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AGC (Advances) Ltd v McWhirter

Supreme Court of New South Wales (1977) 1 BLR 9454

Overview

Issue arose about whether removing the reserve at auction constituted an offer to sell to the highest bidder or whether it was an invitation for offers.

Auction of house

 

Facts

P put a property up for sale at auction subject to a reserve. The highest bid of $70,000 was below this reserve. P then instructed the auctioneer to withdraw the reserve and a bid of $70,500 was made by D. P did not accept the bid (they had concerns about D's ability to pay). The property was then knocked down to the earlier $70,000 bidder. D claimed a contract had been formed when they made the highest bid.

 

Held (Holland J

Bidders at auctions make offers that may or may not be accepted. Withdrawal of a reserve does not change this - it does not constitute a definite offer to sell to the highest bidder; an auction is merely an invitation to treat.

[9548] An auction remains, in my opinion, an invitation to treat. If the fact that there is a reserve price is notified, it indicates to the bidders that an offer below the reserve price will or may not be considered. If the sale is advertised as being without reserve or to the highest bidder, it means that the highest bid is an offer that is liable to be accepted and, if accepted, will make a contract but the vendor remains free to withdraw the property from sale or decline to accept any bid.