SECTION 64, SALE OF GOODS ACT 1930- AUCTION SALE

INTRODUCTION

A public sale is an auction sale. The products are auctioned to the general public who have gathered in one location for the auction, and all prospective buyers are referred to as bidders. The bid is the price they are giving for the products, and the things will be sold to the highest bidder. The auctioneer is the person who conducts the auction sale.[1] He is the seller’s representative. As a result, he is subject to all of the rules of the Law of Agency. However, if an auctioneer desires to sell his property as the principal, he may do so and is not required by law to reveal this fact. The auction procedure involves the sale of any valuable commodities or property in a public gathering where purchasers (bidders) place bids for the item and the sale is made to the highest bidder.

RULES OF AN AUCTION SALE

The auction is governed by Section 64 of the Sales of Goods Act, 1930. The following are the rules governing an Auction Sale.

  1. Goods Sold in Lots- When items are sold in lots and are placed up for auction, each category or lot of goods will be subject to a separate contract of sale.
  2. Completion of Sale- The auctioneer proclaims the sale of commodities to be complete only when the auctioneer announces it to be completed by the fall of the hammer or any other conventional means. Until then, the builder might withdraw his bid at any time.

Case Law- PAYNE V. CAVE[2] 

Mr. Cave was the buyer in this case, and he placed the highest bid for an item at the auction. Mr. Cave afterward decided not to purchase the home and retracted his bid before the auctioneer dropped the hammer. Mr. Cave had the right to withdraw his bid at any moment until the auction was declared complete since he had withdrawn his bid before the auction was completed. He is not obligated to buy the things.

  • Seller may Reserve Right to Bid- At the auction, the seller can reserve his right to bid, but he must do so clearly. He has the option of appointing someone to bid on his behalf.
  • Sale Not Notified- If the seller does not expressly announce his right to bid, he will not be able to bid at the auction, nor will he be able to select someone to bid on his behalf. Such bids should not be accepted or entertained by the auctioneer. Any sale made in violation of this guideline is illegal and will be reported to the buyer as fraudulent.
  • Reserve Price- Once the reserve price is set, the auctioneer is unable to sell the subjected commodities for less than the reserve price.

Case Law- MCMANUS V. FORTESCUE[3] 

In this example, the auctioneer sold the property for less than the reserved amount, as specified in the catalog for each lot, and the seller refused to sign the memorandum of sale as a result. The auctioneer was released by the court because he had made a mistake.

6.     Pretend Bidding- In any situation, if the seller or his agent knowingly and purposefully pretends to bid to inflate the price of the items, the sale is voidable at the buyer’s discretion.

7.     No Credit- The auctioneer will not be able to sell the products on credit as he intends. He also won’t take a bill of exchange unless the vendor expressly agrees.

HARRIS V. NICKERSON[4]

In this situation, an advertisement in the newspaper stated that certain objects will be sold and auctioned for three days at a specific location. The plaintiff wished to purchase particular goods, but they were no longer available. The plaintiff sought damages for lost time and travel expenses from the defendant. The court ruled that an auction advertisement does not constitute an offer and that the advertiser might withdraw items at any point prior to the auction.

CONCLUSION

The Sales of Goods Act is only concerned with movable property. An auction sale is a public sale in which several potential purchasers are invited to a specific location where the auction will take place. The auctioneer, who conducts the auction of a property, and the buyer, who will bid the highest of any other buyer in the auction, are the two key players involved.

The auction is only declared complete when the hammer is down or when the auction is proclaimed complete in a traditional manner. On the fall of the hammer, ownership of the property moves from the owner to the highest bidder. The seller cannot bid personally, nor can he appoint someone to bid on his behalf.

The seller or his representative might act as the auctioneer. The auctioneer should always be a licensed individual who is acting in the best interests of the seller. A buyer can withdraw his bid at any time before the auction ends. A bid is an offer that is accepted only after the sale deed is executed in the name of the highest bidder.


[1] Toppr-guides, Toppr-guides (2018), https://www.toppr.com/guides/business-laws/the-sale-of-goods-act-1930/auction-sale/ (last visited Oct 28, 2021).

[2] Payne v Cave (1789) 3 TR 148

[3] Mcmanus v Fortescue (1970)

[4] Harris v Nickerson (1872) LR 8 QB

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