Article — Merkelbach, Summa Theologiae Moralis
Article III: On Sale by Auction
528. Sale by auction or public sale (vente aux encheres; openbare verkoop of veiling) is that by which a saleable thing, publicly set out, is proclaimed by a herald and adjudicated to the one offering the greater price. It can be voluntary or judicial, according as it is made spontaneously by the owner, or is established by law or imposed by a judge, for example, for paying debts.1
1 Cf. Civil Code, a. 826-827; 1686-1688; 2204-2218; Judicial Code, a. 673-677; 945-985.
It received its name from this, that formerly, by the judicial authority of a judge, it was made under some spear; it is also called public auction (a la hausse; bij opbod of hooger aanbod), because a later bidder increases the price of the earlier by ascending; also licitation, because by licitating, that is, by contending among several, the price is determined.
Therefore it is proper to this sale that the just price is not judged from common estimation, but is conventional, obtained from an honest contest among bidders; whence the contract is essentially aleatory, in which the seller and the buyer commit themselves to equal danger and hope, or take on an equal danger of losing and hope of gaining. Therefore, provided fraud is absent on each side, the price will be legitimate.
Such a sale can be made in two ways:
- In itself, considering only the nature of the thing, the mode is fully aleatory, by which the seller establishes that the price, without any intervention, is to be determined by the bidding of buyers alone, and that the thing is not to be withdrawn, but handed over to the one offering more.
In this contract: a) it is illicit for the seller to send fictitious bidders who, without the intention of buying, increase the price of the thing (for thus he would impede what he had established: that the thing be handed over to the one offering more); and even if the price is offered below the common price, he is bound to yield the thing.
b) On the other side, buyers cannot by fear, fraud, or other unjust means (though indeed by prayers and persuasions) impede others from bidding or offering more, nor make an agreement among themselves not to bid beyond such a price or with respect to such a thing: for thus they act unjustly toward the seller, who is deprived of greater gain, and toward bidders who are deprived of the hope of procuring the thing for themselves. All these things, namely, are repugnant to the perfectly aleatory nature of the contract.
- By accident, on account of custom, the mode is not fully aleatory, and the contract is mixed, by which the seller reserves to himself the right of increasing the price by himself or through others, and of retaining the thing for himself, if no one offers a greater price.
In this case a) the seller will be able to use false bidders and withdraw the thing, if the price offered is below the lowest.
b) On the other side, buyers can protect their own rights and at the same time make an agreement with certain others2 not to bid beyond such a determined price.
2 With certain others; for if it were done among all, there would be a monopoly, concerning which below.
By these devices, since some answer to others, equality is constituted. - Yet bidders could not by force, fear, or fraud turn other buyers away from bidding, since these means are unjust.
529. Principles concerning the justice and injustice of public auction.
- The seller injures justice if he does not hand over the thing adjudicated, or if he sets out one thing and hands over another of lesser price.
- Heralds injure justice if by unjust means they inflict damage on the seller or on certain buyers, whether by beginning before the time, or by instituting the auction at a time when they foresee there will be few bidders, or by adjudicating the thing sooner or later so that they may favor friends.
- Bidders injure justice if by unjust means they impede other buyers from increasing the price.
- The seller furnishes security as to eviction of the thing; but not as to defects, even redhibitory defects: for he sells the thing as it has been set out, unless nevertheless otherwise established by law or pact.
530. Question: Whether in auction it is licit to buy back one's own things by oneself or through another?
Resp. If the bidding is forced, this certainly is licit, since creditors rather than the owner sell, and certainly it is not fictitious bidding. If the bidding is free, then today it is licit by oneself or through others to take care that things not be sold below the lowest price: buyers ought to know this, especially because custom now permits the thing to be withdrawn altogether; - but it is not licit to send fictitious bidders for this end only, that the price be immoderately increased and buyers be deceived.