Be very careful when you buy on auction, because many of the usual legal protections for consumers have been stripped away when goods are sold on auction, specifically
- The implied warranty of quality in section 55 of the Consumer Protection Act which guarantees that goods you buy are good quality, free of defects, usable and durable and fit for their purpose
- The protections in the Liquor Act (when alcohol is auctioned as a fundraiser)
- The requirement that there’s a comprehensive written contract when you’re buying property in the Alienation of Land Act
- The protections in the Secondhand Goods Act
If you are a seller of a product you know has got quality issues, I’d recommend you sell it on auction to avoid liability for the defects. You will still be liable if the item was advertised in a misleading way, e.g. “excellent condition”. The Consumer Protection Act even requires that your auctioneer discloses an issue if his omission to do so would mislead bidders.
Sheriffs’ auctions of repossessed goods can be just the place to pick up a bargain, but beware, vehicle financiers routinely repossess cars and sell them on auction without having to jump through many hoops. So buyers can get caught in the middle when a distressed debtor finds the funds to catch up on his car debt and tries to stop the auction at the last moment or even tries to get back his car after it’s been sold to you.
Our courts have been getting proactive in preventing exploitative auctioning of homes where the bank’s client has fallen behind on their bond, by requiring a reserve price and setting conditions for the sale. Make sure you know what those conditions are and whether the property comes with any municipal debt. Our firm has had to assist a winning bidder in getting his money back for the sheriff’s commission and the seller’s legal fees after the bank cancelled the sale when the distressed debtor caught up their bond payments.
Every auction has a set of Terms and Conditions- make sure you understand them well in advance of the bidding starting. Bidders are bound by these rules even if they didn’t read them beforehand, or they arrived late and didn’t hear the auctioneer reading them out at the start of the auction. For example, the T&Cs can allow the seller or the auctioneer to bid though a representative- to artificially drive the price up. This is only allowed where there’s no reserve price set.
You have become the owner of the item if the auctioneer announced that your bid was successful either by the fall of the hammer in an in-person auction or by another customary method, e.g. a message on your screen with an online auction.
When goods are sold in lots, each lot is regarded as a separate transaction unless there’s evidence that it’s been done differently.
Auctioneers who are members of the SA Institute of Auctioneers’ are subject to their code of conduct which can be found at https://www.auctioneering.co.za/uploads/documents/saia_code_of_conduct.pdf.
In terms of section 65 of the Consumer Protection Act, an auctioneer who is holding a bidder’s money, must not treat those funds as being the property of the auctioneer, and must exercise the degree of care, diligence and skill that can be expected from a person managing the property of another, when they handle, safeguard and use those funds.
The CPA regulations list a variety of rules that apply to:
- the advertising of the auction,
- the rules of the auction,
- the treatment of unsold property,
- recordkeeping and
- mock auctions (where any goods are given away as gifts, or goods are sold for less than the highest bid or part of the purchase price is refunded to the purchaser).
Online auctions, vehicle auctions and livestock auctions are separately regulated. Various rules are set for auctioneers, including that they cannot take a fee if the seller defaults, and if the purchaser defaults, the fee may not be more than 10% of the purchase price (or the advertising costs incurred).