What is the correct position: during an auction, the Auctioneer accepted a bid but when the client returned to pick up the sold item, the Auctioneer declined to get the money saying the accepted price was fall below the reserve price. Can the bidder who won sue for breach of contract?
NB: The Auctioneer did not mention that there was a reserve price on the item.
Generally, the bids are the offer which the auctioneer may, but is not bound to, accept. (Chitty on Contracts, § 4-025). Many Sale of Goods Acts specify that the "sale is complete when the auctioneer announces its completion by the fall of a hammer" (see Ontario's Sale of Goods Act; see also Chitty on Contracts, § 4-025). If the auctioneer is not going to accept the bid, the auctioneer may withdraw the lot.
If the property is put up for auction subject to a reserve price, no contract is formed if the auctioneer mistakingly purports to accept a bid lower than the reserve price (Chitty on Contract, § 4-026). As for how this should play out in practice, see Halifax, City of v. Miller and Johnson Auctioneers Ltd., 40 N.S.R. (2d) 35: "the proper course for the auctioneer... was to make known that there were reserve prices at the auction and if in the case... the reserve price was not reached to withdraw the unit from the auction," citing Halsbury's Laws of England (4th Ed.), vol. 2, para. 747, at p. 383.
Any after-the-fact declaration of the existence of a reserve bid has no bearing on the formation of the contract.
The only thing that matters is whether the property is put to auction subject to a reserve price.
