If you cannot bear being outbid, then auctions are not for you. But I have to say that I did feel a little let down…
It was not a big deal, just my unsuccessful attempt to buy a drawing that had caught my eye in the auctioneer’s catalogue.
I was not able to attend the auction but I spoke with the auctioneer, who said that I could “leave a bid” with him for the lot. To be honest, I cannot now remember whether words like “agent” or “proxy” were used. But I came away from the encounter with the impression that the auctioneer was an agent – indeed, my agent – and that I had entrusted him with my bid.
I did not get the drawing. The guide price was £200, my bid was £250 and the lot was knocked down at £260. Fair enough, I thought – if you can’t stand the heat of the auction, get out of the saleroom.
But later I learned from a friend who was at the sale that, when “my” drawing was put up, the auctioneer’s first words were something along the lines of “I’ve got a bid for £250. Who will give me £275?” I also learned that the lot was sold only after a lot of huffing and puffing by the auctioneer, followed first by cajoling, and then by pleading.
I think many lawyers stop thinking like lawyers when they leave their offices. I should, I now realise, have understood that the auctioneer’s overriding duty is to get
the best price for his client: the seller. And I do recognise that he duly discharged this duty.
But when I got back to work I thought a bit more about proxy bids. It is one thing me losing out on something that I thought would look nice hanging up in my dining room – my wasted costs were minimal.
However, consider someone looking to secure a lot at a property auction. He or she would have commissioned a survey, asked a solicitor to review the legal pack, secured an offer of finance (or rearranged his or her affairs to have finance available) and got insurance cover ready.
I was lucky to be able to consult James Emson of Clive Emson Auctioneers. He said they are frequently asked by bidders whether they will be in any way disadvantaged if they go down the proxy route and the answer is “no”.
Their practice is to see that anyone looking to make a proxy bid (or a bid by telephone, or over the internet) is directed to send his or her bid form in a sealed envelope to one of the staff whose sole job at the auction is to handle such bids.
This means that none of the auctioneers have any prior knowledge of those bids – just as they have no knowledge of what those bidders turning up in person will bid. There is a level playing field for all bidders regardless of which bidding method they choose.
On the morning of the auction, all of the proxy and telephone bids that have been received are distributed to the bidding staff roughly half an hour before the auction starts. At this point the envelopes are opened so that staff can contact such bidders to inform them of any addenda or alterations to sale conditions on the lot in which they are interested. Those bidders then have a chance to adjust their bids as a result of such changes – in just the same way as those bidders arriving in the saleroom.
Going back to my doomed bid for the drawing, my friend kindly said that – to avoid me being disappointed again – he would bid for anything that took my fancy at the next sale on my behalf.
I thanked him warmly, but a provision in the Common Auction Conditions sprang to mind. Condition A5.7 makes an agent personally liable to buy the lot if his or her principal fails to complete the purchase of the lot and to indemnify the seller against losses caused by the principal’s default – quite a burden to put on a friend.
This provision is in the “auction conduct conditions”, which means that they cannot be changed without the auctioneer’s consent. Auctioneers will be wary of doing that as it leaves their client, the seller, without a key route of recourse.
Nicholas Redman, senior professional support lawyer, DLA Piper
