Please note that since this book was last published in 1997 some of the laws that have been referenced may have changed. We
are doing our best to update the articles, however, it is advisable that you to consult an attorney before relying on any information contained herein.
An auction is normally a sale at which goods are sold to the
highest bidder. It is governed by the same basic principles
relating to the formation of contracts that apply to
any other sale, in that there must be an offer to sell and an
acceptance of that offer. (See buying and selling.)
Auctions without reserve
If the auction is without reserve, every bid made is regarded
as an acceptance of the seller's offer to sell. This means that
an agreement of sale is reached every time a bid is made, but
this agreement is subject to the condition that if anyone makes a
higher bid while the auction of the item in question (the 'lot')
is in progress, the prior agreement will fall away and be
replaced by a contract to sell to the higher bidder.
If there is no higher price, the knocking down or tapping of
the hammer by the auctioneer, who acts as agent of the seller
indicates that the auction of the lot in question is over and
that a contract to sell it to the highest bidder has come about
for the price bid.
Once a bid has been made, it cannot be withdrawn without the
consent of the auctioneer. If no higher bid is made, the person
making the highest bid becomes the purchaser. Likewise, once the
auction of the lot has begun, the auctioneer (or seller) may not
withdraw it, and even if he or she does, the highest bidder has a
right to be regarded as the purchaser.
Auctions with reserve
The situation is different when the sale is with reserve - in
other words, when a minimum price is placed on the lot.
When the auctioneer or seller does not disclose the reserve,
the lot is put up merely as an invitation to negotiate; each bid
is then regarded as an offer by the bidder to buy, which may be
accepted or rejected by the auctioneer. Until it is accepted
there is no contract. Each offer lapses when a higher offer is
made, and acceptance takes place when the article is knocked down
to the highest bidder.
Thus the would-be buyer may withdraw a bid at any time before
it is accepted, and the seller may decline to accept any bid up
to the amount of the uncommunicated reserve, or even withdraw the
lot from sale altogether before the amount of the reserve has
been reached. It is uncertain whether the auctioneer is obliged
to sell to a person who makes a higher bid than an undisclosed
reserve amount, but it is arguable that the auctioneer must do
When the amount of the reserve is disclosed, the first bid
equal to or greater than that amount constitutes an acceptance of
the offer to sell.
Conditions of sale
Auctions are usually governed by conditions of sale drawn up
by the auctioneer or seller and primarily in his or her
interests, not those of the buyer.
The terms on which the auctioneer offers items for sale are
usually read out immediately before bidding starts and the
potential buyers are then bound by them. It is the duty of
bidders to find out the conditions of sale if they were not
present at the start of the auction. Thus, a successful bidder
for a house who arrived late and did not hear the terms is not
permitted to withdraw from the sale because he or she did not
know, say, that occupation could be given only after six months.
If there is a catalogue, the conditions are usually printed
inside it, but they may sometimes be posted up in the salesroom
in the form of a placard or simply read out by the auctioneer,
who is legally obliged to draw them to the customers' attention
before the sale. After announcing the conditions orally at the
beginning of the sale, the auctioneer is not required to repeat
them every time another person enters the room. Latecomers,
however, will be bound by these conditions, whether they knew of
them or not.
Sometimes the sale catalogue states that the sale is subject
to the auctioneer's usual conditions, displayed on a notice in
Bargains at auctions are rarer than many people think. Anyone
who plans to make a bid should examine the goods carefully
beforehand. The guiding principle is caveat emptor - let
the buyer beware. Goods sold at auctions are normally second-hand
and the conditions of sale usually state that items are sold voetstoots or 'as is'.
This means that a buyer who later finds that the goods are
defective will have no redress, unless the seller behaved
fraudulently, for example, in concealing the defect instead of
disclosing it. Even when new goods are sold, the printed
conditions of sale normally exclude liability for any defects.
If, however, a warranty has been given that goods have no
defects, a buyer who later finds that they are defective, may sue
for a reduction in price or cancellation of the sale and
If there are conditions of sale, the seller is not bound by
any warranty or
representation made by the auctioneer if that warranty or
representation differs from the conditions of sale. The
auctioneer may, however, be liable to the buyer for his or her
When an advertisement precedes the sale, the seller is usually
bound both by the advertisement and by the conditions of sale,
although, if they differ, the conditions will normally prevail.
Bidding at auctions
The bids at an auction can be made verbally or by pre-arranged
signs. For example, a buyer who wishes to remain anonymous may
have an arrangement with the auctioneer to bid by nodding, by
rubbing an eye or by tapping an ear with a rolled-up newspaper.
It is most unlikely that a spectator could, by moving suddenly
at the wrong moment, become the owner of a painting or piece of
furniture worth thousands of rands. The story of a man who bought
a Rembrandt by waving to a friend across the auction-room is
As it is part of an auctioneer's skill to know who is bidding
at a given moment, disputes are unlikely to arise over who
actually made the final bid for a lot. If, however, there are two
bidders of the same amount and it cannot be ascertained who bid
first, the auctioneer would be obliged to put the lot up again.
The auctioneer may lay down the condition of starting at a
certain level and insist that bids are made in specific amounts.
For instance, to save time and to help the bidding reach a
reserve price in the sale of a house, the auctioneer may accept
bids only in multiples of a thousand rands. As the bids rise, the
auctioneer may cut the size of the bid units.
Bidding by a seller
In a sale without reserve, the seller or the seller's agent
may not bid (that is to say, attempt to push up the price), and
if either does so and if the buyer discovers this, the buyer is
normally entitled to regard the sale as not legally binding.
Although the auctioneer's duty is to obtain the best price for
the seller, this may be done only in legitimate ways. The
auctioneer may not employ a 'puffer' - a person who bids to
increase the price on a secret understanding arrived at
beforehand not to be bound by any bid made for this purpose.
The auctioneer may also not increase the price by means of
imaginary bids, nor may a clerk, a crier or any company or
partnership of which the auctioneer is a member bid or buy either
personally or through another party. If this happens, the buyer
can refuse to be bound by the sale.
Bidding by buyers
A buyer who does anything to prevent or deter others from
bidding or to induce them to bid lower than they would otherwise
have done - for instance, by forming a dealers' ring - commits a
fraud upon the seller. A seller who finds out that this has
happened is entitled to regard the sale as null and void.When
collusion of this kind between buyers takes place publicly, the
auctioneer may stop the sale. Indeed, any 'fixing' of an auction
by either the bidders or the auctioneer will amount, in most
circumstances, to at least attempted fraud, which is a serious
criminal offence (see attempted
Advertising an auction
If an ordinary sale by auction is advertised, it need
nevertheless not be held. The advertisement is merely a statement
of intent and is not binding on the seller or the auctioneer.
Thus, no potential buyer can bring a court action to compel the
seller to hold the auction, and a potential buyer's action for
wasted travelling expenses when an auction is cancelled would
It is therefore always advisable, to check on the day of the
auction whether in fact it is being held.
Selling your home by auction
If you decide to dispose of your home by public auction, you
should first consult an auctioneer to find out how much the
auction will cost.
In a sale by private treaty you pay noth- ing to an estate
agent who does not sell your house, but an auction sale will
involve advertising and possibly other costs even if the property
is not sold.
If your property has been on the market for a considerable
time without attracting a buyer, the price may be too high, but
an auction may assist you to obtain an offer, since an auction
suggests urgency and is likely to attract attention.
Before the auction you will probably agree with the auctioneer
on a reserve price - that is, a minimum price below which the
house will not be sold.
Property sold at an auction is usually sold subject to the
seller's approval, for which a period of 24 or 48 hours is
normally allowed. You therefore have time to consider whether to
accept the highest bid made and, if necessary, to consult your
attorney about it.
If, however, you do not accept the highest offer, you will
still be liable for the auctioneer's fees if the top bid exceeds
the reserve price.
There is one exception to the rule that contracts for the sale
of land have to be in writing: when land is sold by public
auction, the sale agreement is finalised when the auctioneer
accepts the highest bid. If, however, the price of land sold by
public auction must be paid in more than two instalments over a
period exceeding a year, a written contract for the sale of that
land must be drawn up, the conditions on which the land is sold
must be read out in public just before the auction and the buyer
must be given a copy of the contract as soon as the auction is
The auctioneer cannot rescind or alter the terms of the sale
and is not liable for at- tending to the transfer of the