There have been two interesting stories this week concerning placing bids online – one where a buyer made a £180,000 bid and immediately changed his mind and the other where a seller accepted a bid and then tried to cancel the sale (which you can read about here). In both cases a legally binding contract was formed which is going to cost the affected parties mind boggling sums of money.
The clearance of Pleasure Island Family Theme Park in Cleethorpes near Grimsby was garnered a ton of interest with the star lot being the Carousel ride from 1904. The auction was managed by Prestige Auctions with BidOnThis contracted to handle online bidding.
When it came time to auction the Carousel, there were no bids in the room but at the final second as the hammer fell a Lincolnshire based man clicked a big red button on his screen to place a £180,000 bid. To applause in the room the Carousel was sold… except the bidder suddenly regretted his bid and hastily got on the phone with the excuse that he hadn’t meant to bid and had intended to ‘close the browser window’. He’s on the hook for almost £250,000 by the time you add on commission, fees and VAT!
One of the unique advantages for off-line auction houses partnering with BidOnThis is their unique approach to vetting and qualifying buyers. Before placing a bid, buyers have to register their bank card with BidOnThis and when the hammer falls the bid amount plus any commissions and VAT are automatically charged. For the buyer this means that less than scrupulous auction houses can’t then naughtily accept a higher sale price after the auction having conveniently ‘lost’ the goods and the buyer can’t back out – or at least if they do they have already paid so the funds are secure. It’s a great system and also saves on administration with the auction house having to chase online bidders for payment.
Any one selling on eBay has almost certainly experienced this ‘Buyer Remorse’ in the past with any number of excuses such as ‘my child bid’ or ‘the cat walked across my keyboard’ and we all know such excuses are just about always implausible. Helen Parker of BidOnThis explains how implausible an accidental bid would be due to the number of steps a potential buyer would have to take:
“At BidonThis when a buyer wins we take the payment on behalf of the seller as soon as the hammer goes down per lot. This ensures that the seller and buyer are fully committed to the contract. No-one else in the industry does this because the platform has to take the risk on the funds – when I started BidonThis I decided this was worth doing in order to keep the honour of the contract.
The number of steps the buyer has to go through in order to bid is exactly right to ensure they are vetted and proven as serious – register details, register shipping details, enter your card details with Barclays, independently fraud checked, IP checked against your address, card checked for funds, log in, and ONLY at that point will the bid button be available to press… and then you have to press an isolated big red button, which in the Cleethorpes case would have had “Bid £180,000” written on it. We would obviously always expect an item of this size to be settled later, but fortunately because of the checks this buyer would always have been able to be identified and located.”
– Helen Parker – BidOnThis
No one is quite sure what will happen in this case as there are so many parties involved – Prestige Auctions, BidOnThis and Pleasure Island Family Theme Park and HMRC for the VAT for starters. Even if the buyer isn’t pursued for the £180,000 bid price there are still commissions due to be paid to various partners involved in running the auction.
The moral of the story is that a bid, whether online or in person, is a legally binding contract so don’t bid unless you are serious. Definitely don’t click that big red “Bid £180,000” button unless you’re serious about paying.