AUCTIONEERS - authored by Tamara Oppenheimer
1. Importance of sales by auction
Sales by auction involve important economic activity that goes on most weeks at auction houses throughout the UK. A wide variety of assets and securities are the subject-matter of specialist auctions at regular intervals, some firms dealing exclusively with one commodity only. Examples are plant and machinery, livestock, life policies, motor vehicles, firearms, books and postage stamps. In so far as standard conditions of sale exist, at least some of these conditions will vary according to the subject-matter of the auction. Plant and machinery or vehicle sales, for instance, require special conditions of sale to take account of safety legislation. Auctioneers obtain items for their sales from varying sources but primarily from private sellers, personal representatives and traders realising their stock. The auction serves the vital function of reducing assets into money quickly and by a specific date, particularly if no reserve is placed. Sellers, liquidators and receivers often take the view that although prices realised at auction may be lower than in a sale by private treaty, this discount is more than balanced by the saving in administrative effort and time which might be needed to find a suitable private treaty purchaser. In Thomas Eggar Verrall Bowles v. Rice
1 an unusual aspect of the economic consequences of a sale by auction was in issue. The defendant was virtually insolvent and his shop stock had been taken by bailiffs by way of distraint. His solicitors, in the course of complex negotiations, had undertaken to inform him of the date and place of the auction to which the bailiffs had consigned the goods but they failed effectively to do so. The stock was sold off very cheaply at below cost and the defendant had no opportunity to bid. It was held that the solicitors had failed to discharge their duty of informing the defendant client of the sale, thus enabling him to buy at least some of the stock back at a bargain price and resell at a profit. Despite the speculative element of how high he would have had to bid successfully and the limited resources available to do this, damages were assessed at 70 per cent of the putative net profit.
The rest of this document is only available to i-law.com online
If you are already a subscriber, please enter your details below to log in.