An auction sale is the sale of goods through a bidding process and is covered under the Sale of Goods Act. The process of sale by auction involves the selling of any goods and property of value, in a public gathering where buyers make a bid for the purchase and the sale is made to the highest bidder.
Different types of auctions can be employed in the sale of goods, including English auctions, Dutch auctions, sealed bid auctions, and online auctions. The choice of auction type depends on the goals of the seller and the nature of the goods being sold.
Rules of auction sales are
- Sale completion: It is one of the most important Auction Sale rules that the seller must complete the sale once a bid has been accepted. In case, he is unable to do so for any reason, he must inform all potential buyers of this before the Auction commences and also refund their money.
- Auctioneer: The Auctioneer conducts the Auction Sale by announcing each product being put up for bidding and calling for bids from interested buyers.
- Reserve price: This is the minimum price at which the seller is willing to sell a particular item in an auction sale. If no bidder meets or exceeds this price, then the item goes unsold.
- Bidding increments: In most auctions, there are predetermined bidding increments that determine how much a can increase her/his bid amount.
- Auction closing time: The Auction Sale must have a definite ending time so that all interested buyers are aware of when the bidding process will end.