Introduction:
An Auction is a process of buying and selling of goods or services, by furnishing them up for bid or offer, taking the offer and then sell the items to the highest price from the lowest bidder. There are different definition exists as per different types of auctions in a different situation, having different types.
Generally, an auction sale is like a public sale. The goods are sold to all the members of the public at large who are eligible to assemble in one place. Such interested buyers are the bidders. The price they are offering for the goods is the bid. And the goods will be sold to the bidder with the highest bid.
There are mainly two terms in the history of this buying and selling i.e. Auction sales and Goods. Both are different in their different type of situation. Hence these two terms are also defined in the Sales and Goods Act, 1930.
Historical Background
The phenomenon or this tradition of an Auction sale is too as old as 500 B.C. It has been noticed that, in the Greek Period, people of Greece, follow this tradition even when women get married, Women went through this Auction sale. During the earlier times in Greece, women were not allowed to go for marriage without going through this step of process i.e Auction of women. Whosoever gives the highest price of the woman, the woman was sold to that person only. And if the person didn’t fulfil his marriage or dissolves the marriage, he was allowed to take his money back.
Due to this process of an Auction sale, the new Technological growth and many other goods like a computer, mobile phones, printer, typewriter, were increasing when it was first introduced in India in the 1990s reported in new Economic policy.
Example
- ‘A’ a person held Auction of a House. B’ had given the highest Bid. But before the hammer was gone to be down by the auctioneer, the seller decides to withdraw the auction sale, B is not able to enforce the property to him.
Legislation
Sale of Goods Act, 1930
Statutory Rules/Provisions of Auction Sales under Sale of Goods Act, 1930
Section 64- It deals with the provision to the Auction sale and this section provides certain rules regarding the auction sale.
Rule 1– Lots Goods are to be Sold- There is one condition as per rule, that when the goods are in lots then they are going through the auction sale. The goods can be of many kinds, such lots are considered a separate subject.
Rule 2– When the sale is complete– when the auctioneer says its complete, then the completion of the sale is done. And this can be complete by some actions also, like when the hammer falls on or some customary actions too. Till the auctioneer did not says “the sale is complete” the prospective buyers can keep going on with the auction price. The final or completion of a sale depends upon the fall of Hammer or auctioneer’s announcement only.
Rule 3 – Reservation of Right to bid- It is the 3rd rule under section 63 of Sales of Goods, Act. 1930, that it is the duty of the seller to reserve his Right to bid, in such case, he(seller) can make an agent on his behalf who can make Bid at the time of auction.
Rule 4- Auction must be notified in public- Another major rule during auction sale is, it must be publicly noticed, if the seller did not do so, his Right to bid didn’t apply in any circumstances. And even not any other can bid for that particular auction sale and called unlawful auction sale or will be declared as Fraudulent case.
Rule 5 Price must be reserve– Another rule is considered on the reserve price of the Goods at the time of auction sale. This means that seller/ auctioneer is not allowed to sell any goods at any price which is not reserved first. The reserve price once declared the auctioneer cannot sell the subjected goods at price below the reserve price.
Rule 6– In case of pretending to bid- If the seller or any other person who is employed only for just to pretend to bid for raising the high price of goods, this type of auction sale will be considered as Voidable at the option of the buyer.
Rule 7 – Auction sale is not on any Credit – The last rule under section 64 of the Act, 1930 says that the auctioneer didn’t have right to sell the auction goods on credit as per his own choice or accept any sort of bill of exchange either unless the seller is expressly fine with it.
Landmark Judgments
- Mcmanus VS. Fortescue[1] – It was held in this case, that the auctioneer had mistakenly sold the auction property, not according to the Rules, due to which the seller has rejected to accept the sale.
- Bombay salt & chem Industries VS. L.J Johnson & others.[2]- It was held in this case that, who so ever make the highest price during the process of the auction sale, he may take over his Rights on that particular property.
- Harris VS Nickerson[3]– In this case, it was held that the auction sale was published in the Newspaper an advertisement that, few goods are to be sold within three days.suddenly the auction sale was withdrawn by the seller before auction sale, thus, the plaintiff sued regarding the TA/loss of Time, hence Court held that, he was not liable for the claim of TA as per the rule under section 64 of Sales of Goods Act, 1930,
Conclusion
It would be concluded here, that the auction sale is well defined in brief with having Rules under the provision of section 64 of the sale and goods Act, 1930. Only immovable property is defined under this Act, 1930. Auction sale can be defined as a public sale in which various prospective buyers are invited to a particular area. There are two main parties involved one is the auctioneer who conducts the auction of a property and the other is the buyer who will bid the highest than any other buyer in the auction.
The process of auction sale has certain rules for buying and selling goods. It is completed when the seller or auctioneer announced or drop the hammer or in a customary manner, then ownership of that auction sale property or building passes to the other owner who gave the highest price at the process of auction. An authorised person is appointed for the auctioneer and he should act on behalf of the seller at the best price with the bonafide intension. The bidder can revoke his bid any time before the completion of the auction. This phenomenon of auction sale must go through as per the Rules under the provision of The sales and goods Act, 1930. If they do not do so, the auction sale will be called as an unlawful auction.
References:
The Sales and goods Act, 1930
[1] (1907)2 K.B (1)
[2] 4 OCT, 1957
[3] (1873)LR 8 QB 286
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