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Bidder in online auction not bound by error for now

Bidder in online auction not bound by error for now

On 25 June 2014 the forced sale of a business premises took place online with an ascending-bid session and descending-price session. After the starting bid had been set at € 514,000.00, the descending-price session took place, during which X agreed to the bid of € 550,000.00. Only after this did X realise that the purchase price would be a total of € 1,064,000.00 (plus costs) instead of € 550,000.00, which X had in mind. The bank brought preliminary relief proceedings against X, in which it was disputed whether X should have to buy the business premises for € 1,064,000.00.

The focus was on whether a contract of sale had been established. Article 3:33 of the Dutch Civil Code stipulates that a juridical act requires an intention to produce juridical effects manifested by a declaration.

It was demonstrated by X’s lawyer that X’s intention was not to produce the effect of X purchasing the business premises for € 1,064,000.00 plus additional costs. This was evidenced by the fact that X immediately contacted the junior civil-law notary present at the auction house by telephone to tell him that there had been an error. It was also argued that a sum of € 1,064,000.00 was extraordinarily high for this kind of business premises, given the fact that the forced-sale value of the property was significantly lower than the bid made by X. The fact that two expert property auction civil-law notaries were of the opinion that X’s bid should have been declared invalid also played a role in the interim relief judge’s decision. According to the interim relief judge, it was not sufficiently established that the bank could rely on Article 3:35 of the Dutch Civil Code. Immediately after X had told the junior civil-law notary that there had been an error, the junior civil-law notary consulted with the bank, which means it cannot be ruled out that the bank was aware of X’s error before the award.

Based on the above, the interim relief judge concluded that no perfect contract had been established.

In the Netherlands, two different systems are used for forced sales and voluntary auctions. In certain parts of the country, the purchase price is the bid which the buyer agrees to in a descending-price session. In other parts of the country a system is used in which the amount of the starting bid and the amount reached in the descending-price session are added together. In view of this judgement, it would be clearer if a single system were used nationally, so that no confusion could arise about the ultimate purchase price.

Source: Interim Relief Judge District Court Rotterdam 4 August 2014, no. C/10/455101 / KG ZA 14-675 (RBRT:2014:669)

By Ruben Berentsen, Marleen Vermeulen & Anita van Wijk

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