LEGAL RULES REGARDING AUCTION SALE
The legal rules regarding the auction sale are contained in various provisions of Section 64 of the Sale of Goods Act, which may be discussed under the following heads:
1. Completion of auction sale.
2. Retraction of bid.
3. Transfer of ownership.
4. Seller’s right to bid.
5. Fraudulent sale.
1. COMPLETION OF AUCTION SALE
An auction sale, at an appointed time and place, the auctioneer puts up the goods for sale to the intending buyers (bidders) by inviting biddings from them. The bidders after to pay the price by showing their willingness to pay the price. The auctioneer then accepts the highest bid by a tap with his hammer, or by any other customary manner. On such acceptance, the auction sale is complete. This rule is contained in Section 64(2) of the Sale of Goods Act. which provides that, the sale by auction is complete as soon as the auctioneer announces its completion (i.e., the acceptance of the bid) by the fall of the hammer, or in any other customary manner, e.g., by shouting one, two, three or by shouting going, going, gone, etc.
2. RETRACTION OF BID
The sale is complete as soon as the bid is accepted by the auctioneer. Before the completion of the sale, the bidder has the right to retract (i.e. withdraw) his bid. This rule is also contained in Section 64(2) of the Sale of Goods Act, which provides that, before the sale is completed by the fall of the hammer, any bidder may withdraw his bid. i.e., he has the right to say that he is not ready and willing to purchase the goods. This is based on the principle that a bid is an offer, and it can be revoked before it is accepted by the fall of the hammer.
Where the bidder withdraws his bid before the acceptance of his bid, his security amount cannot be forfeited. However, if the bidder withdraws his bid after the fall of the hammer, the amounts to a breach of contract and his security deposit will be liable to be forfeited
3. TRANSFER OF OWNERSHIP
On the completion of sale by the fall of hammer, the ownership of the goods is immediately transferred to the buyer (i.e., highest bidder) if the auction is of specific goods in a deliver state. Thus, once the hammer falls for the sale of specific goods in a deliverable state, the highest bidder becomes the owner of the goods, and he can deal with the goods as his own.
It may also be noted that after the fall of the hammer, the auctioneer cannot modify the terms of auction to prevent the ownership being passed to the buyer
4. SELLER’S RIGHT TO BID
Sometimes, in an auction sale, the seller apprehends that the bidders may enter into a knock-out agreement. (It is an agreement between the bidders not to bid against each other, with a view to prevent competition among them). In such cases, the seller has the right to bid in the auction, or to appoint a person to bid on his behalf. However, the seller can do so only if tie has expressly reserved his right to do so. And the sale has been notified subject to such a right of the seller. This rule is contained in Section 64(3) of the Sale of Goods Act, which provides that, the seller or any one person on his behalf may bid at the auction if seller’s right to bid is expressly reserved. It may however, be noted that the seller can appoint only one bidder to bid on his behalf. If he appoints more than one bidder the sale is voidable, because in such cases the intention of the seller is not to protect his interest, but to enhance the price.
As a matter of fact, if the seller makes use of pretended bidding to raise the price, the sale is voidable at the option of the buyer, and he can put an end to the contract of sale if he so chooses. [Section 64 (6)].
5. FRAUDULENT SALE
The seller or any one person on his behalf may bid at the auction if the sale is notified to be subject to such a right of the seller. If the seller has not reserved his right to bid at the auction, he cannot bid at the auction. Moreover, then he can not appoint any person to bid on his behalf. If he does so, the buyer may treat the sale as fraudulent. This rule is contained in Section 64(4) of the Sale of Goods Act, which provides that, where the seller’s right to bid at the auction is not notified, the buyer may treat the sale as fraudulent if the seller or any person on his behalf bids at the auction. And the buyer may refuse to take the goods sold to him. In such cases, the sale is also fraudulent if the auctioneer knowingly lakes any bid from the seller or any person on his behalf.
The legal rules regarding the auction sale are contained in various provisions of Section 64 of the Sale of Goods Act, which may be discussed under the following heads:
1. Completion of auction sale.
2. Retraction of bid.
3. Transfer of ownership.
4. Seller’s right to bid.
5. Fraudulent sale.
1. COMPLETION OF AUCTION SALE
An auction sale, at an appointed time and place, the auctioneer puts up the goods for sale to the intending buyers (bidders) by inviting biddings from them. The bidders after to pay the price by showing their willingness to pay the price. The auctioneer then accepts the highest bid by a tap with his hammer, or by any other customary manner. On such acceptance, the auction sale is complete. This rule is contained in Section 64(2) of the Sale of Goods Act. which provides that, the sale by auction is complete as soon as the auctioneer announces its completion (i.e., the acceptance of the bid) by the fall of the hammer, or in any other customary manner, e.g., by shouting one, two, three or by shouting going, going, gone, etc.
2. RETRACTION OF BID
The sale is complete as soon as the bid is accepted by the auctioneer. Before the completion of the sale, the bidder has the right to retract (i.e. withdraw) his bid. This rule is also contained in Section 64(2) of the Sale of Goods Act, which provides that, before the sale is completed by the fall of the hammer, any bidder may withdraw his bid. i.e., he has the right to say that he is not ready and willing to purchase the goods. This is based on the principle that a bid is an offer, and it can be revoked before it is accepted by the fall of the hammer.
Where the bidder withdraws his bid before the acceptance of his bid, his security amount cannot be forfeited. However, if the bidder withdraws his bid after the fall of the hammer, the amounts to a breach of contract and his security deposit will be liable to be forfeited
3. TRANSFER OF OWNERSHIP
On the completion of sale by the fall of hammer, the ownership of the goods is immediately transferred to the buyer (i.e., highest bidder) if the auction is of specific goods in a deliver state. Thus, once the hammer falls for the sale of specific goods in a deliverable state, the highest bidder becomes the owner of the goods, and he can deal with the goods as his own.
It may also be noted that after the fall of the hammer, the auctioneer cannot modify the terms of auction to prevent the ownership being passed to the buyer
4. SELLER’S RIGHT TO BID
Sometimes, in an auction sale, the seller apprehends that the bidders may enter into a knock-out agreement. (It is an agreement between the bidders not to bid against each other, with a view to prevent competition among them). In such cases, the seller has the right to bid in the auction, or to appoint a person to bid on his behalf. However, the seller can do so only if tie has expressly reserved his right to do so. And the sale has been notified subject to such a right of the seller. This rule is contained in Section 64(3) of the Sale of Goods Act, which provides that, the seller or any one person on his behalf may bid at the auction if seller’s right to bid is expressly reserved. It may however, be noted that the seller can appoint only one bidder to bid on his behalf. If he appoints more than one bidder the sale is voidable, because in such cases the intention of the seller is not to protect his interest, but to enhance the price.
As a matter of fact, if the seller makes use of pretended bidding to raise the price, the sale is voidable at the option of the buyer, and he can put an end to the contract of sale if he so chooses. [Section 64 (6)].
5. FRAUDULENT SALE
The seller or any one person on his behalf may bid at the auction if the sale is notified to be subject to such a right of the seller. If the seller has not reserved his right to bid at the auction, he cannot bid at the auction. Moreover, then he can not appoint any person to bid on his behalf. If he does so, the buyer may treat the sale as fraudulent. This rule is contained in Section 64(4) of the Sale of Goods Act, which provides that, where the seller’s right to bid at the auction is not notified, the buyer may treat the sale as fraudulent if the seller or any person on his behalf bids at the auction. And the buyer may refuse to take the goods sold to him. In such cases, the sale is also fraudulent if the auctioneer knowingly lakes any bid from the seller or any person on his behalf.
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