It’s important to know your rights when buying a car at auction as although you can buy a good car at auction for a bargain price you don’t have the same protections under the Consumer Protection Act (CPA) as you get at other car dealerships.
The main differences are that you can’t test drive the car – although some auctioneers will allow you to start the engine – and that you buy it as is (voetstoots), as Section 55 of the CPA requires that all of you purchased goods must be of good quality, does not apply to auctioned goods.
Section 45 and Rules 18 through 30 of the CPA provide how auctions should be conducted and what is permitted and what is prohibited. Since the right to good quality does not apply to auctioned goods, these special rules protect you when buying or selling at auction.
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Special regulations for car auctions
In addition to the general regulations for auctions, there are also special regulations in the regulations for vehicle auctions. First of all, auctioneers are not permitted to sell motor vehicles unless they display a notice on the vehicle at all times when viewed by potential bidders stating the following:
- Name and business address of the auctioneer
- whether the auctioneer or auction house owns the vehicle and whether the auctioneer or auction house is liable for repairs
- whether the auctioneer or auction house is selling the vehicle on behalf of a motor vehicle dealer, bank or other financial institution (licensed name, business address and whether authorized to repair must be provided) or another person (a statement of who is responsible for repairs and the name and address of the last owner (who was not a dealer, bank or other institution) or alternatively a statement that details of the last owner are available from the auctioneer
- if someone else has leased the vehicle from the owner, that the other person’s name and address are available at the auctioneer
- the year of manufacture of the vehicle, if known
- Year of registration of the vehicle, make and model, license plate number, engine number and identification number (VIN)
- that the reading of the vehicle’s odometer is guaranteed and
- why the vehicle is being sold if it is not in the normal course of business.
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General Auction Rules
The general auction rules in the regulations of the CPA stipulate that an auctioneer must prepare the auction rules in writing and make them available to the public at least 24 hours before the start of the auction. These rules must contain at least:
- the words “Auction Rules” in large letters on the first page
- Date, place and time of the auction
- the full name, address and contact details of the auctioneer
- all mandatory information required by law
- a declaration that the rules of the auction comply with § 45 and the regulations
- the words “Where goods are auctioned in lots, each lot shall, unless the contrary is proven, be the subject of a separate transaction”
- a statement that an auction will begin at the published time and that it will not be delayed to allow someone to attend the auction later
- a provision that anyone participating in the auction to bid on someone else’s behalf must produce a power of attorney, proof of identity and proof of residential address no more than three months old
- unless the auctioneer is also the owner or legal seller of the lot, a statement that the auctioneer has an escrow account into which all monies will be deposited for the benefit of the seller, after the agreed commission has been deducted
- a statement that the auctioneer will announce during the auction what the reason for the auction is, unless that reason is the normal and voluntary sale of the goods by the owner
- a provision that a person wishing to bid at the auction must register before the auction begins, providing proof of identity and proof of residence
- a provision that the bidders’ directory and the vendors’ list are available for inspection free of charge during normal business hours, and
- a breakdown of the total cost of advertising and conducting an auction, and an explanation of whether additional costs have been added and how these are calculated.
These rules shall not exclude liability for incorrect information in the notice of auction or the auction rules that do not comply with the requirements of the regulations, contain restrictions, provisos or reduce the requirements of these regulations, unless expressly provided for and exclude the right to inspect the goods.
The inspection of the goods is important because you are not allowed to test drive the car, but you can inspect it. This means you can bring in a mechanic and do a thorough inspection before you buy the car.
Auctioneers are personally responsible and liable for the content of the auction regulations. Each auctioneer is considered to be the representative of the owner or legal seller of the goods and must carry out his duties in such a way that the highest or lowest bid of a bidder is accepted.
They also have a duty to keep themselves informed of the current market conditions of goods to ensure they can provide customers with the best possible advice and services. They owe each customer a duty of care, must protect and secure the goods under their control, maintain a professional and confidential relationship with customers at all times, disclose estimated costs and services for conducting the auction, and disclose all known risks related to the auction private goods.
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Among prohibited conduct, auctioneers may not:
- Demand or receive a fee or commission from the buyer if the seller fails to comply with the sale agreement
- accept a bid from someone who is not on the bidder list
- set a reserve or reserve price without the express written consent of Seller
- remove an item or lot from an auction without the express written permission of the seller
- allow bidding on an item or lot if the auction has not been advertised as required
- deviate from the advertised order of goods during an auction
- knowingly cause or permit a misrepresentation of the value, composition, structure, character or quality or manufacture of the goods
- prevent anyone from accessing advertising, auction rules or seller listings; or
- pay someone else to be appointed auctioneer.
The important provision here is that the auctioneer is not permitted to knowingly misrepresent the value, composition, structure, character or quality or manufacture of the car. Again, remember that you are not allowed to bid if you have not registered.
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Other duties of the auctioneer
Auctioneers are required to maintain a bidder file recording the bidder number and identity of each bidder by requiring each bidder to register with proof of identity, signature and residence prior to the start of the auction. You must also ensure that the owners sign a declaration that they are the owner or legal seller of the goods.
Before bidding begins, the auctioneer must provide each bidder who registers with a bid number and a paddle or other device to display the bid number. Bids from unregistered bidders are void and the venue where the auction is held must be open and accessible to any member of the public. The auctioneer has the right to have anyone disturbing the auction expelled from the premises.
The auctioneer must grant consumers a reasonable time and opportunity to inspect the goods offered before the auction and may not charge any fee for the inspection. Here the regulations require you to bring a mechanic to inspect the car you have your eye on.
Auctioneers are also not allowed to charge you for participating in an auction, but can expect a refundable deposit of a few thousand rand for car auctions.
Since everyone lives and shops online, the regulations also allow for online auctions. Even if the auction takes place online, the auctioneer must comply with the regulations.