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LSDefine
Simple English definitions for legal terms
absolute auction
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A quick definition of absolute auction:
An absolute auction is a type of auction where the property being sold will go to the highest bidder, without any minimum price or limit on bidding. The owner cannot withdraw the property after the first bid, reject any bids, or outbid other bidders. This means that each higher bid creates a contract, with the highest bid being the winner. In contrast, a reserve auction has a minimum price that must be met before the property can be sold. A Dutch auction is a type of auction where the price starts high and gradually decreases until the property is sold, while a knock-out auction is when bidders agree not to bid against each other.
A more thorough explanation:
An absolute auction is a type of auction where the property being sold will be sold to the highest bidder, without any minimum price limit. The owner cannot withdraw the property after the first bid is received, reject any bids, or outbid other bidders. This means that the highest bid creates an enforceable agreement between the owner and the bidder.
For example, if a painting is being sold at an absolute auction, the bidding will start at $0 and the highest bidder will win the painting. The owner cannot set a minimum price or reject any bids.
On the other hand, a "auction with reserve" is an auction where the property will not be sold unless the highest bid exceeds a minimum price set by the owner.
Another type of auction is a Dutch auction, where the property is initially offered at an excessive price that is gradually lowered until the property is sold. This type of auction is often used for securities, where shareholders indicate how many shares they will sell and at what price, and the corporation buys however many shares it wants at the lowest prices offered.
Overall, an absolute auction is a type of auction where the highest bidder wins the property being sold, without any minimum price limit or the ability for the owner to reject bids.