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AUCTION SALE

A sale by auction is a public sale where goods are offered to be taken by the hi
ghest bidder. In the case of sales by auction:
(i) Where goods are put for sale in lots, each lot is prime facie deemed to be
the subject of a separate contract of sale.
(ii) The sale is complete auctioneer announces its completion by the fall of ha
mmer and until such announcement is made, any bidder may retract his bid.
(iii) A right to bid may be reserved expressly by or on behalf of the seller and
where such right is expressly so reserved the seller or any one person on his b
ehalf may bid at an auction.
(iv) Where 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 himself to employ any pers
on to bid at such sale.
(v) The sale may be notified to be subject to a reserved price.
(vi) If the seller makes use of pretended bidding to raise the price, the sale i
s voidable at the option of the buyer.
According to Benjamin, sales by auction are of 3 kinds.
(1) Sale without reserve where the employment of a puffer renders the sale voida
ble.
(2) Sale with a condition that the highest bidder shall be the purchaser.
(3) Sale with a right expressly reserved to bid by or on behalf of the seller.
An auction with reserves is one where an upset price is fixed below which the auct
ioner refuses to sell or reserves to himself the option of buying. An auction is
said to be sold to be sold to the highest bidder whether the same bid be equiva
lent to the real value or not.
Section 64 prohibits secret bidding or use of pretended bids or the employment o
f puffers on behalf of the seller to raise the price at auction. Even when the sal
e is with reserve or subject to an upset price only the seller or in his absence
only one person acting on his behalf may bid. If more persons than one bid to t
he knowledge of the seller with a view to enhance the price, the buyer can avoid
the contract treating the sale as fraudulent. On the other hand an agreement am
ong intending bidders not to compete against each other with a view to knocking
off the article at a low price has not been held to be illegal.
The seller can protect himself against too low a bid by fixing a reserve price b
elow which he will not sell.
Puffers are persons who without having any intention to buy are employed by the
seller to raise the price by fictitious bids, thereby increasing competition amo
ng the bidders while they themselves are secured from risk by secret understandi
ng with the seller that they shall not be bound by their bids.
A Knock ont is a combination of persons to prevent competition between themselves
at an auction by an agreement that only one of their member shall bid and that a
nything obtained by him shall be afterwards disposed of privately among themselv
es. Such a combination is not illegal.
Damping is the illegal act of dissuading they would be purchaser from bidding or
from raising the price by pointing out defects or doing some other acts which p
revent persons from forming a proper estimate of the price of goods. Damping is
illegal.
An auction sale is a public sale to any person bidding the highest price, upon t
erms and conditions previously announced. The sale described in the previous cha
pter was negotiated privately, a definite purchaser appearing with whom the sell
er dealt directly, knowing with whom he was doing business. An auction sale on t
he other hand is public and any person may become the purchaser. The owner does
not even know, until the bidding takes place, what price he will receive1 for hi
s property.
Usually the seller can realize more for his property at private sale. However he
may be compelled to sell at auction, either because the law requires the sale o
f his property publicly, or because private purchasers do not appear or he think
s a public sale would bring a larger price. In the large cities there are custom
ary auction rooms and licensed auctioneers whose time and energy is devoted to a
uction sales. In the country districts the sale is usually had at some gathering

place, as the post office, railway station, town hall or on the property.
Auction sales are of two kinds - voluntary and involuntary, each differing very
materially from the other.
An auction is a process of buying and selling goods or services by offering them
up for bid, taking bids, and then selling the item to the highest bidder. The o
pen ascending price auction is arguably the most common form of auction in use t
oday. Participants bid openly against one another, with each subsequent bid requ
ired to be higher than the previous bid. An auctioneer may announce prices, bidd
ers may call out their bids themselves (or have a proxy call out a bid on their
behalf), or bids may be submitted electronically with the highest current bid pu
blicly displayed. In a Dutch auction, the auctioneer begins with a high asking p
rice for some quantity of like items; the price is lowered until a participant i
s willing to accept the auctioneer's price for some quantity of the goods in the
lot or until the seller's reserve price is met. While auctions are most associa
ted in the public imagination with the sale of antiques, paintings, rare collect
ibles and expensive wines, auctions are also used for commodities, livestock, ra
dio spectrum and used cars. In economic theory, an auction may refer to any mech
anism or set of trading rules for exchange.
There are traditionally four types of auction that are used for the allocation o
f a single item:
English auction, also known as an open ascending price auction. This type of auc
tion is arguably the most common form of auction in use today. Participants bid
openly against one another, with each subsequent bid required to be higher than
the previous bid. An auctioneer may announce prices, bidders may call out their
bids themselves (or have a proxy call out a bid on their behalf), or bids may be
submitted electronically with the highest current bid publicly displayed. In so
me cases a maximum bid might be left with the auctioneer, who may bid on behalf
of the bidder according to the bidder's instructions. The auction ends when no p
articipant is willing to bid further, at which point the highest bidder pays the
ir bid. Alternatively, if the seller has set a minimum sale price in advance (th
e 'reserve' price) and the final bid does not reach that price the item remains
unsold. Sometimes the auctioneer sets a minimum amount by which the next bid mus
t exceed the current highest bid. The most significant distinguishing factor of
this auction type is that the current highest bid is always available to potenti
al bidders. The English auction is commonly used for selling goods, most promine
ntly antiques and artwork, but also second hand goods and real estate.
Dutch auction also known as an open descending price auction. In the traditional
Dutch auction the auctioneer begins with a high asking price for some quantity
of like items; the price is lowered until a participant is willing to accept the
auctioneer's price for some quantity of the goods in the lot or until the selle
r's reserve price is met. If the first bidder does not purchase the entire lot,
the auctioneer continues lowering the price until all of the items have been bid
for or the reserve price is reached. Items are allocated based on bid order; th
e highest bidder selects their item(s) first followed by the second highest bidd
er, etc. In a modification, all of the winning participants pay only the last an
nounced price for the items that they bid on. The Dutch auction is named for its
best known example, the Dutch tulip auctions. ("Dutch auction" is also sometime
s used to describe online auctions where several identical goods are sold simult
aneously to an equal number of high bidders. In addition to cut flower sales in
the Netherlands, Dutch auctions have also been used for perishable commodities
such as fish and tobacco. The Dutch auction is not widely used.
Sealed first-price auction or blind auction, also known as a first-price sealedbid auction (FPSB). In this type of auction all bidders simultaneously submit se
aled bids so that no bidder knows the bid of any other participant. The highest
bidder pays the price they submitted. This type of auction is distinct from the
English auction, in that bidders can only submit one bid each. Furthermore, as b
idders cannot see the bids of other participants they cannot adjust their own bi
ds accordingly. From the theoretical perspective, this kind of bid process has b
een argued to be strategically equivalent to the Dutch auction. However, empiric
al evidence from laboratory experiments has shown that Dutch auctions with high

clock speeds yield lower prices than FPSB auctions. What are effectively sealed
first-price auctions are commonly called tendering for procurement by companies
and organisations, particularly for government contracts and auctions for mining
leases.
Vickrey auction, also known as a sealed-bid second-price auction. This is identi
cal to the sealed first-price auction except that the winning bidder pays the se
cond-highest bid rather than his or her own. Vickrey auctions are extremely impo
rtant in auction theory, and commonly used in automated contexts such as real-ti
me bidding for online advertising, but rarely in non-automated contexts.