Sale by Auction

AUCTION SALE

            In auction sale an invitation is given for bid, bids are made by potential buyers.  The highest bid is generally the selling price, however the seller is not bound to sell his goods on the highest bid.  But it is custom to do so, setter failure of doing so may break the reputation of the firm or seller.

            Section 164 of contract of sale of goods act lays down the following rules regarding auction sale :-

(I)        Goods are kept in lots, each lot is treated as subject to separate contract.

(II)       Its completion is made by fall of HAMMER and using some traditional words like one, two, three sold etc.

(III)     It is an invitation to offer and not an offer.

(IV)     Auction sale is notified prior to the potential buyer in respect of potential buyer, place, base price and time of auction.

                        It should be noted that the base price, or (reserved price) is the price which is the lowest bid.