What is an Auction Sale?
It is a public sale in which different willing buyers participate. The goods are finally sold to the highest bidder, i.e., the one who has quoted the highest price.
Rules regarding Auction Sale
1. If the goods are put up for sale in an auction in lots, each lot is deemed to be a subject of a separate contract of sale.
2. When the auctioneer announces its completion by the fall of the hammer or in some other customary manner, the sale is considered complete. Until such an announcement, any bidder may revoke his bid.
3. In an Auction sale, a right to sell may be reserved expressly by the seller. In such a case, the seller or any one person on his behalf may bid at the auction.
4. Where a sale is not notified to be subject to a right to bid on behalf of the seller, it is not lawful for the seller to bid himself or to employ any person to bid at such a sale.
5. The sale may be notified to be subject to a ‘reserve‘ or ‘upset‘ price. It is a price below which the auctioneer will not sell in the Auction.
6. In an Auction sale, if the seller makes use of pretended bidding to raise the price, the sale is voidable at the option of the buyer (he may avoid it).
7. Sometimes, a group of persons may form a combination to prevent competition among themselves in an auction. Only one of them may actually bid and they may share the benefits later privately. Such a combination is called a ‘knock out‘ and is not illegal. But if the intention of the parties is to defraud a third party, the knock out is illegal.