• At common law, knock-out auctions were not forbidden, on grounds that a person could not be constrained to make an offer. But most jurisdictions now have statutes that (1) forbid dealers (those who buy at auctions with the intention of reselling to others) from giving or offering an inducement to abstain from bidding at an auction, and (2) penalize the person who seeks such an inducement from a dealer.
knock out auction
An auction at which two or more bidders have agreed in advance not to bid against one another.
