate contract from that of the real estate sales agreement. Consequently, the authorization representation clause in the auctioneer’s listing agreement, whether or not sufficient to bind the owners to an auction, did not create authorization for the required signatures on a formal contract of sale for land. Moreover, the Court held that there were conditions to the auction listing as well as parties who did not sign it. The lower court held that the contract of sale was not binding on those who did not sign them, and thus were not enforceable against these parties. The successful bidder then argued that the auction at which he offered the highest bid was one that was “without reserve,” and therefore a binding contract was formed when his bid was accepted. In prior auction cases, however, the auction proposals contained certain “terms of sale,” including a minimum price, and also stated unequivocally that the contract would definitely be awarded. In those cases, the respective courts held that these provisions “transformed the sale to the equivalent of a sale ‘without reserve.’” “In the case at hand, there [was] no document signed by all the parties to be charged. There was no price term in any of the initial advertisements, which instead stated the price was subject to approval by the seller. There was no definite date for conveyance of the property.” Thus, according to the Court, there was no contract of sale. Further, there was ample reservation of rights in the advertisements for the auction, the terms for registering to be a bidder, the terms of sale and the terms of the auction contract itself. In essence, the successful bidder was “on notice that his bid was not the acceptance of a contract and that any sale had to be approved by the seller.” In sum, merely authorizing property to be listed for bidding purposes with an auctioneer and with conditions does not conclusively bind the owner to a subsequent contract to actually convey the land.


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