An Auctioneer’s Announcement of the Terms and Conditions Upon Which Bidders or Offers Will be Received are Generally Considered to Supersede all Others and to bind the Purchaser Even if the Purchaser did not hear or Understand the Announcement

The Supreme Court of South Carolina in Hamrick v. Summey, 282 S.C. 424 (S.C. 1984) held that all bidders in an auction sale are bound by the terms and conditions that an auctioneer announces.  Appellants debtors sought review of the judgment of the trial court, Cherokee County (South Carolina), which granted a motion for summary judgment in Defendants’ favor in an action filed by Plaintiffs-Appellants to set aside an auction sale of certain land.

This matter relates to an action brought by Lamont F. Hamrick and Trava D. Hamrick, (“Appellants”) to set aside an auction sale of land.  J. Calvin Summey, J. David Acker and Furman Ray Gray, trustees who hold title to the property (“trustees”), H. D. Goforth, an auctioneer (“Auctioneer”) and realtor, and Barry L. Hamrick, successful bidder at the auction are –Defendants-Respondents (collectively “Defendants”).  Appellants were indebted to trustees.  In order to discharge their debts, Appellants deeded two parcels of land to the trustees to sell the land to satisfy their debts and told that any surplus from the sale would go to the Appellants.  The trustees appointed an Auctioneer to conduct public auction. 
 
The auction rules required a successful bidder to deposit twenty percent of the amount bid on the day of sale by cash or check approved by the seller. And the balance bid amount was to be paid at the time of closing. Also the terms stated that a check would have to be approved by the Auctioneer or trustees if the successful bidder paid the deposit by check.  If the successful bidder was satisfactory to the auctioneer, nothing more was required.
At the auction, Collins made several high bids.  Collins was paying by personal check and  the auctioneer did not know him.  So, the auctioneer requested Collins to agree to a form of security for his payment.  Collins refused to sign the agreement and did not continue to bid. The property was then purchased by Hamrick as the highest successful bidder.  Thereafter, the Appellants sued Defendants for chilling the bidding by requiring Collins to sign an agreement.  They alleged that they did not obtain the best possible price and moved to set aside the auction sale. The trial court granted summary judgment to the Defenmdants and this appeal followed. 

The Court stated that public policy requires open, free competitive bidding at auctions so that the owners may receive a fair price through competitive bidding. Id. at 427.  Conduct which has the effect of stifling fair competition and chilling the bidding is against public policy and will cause the sale to be set aside. Id. ( citing Farr v. Sims, 9 S.C. Eq. (Rich. Cas.) 122 (1832); Hamilton v. Hamilton, 19 S.C. Eq. (2 Rich. Eq.) 355 (1845);7 Am. Jur. (2d) Auctions and Auctioneers § 24). 

However, the Court noted that the terms and conditions that an auctioneer announces with regard to accepting bids or offers generally supersede all others. Id.   These terms bind the purchaser even though he did not hear or understand the announcement. Id. at 427-28 7 Am. Jr. (2d)Auctions and Auctioneers § 14. Generally, the auctioneer has the right to prescribe the rules of bidding and any bid not in conformity with the terms and conditions of sale as advertised and announced by the auctioneers is not entitled to consideration. Id. At 428.  7 Am. Jr. (2d) Auctions and Auctioneers § 21. It is clearly the seller's right in connection with the sale of property at a public auction to prescribe, within reasonable limits, the manner, conditions and terms of sale. Id. 7 Am. Jr. (2d) Auctions and Auctioneers, § 14. 

Also the Court noted that it is usual and customary to require prospective bidders to deposit cash or other security to ensure compliance with the contract of sale. Id.  The person conducting the sale may in a proper case require a bidder to deposit or furnish a reasonable security as a condition of the acceptance and reporting of his bid. Id. 47 Am. Jr. (2d) Judicial Sales § 139.  The Court held that the bidder never brought himself within the terms of the auction because he failed to make a deposit on his bids nor was he prepared to do so. Id. Also Collins failed to give any reason as to why he should approve the bidder's personal check. Id.  The Court stated that the bidder was given full opportunity to give some security for his check, but he failed to do so. Therefore, there was no discrimination against the bidder. Id.  Rather it was only an effort to give some strength and credibility to the prospect’s bid because there were potential problems attendant upon accepting a personal check. Id.  The Court affirmed the lower court’s judgment.