This case is concerned with the auctions in the offer and acceptance chapter in contract law
Facts of Barry v Davies
There were two brand new engine analysers for auction by the custom and excise, without a reserve price. The price of each machine was 14,521 pounds. As there was no reserve price the auctioneer failed to get the bid of 5000 pounds and 3000 pounds for each machine
The claimant bid at 200 pounds was rejected by the auctioneer and he took the machines out of the auction. Later these machines were sold at 1500 pounds in an advertisement.
The claimant brought an action against the auctioneer, that he was bound to give the machine to the highest bidder as there was no reserve price.
The issue in front of the courts was that whether holding an auction without reserve price amounted to a contractually binding offer to sell the property to the highest bidder.
The Decision came in the favour of the claimant as it was held that there was a collateral contract between the highest bidder and the auctioneer.
As when the auction was being held by the auctioneer without a reserve price it constituted an offer, and the when there was an highest bid that constituted as an acceptance to that offer.
As the claimant was awarded with damages, because the consideration was in the form of detriment that he suffered when auctioneer took out his bid, And sold the machine at a higher price
Important Point of Barry v Davies
When an auction is held without the reserve price. The Highest Bidder makes a collateral contract with the auctioneer.