The Fact That a Land Sale Involves an Auction does not take it Outside the Statute of Frauds

The Supreme Court of Idaho held that the statute of frauds applies to auctions of land in the same manner as any other land transactions.  The court found that there is no basis, on the face of the statute, for ignoring the statute of frauds in an auction context. 

In Wakelam v. Hagood, 151 Idaho 688 (Idaho 2011), involving a suit to enforce an auction sale, the Plaintiffs highest bidders, Wakelam and Ressler (Plaintiffs) argued that Idaho Code § 9-503 (Idaho statute of frauds for real estate transactions) does not apply to an absolute auction of real property because the definitions of an absolute auction preclude the events that transpired in that case. 

The Supreme Court discussed the principles of absolute or without reverse auction and held that in an auction held without reserve, the opening of bids by the auctioneer constitutes a firm offer, as opposed to an invitation to make an offer. Wakelam, 151 Idaho at 691. The seller, in such instances, promises to sell to the highest bidder and such promise is irrevocable after one bid has been made. Id.

The Supreme Court further stated that the term "without reserve" are words [sic] of art and mean that, in making such an announcement, the owner enters into a collateral contract with all persons bidding at the auction that he or she will not withdraw the property from the sale, regardless of how low the highest bid may be. Wakelam, 151 Idaho at 691.

The Supreme Court observed that the courts have reached different conclusions and/or have not closely examined the interrelationship between the statute of frauds and auction procedures.  Wakelam, 151 Idaho at 691. However, none suggest a strong reason for ignoring the statute of frauds beyond the general maxim, "equity will not permit the statute [of frauds] to be used as an instrument or means of effecting that which it was designed to prevent." Anselmo v. Beardmore, 70 Idaho 392, 396, 219 P.2d 946, 949 (1950). Id.

The court stated that when there is an explicit law, Idaho Code § 9-503, codified; there must be some recognized basis for ignoring the statute. Wakelam, 151 Idaho at 693. There is no clear common law rule pertaining to the precedence of auctions over the statute of frauds, therefore there is a general recognition of the statute of frauds' applicability. Id. The court further found that the cases that have recognized an exception to the statute of frauds have done so with little analysis, analogizing to the statutory rules governing auctions of personalty or requiring that the auctioneer sign a memorandum finalizing the sale. Id.  Such situation was not present in the current case.  Therefore, the Supreme Court observed that there is no general equitable principle that specifically exempts auctions (or auctions without reserve) from the requirements of the statute of frauds. Id.


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