1. cHApter:- 6 AUCTION SALES Submitted by: Arshpinder Kaur(2303)
Arashpreet Kaur(2361)
Submitted to:
Miss Falak Khanna

2. An auction is a manner of selling property by bids usually to the highest bidder by public competition. The auctioneer who sells goods by auction, is an agent of the seller only. He may, however sell his own property as principle and need not disclose the fact that he is so selling. The auctioneer holds the goods as a bailee. On a sale by auction, a contract is formed between the auctioneer and the buyer, and incurs certain liabilities though not all liabilities of a seller.
The rules regarding auction sale are laid down in section 64 and are as under:
Where an auction sale is made in lots, each lot is prima facie deemed to be the subject of a separate contract of sale.
A sale by auction is complete when the auctioneer announces its completion by the fall of the hammer or in any other customary manner. Until such announcement is made any bidder may withdraw his bid. This can be done by the bidder on the principle that each bid is only an offer by the bidder to the auctioneer and it may be retracted at any time before it is accepted. When the auctioneer announces the completion of the sale by the fall of the hammer, the sale is complete and the property in goods passes to the buyer.

3. EXAMPLE:
D sold a motor car by auction. It was knocked down to K who was only allowed to take it away on giving a cheque for the price and signing an agreement that ownership should not pass until the cheque was cleared. The cheque was not cleared. Meanwhile K sold the car to S. It was held that the property passed on the fall of the hammer and therefore S had a good title to the car. Both sale and sub sale are valid in favour of K and S respectively.
3. A right to bid may be reserved expressly by or on behalf of the seller.
4. Where a right to bid is so reserved, the seller or any other person on his behalf may bid at the auction.

4. 5. In case the sale is not notified to be subject to a right to bid on behalf of the seller, it shall not be lawful-
for the seller to bid himself or to employ any person to bid at such sale, or
for the auctioneer knowingly to take any bid from the seller or any such person.
6. Any sale contravening the above rule may be treated as fraudulent by the buyer. He will be entitled to avoid it under section 19 of the Indian Contract Act. Knock-outs i.e., combinations among bidders not to bid against each other are not illegal. But if the object of the knock-outs is to depress the sale, i.e., the price, the purchase may be fraudulent and therefore, voidable.

5. 7. A sale by auction may be notified to be subject to a reserved or upset price. The seller can fix a reserved price in order to protect himself against ‘knock-out’ agreement. A combinations of person not to bid against one another at auction called knock-out is not illegal. Further the auctioneer has the right to make the auction subject to any condition he likes. If he does so, those conditions would govern the rights of the parties. The seller is not bound to accept the highest bid; it necessarily implies that he can accept any lower bid.
8. If the seller makes use of pretended bidding to raise the price, the sale is voidable at the option of the buyer.
When an auctioneer sells goods he impliedly undertakes the following obligations.
He warrants his authority to sell.
He warrants that he does not know of any defect in his principle’s title.
He undertakes to give possession against the price paid into his hands.
He undertakes that such possession will not be disturbed by his principle or himself.

6. THE END THANK YOU