Ordinarily, a Seller in an Auction Sale is Bound to Accept the Highest Bid only if an Invitation for bids Includes the Sale terms and Specifically states that an Auction is Positive or Without Reserve

The Appeals Court of Massachusetts in Mangano v. Town of Wilmington, 51 Mass. App. Ct. 857 (Mass. App. Ct. 2001) held that the seller in an auction is bound to accept the highest offer only if an invitation for bids specifically states that an auction is positive or without reserve and the terms of the sale are included in the invitation.

In this case, the Wilmington town (“Town”), Defendant decided to sell certain real property that it owned.  The Town published a request for bids in a local newspaper stating that the disposition was to be in accordance with Mass. Gen. Laws ch. 30B.  The Request for Proposal specifically stated that the Town reserved the right to reject any and all proposals. Mangano, the Plaintiff (“Plaintiff”) was the highest bidder.
The Town held a meeting after opening the bid but before the bid was accepted.  At the meeting, the Town decided to not to sell the property because it may cause hardship for neighboring property owners. The Plaintiff sought a declaratory judgment finding that the Town wrongfully withdrew the property from the bidding process and ordering the Town to accept Plaintiff's bid.  The Superior Court granted Town’s motion for summary judgment.  This appeal followed.    

The Court stated that the request for bids was merely a solicitation for offers. Id. at 860 (internal citation omitted).  The Court observed that the Town did not take any steps to accept the Plaintiff’s offer (bid). Id.  The Court referred to the case of: Dunham v. Boston, 94 Mass. (12 Allen) 375, 377 (1866) where the court held that there was no contract created where municipal board voted to recommend sale of a parcel of land, vote was approved by the mayor, and the city solicitor prepared the deed, but the deed was not signed because alderman objected ; Edge Moor Bridge Works v. County of Bristol, 170 Mass. 528, 531-533, 49 N.E. 918 (1898) where the court held that no contract was created where county commission had invited bids for a project, accepted the bid of the plaintiff, notified the plaintiff of the acceptance but then refused to execute a contract for construction, because "the vote was but a step in the negotiation . . . [and] execution of the contract was an act to be done in the future";  and Al's Lunch, Inc. v. Revere, 324 Mass. 472, 474-476, 87 N.E.2d 5 (1949) where the court held that no contract found where city council voted to authorize the city solicitor to take further steps toward sale of real estate, even where vote was communicated to plaintiff. Id. at 860-61. 

The Court further stated that the General Laws c. 30B, § 16, does not restrict the Town’s power to choose whether or not to accept an offer. Id.   Based on the above discussed facts and law, the Court found that the parties had not reached the point where an enforceable agreement for the purchase and sale of the real property had come into existence. Id.   Therefore, the Plaintiff cannot force the Town to accept its bid and require that the property be transferred. Id.