It is important to know your rights when buying a car at an auction because you do not have the same protection under the Consumer Protection Act (CPA) as in other car transactions, although you can buy a good car at an auction for a bargain.
The biggest differences are that you cannot test drive the car – although some auctioneers will allow you to start the engine – and that you buy it as is (voetstoots), because section 55 of the CPA, which provides that all goods you buy must be of good quality, does not apply to goods bought on auction.
Section 45 and Regulations 18 to 30 of the CPA make provision for how auctions should be held, as well as what is allowed and what is prohibited. As the right to good quality does not apply to goods bought on auction, these special rules protect you when buying or selling at auctions.
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Special regulations for car auctions
In addition to the general regulations for auction, these are also special rules in the regulations for vehicle auctions. To start with, auctioneers are not allowed to sell motor vehicles unless they carry a notice attached to the vehicle at all times when it is viewed by prospective bidders, stating:
- the name and business address of the auctioneer
- if 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 (the licensed name, business address and whether it has the responsibility for repairs must be included) or another person (a statement about who is responsible for repairs, as well as the name and address of the last owner (who was not a dealer, bank or other institution) or alternatively a statement that the last owner’s details are available from the auctioneer
- if someone else leased the vehicle from the owner, that the name and address of the other person is available from the auctioneer
- the year of the vehicle’s manufacture, if known
- the vehicle’s first year of registration, manufacturer and model, registration number, engine number and identification number (VIN)
- that the reading of the vehicle’s odometer is guaranteed and
- why the vehicle is sold if it is not in the normal course of business.
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General rules of auction
The general rules of auction in the regulations of the CPA provides that an auctioneer must compile the rules of auction in writing and make them available to the general public at least 24 hours before the auction starts. These rules must at least contain:
- the words ‘rules of auction’ in large letters on the first page
- the date, place and time of the auction
- the full names, physical address and contact details of the auctioneer
- all compulsory information required by the regulations and the Act
- a statement that the rules of auction comply with section 45 and the regulations
- the words ‘When goods are put up for sale by auction in lots, each lot is, unless there is evidence to the contrary, regarded to be the subject of a separate transaction’
- a statement that an auction will start at the published time and that it will not be delayed to allow anyone to take part in the auction later
- a provision that anyone who attends the auction to bid on behalf of someone else, must produce a letter of authority, proof of identity and proof of their residential address, that is not older than three months
- unless the auctioneer is also the owner or rightful seller of the goods, a statement that the auctioneer has a trust account into which all money will be paid for the benefit of the seller, after the agreed commission is 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 who intends to bid at the auction must register before the auction starts by providing proof of identification and residence
- a provision that the bidders’ record and the vendor roll are available for inspection during normal hours without charge, and
- a breakdown of the total cost of advertising and holding an auction and a statement to indicate if additional costs were added and, if so, how these will be calculated.
These rules may not exclude liability for inaccurate information provided in the advertising of the auction or the rules of auction not meeting the requirements of the regulations, contain any qualification, reservation or decrease the requirements of these regulations, unless these are specifically provided for and exclude the right to inspect the goods.
Inspecting the goods is important, because although you are not allowed to test drive the car, you are allowed to inspect it. This means that you can bring a mechanic to come and do a thorough inspection before you buy the car.
Auctioneers are personally accountable and liable for the contents of the rules of auction. Every auctioneer is considered to be the agent of the owner or rightful seller of the goods and must perform their duties so that the highest or most favourable offer made by a bidder is accepted.
They also have the duty to keep up to date with the current market conditions of goods at all times, to ensure they can advise and perform services for clients to the best of their ability. They owe each client a duty of care, must protect and secure the goods under their control, always have a professional and confidential relationship with clients, reveal estimated costs and services for conducting the auction and disclose any risks they are aware of regarding the auction of particular goods.
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Under prohibited behaviour, auctioneers are not allowed to:
- charge or receive any fee or commission from the buyer if the seller does not honour the agreement to sell
- accept a bid from someone who is not registered in the Bidder’s Record
- set a minimum or reserve price without the express written permission of the 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 during an auction from the sequence of goods as advertised
- knowingly cause or permit the value, composition, structure, character or quality or manufacture of the goods to be misrepresented
- prevent the access of anyone to any advertisement, rules of auction or vendor’s roll or
- pay anyone else to be appointed as auctioneer.
The important provision here is that the auctioneer is not allowed to knowingly misrepresent the value, composition, structure, character or quality or manufacture of the car. Also remember here that you are not allowed to bid if you did not register.
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Other duties of auctioneers
Auctioneers must keep a bidder’s record to record the bidder’s number and identity of every bidder, by requiring every bidder to register before the auction starts with proof of identity and signature as well as residence. They must also ensure that the owners sign a declaration that they are the owner or rightful seller of the goods.
Before bidding starts, the auctioneer must give every bidder who registers a bidding number and a paddle or other device to show the bidder’s number. Bids from unregistered bidders are invalid and the place where the auction is held must be open and accessible to any member of the public. The auctioneer has the right to have anyone who disrupts the auction removed from the premises.
The auctioneer must give consumers a reasonable period of time and opportunity to inspect the goods on offer before the auction and cannot charge a fee for the viewing. This is where the regulations make provision for you to bring a mechanic to inspect the car you have your eye on.
Auctioneers are also not allowed to charge you to participate in an auction, but can in the case of car auctions, expect you to put down a refundable deposit of a few thousand rand.
With everybody living and shopping online, the regulations also make provision for online auctions. The auctioneer must still comply with the regulations even if the auction happens online.