internet, auction, secured creditor, repossession
Under U.C.C. Article 9, a secured creditor selling repossessed collateral must do so in a commercially reasonable manner. A traditional form of foreclosure sale is an auction conducted by a professional auctioneer. With the rapid growth of online auctions like eBay, secured parties may want to use the new platform to sell their collateral. But conceived in the 1940s, Article 9 was not drafted with the Internet in mind. The secured creditor will face many novel issues, including whether the defining characteristics distinguishing a real-world public sale from a private sale remain coherent and applicable in cyberspace; whether an online auction run by a virtual auctioneer can adequately perform the important tasks of a live, professional auctioneer; whether online auction bidders sitting passively in their armchairs at home and staring at their computer screens will feel the excitement of real world auctions so that their bidding is zealous, and a reasonable purchase price will be realized for the collateral; whether legally appropriate advertising of an online auction to the relevant group of potential bidders can occur over the Internet; and finally whether a potential bidder can exercise his right to inspect tangible collateral in cyberspace. In short, when is it commercially reasonable for a secured party to employ an online auction to dispose of repossessed collateral? The Article examines these and other questions.
Korybut, Michael, Online Auctions of Repossessed Collateral Under Article 9 (Fall 1999). Rutgers Law Journal, Fall 1999.