|Auction Basics||Uniform Commercial Code||Contracts|
|Sales Management||Consumer Credit||Other Aspects of Contracts|
|Sale By Auction||Sales Tax|
An auction is a sale by competitive bid. The definition of competitive bid sale includes the exchange between an auctioneer (bid caller) and members of his audience with the acceptance of or rejection of the most favorable bid. A competitive bid sale also includes a silent auction or any sale in which a buyer competes with others for the item to be sold. The acceptance or rejection of highest or most favorable bid shall be conditioned on whether the sale is with reserve or without reserve.
The type of auction is determined by ownership of the property and the conditions under which the property is sold. Auctions can involve total or partial liquidations of business or personal property or consignments.
Consignment Auction is when more than one party's property is included in the auction and each party is assessed a cost for sale or attempted sale.
Liquidation Auctions are a total or partial liquidation and normally involves only one party's property in the auction.
Distress Auctions are conducted under the direction or order issued by a proper court of jurisdiction or the sale is conducted for foreclosure purposes by a secured party.
The responsibility of an auctioneer for the sales management function is dependent upon the agreement between the seller and the auctioneer. Unless otherwise specifically exempted by a written contract agreement between the seller and auctioneer, Sales Management shall include the control and responsibility for the following actions involved in auction sales:
|1. Appraising||7. Site Selection and Preparation||13. Cashiering|
|2. Inventorying||8. Lotting||14. Property Check Out|
|3. U.C.C. Filing||9. Registration||15. Security|
|4. Creditor Notification||10. Bid calling||16. Accounting|
|5. Advertising||11. Ringworking||17. Escrow Account|
|6. Property Make Ready||12. Clerking|
An auction sale is a public sale to the highest bidder. Its object is to achieve a fair price for the property auctioned by means of competitive bidding. Although the term ordinarily implies a sale made on the acceptance of an oral bid, written bids may also be used.
In a sale by auction, goods are 'put up' in lots, and each lot is the subject of a separate sale.
A sale by auction is complete when the auctioneer so announces by the "fall of the hammer" or other customary manner. When a bid is made while the 'hammer is falling', the auctioneer may in his discretion, reopen the bidding or declare the goods sold under the bid on which the hammer was falling. The recognition of a bid of this kind, means that the bid has been accepted as a continuation of the bidding. If recognized, the new bid discharges the bid on which the hammer was falling when it was made.
The auctioneer primarily acts as an agent of the seller, but for many purposes, he is the agent of both parties. The purchaser who bids and announces his bid to the auctioneer, gives the auctioneer authority as his agent, which does not need to be in writing. However, the auctioneer must make some memorandum or entry in writing of the name of the purchaser and the terms of the sale. The entry is usually made by the auction clerk upon the 'fall of the hammer'.
An auction sale is with reserve, unless the goods are in explicit terms, put up without reserve. In an auction with reserve, the auctioneer may withdraw the goods at any time, until he announces completion of the sale.
In an auction without reserve, (absolute auction) after the auctioneer calls for bids on an article or lot, that article or lot cannot be withdrawn, unless no bid is made within a reasonable time.
In either case, a bidder may retract his bid until the auctioneer's announcement of completion of the sale. A bidders retraction does not automatically revive any previous bid.
An auction 'with reserve' is the normal procedure. The crucial point for determining the nature of an auction is the "putting up" of the goods. The goods may be withdrawn before they are actually "put up" without liability, even if the auction is advertised as 'without reserve'. This is subject to any peculiar facts which might bring the case within the "firm offer" principle. However, the announcement prior to the auction, either as 'with reserve' or 'without reserve', will enter as an "explicit term" in the 'putting up' of the goods and must be governed accordingly.
If the auctioneer knowingly receives a bid on the sellers behalf, and notice has not been given that such bidding is reserved, the buyer may at his option avoid the sale or take the goods at the price of the last good faith bid prior to the completion of the sale. This does not apply to any bid at a forced (court ordered) sale.
Puffers, Shills or by-bidders are persons who are employed by the seller to increase the price, by means of fictitious bids, for the sole purpose of inflating the price of the property; without any intention to purchase, and protected by a secret agreement with the seller, that he shall not be liable for his bids. This is not only unethical, it is also illegal, if notice has not been given that the seller is allowed to bid.
If an auctioneer sells property that he has no authority to sell, the owner of the property is entitled to recover the property in an action against the purchaser.
An auctioneer who sells and delivers personal property in his possession without disclosing the name of the seller, is liable on an implied warranty of title. The auctioneer is responsible to the owner for any losses. Even if the auctioneer has disclosed the name of the seller, if the auctioneer has signed a written contract, he is personally bound to the terms of the contract.
An auctioneer is prohibited from selling any horse, mule, or ox, without first obtaining a written statement from the seller, as to the manner, and from whom, the animal was acquired. Such statement must be recorded with the clerk of the county court, together with description of the animal and the name and residence of the seller and purchaser.Top
The Uniform Commercial Code requires a "notice filing", under which a notice is filed with the appropriate filing officer showing that a Debtor and Secured Party intend to engage in secured transactions using a designated kind of collateral.
Financing Statement - Under the Uniform Commercial Code, the notice to be filed with the filing office is called a Financing Statement. The prescribed form is called a UCC-1.
Security agreement - The security agreement entered into by the Secured Party and the Debtor may also be filed instead of the UCC-1 Financing Statement form (depending on individual state laws), if it contains all the information required in a Financing Statement and contains the signature of the Debtor.
Duration - The Financing Statement (form UCC-1), or the security agreement used as a Financing Statement, is effective for a period of five years from the date of filing.
Changes affecting the original Financing Statement have been consolidated into a single form called a UCC-3. This form may be signed by the Secured Party of record only, unless it is an Amendment. If it is an Amendment, the Debtor of record must also sign the UCC-3 form.
The UCC-11 form is used to request the filing officers certificate stating whether any presently effective Financing Statements, Statements of Assignment, Continuation Statements, Termination Statement, Statements of Release or Amendment, Federal Tax Liens, or Utility Security Instruments and Supplements are actually on file affecting particular Debtor, or to request certified copies of the filings.
Where to File: The Code classifies collateral upon the basis of the use to which it is put. It may be filed with the County Clerk or Secretary of State depending on certain conditions.Top
Surcharge for use of credit card
In a sales transaction for goods or services involving the use of a credit card for an extension of credit, the seller may not impose a surcharge on the buyer because the buyer uses a credit card instead of cash, a check, or similar means of payment.
Note: While a seller can not specifically charge for the use of a credit card, a seller may offer a discount for cash, or other means of payment.Top
A contract is a legally binding agreement between two or more persons or parties. Contracts may be written or oral and may vary in form and content. While contracts are used to settle disputes, particularly if the dispute goes to court, a good understanding by all the parties of the proper use of contracts will help prevent disputes. There are many other aspects which should be considered when entering into a contract. An effective contract must contain all the terms and conditions of an agreement.
A contract requires three things: an offer, an acceptance, and a consideration. When these three things exist, a binding contract is formed.
Offer - One party must make an offer. An offer is a clear and specific statement of the terms of the agreement, such as the price, description of services or goods, schedule and type of delivery or performance, time and type of payment(s). If all elements are not included, it is a negotiation, not an offer. The difference between a true offer and a negotiation is that an offer clearly states the intent to enter into a certain contract if the other party agrees to the terms of that contract.
For example, if an auctioneer says, "I will hold an auction to sell your property no later than December 31,1995. The auction will be with reserve, and you will set the minimum bids. I will handle set-up and advertising and charge them against the proceeds of the auction. My commission will be 25% of the total proceeds before sales taxes.", this is an offer.
If an auctioneer says, "I will hold an auction to sell your property, and I'll give you a good deal on my commission.", this is a negotiation.
It is necessary to be very clear and specific when negotiating or making an offer. If the intention is to negotiate, rather than to make an offer, it should be stated. Time periods to which an offer is limited and requests for written acceptances should be stated.
Acceptance - Once an offer has been made, it can be accepted. The acceptance cannot change any of the terms of the offer. This would be considered a counter offer, to which the other party would have to agree in order for a contract to exist.
An acceptance can be a simple statement that the offer is accepted, but an acceptance is usually made in the same form as the offer. If the offer was written, the acceptance should be written. At that point, the contract is binding on both parties, and it is too late for either to change their minds.
Consideration - Consideration means that both (or all) parties must receive something of value from the contract.
For instance, auctioneer making the offer in the example above receives his 25% commission, while the owner of the property to be auctioned receives the services of the auctioneer plus the remainder of the proceeds after taxes, set-up, advertising and commission have been paid.
If the owner/consignor tells the auctioneer that if he sells everything and gets a good price, he will pay him an extra $500, this is not consideration, and is not part of the contract, since the auctioneer is already obligated to sell everything he can, and to get a good price. The owner/consignor would not be getting anything for the extra $500.
Written/Oral - Some contracts, such as transfers of real property, are required to be written. Oral contracts are normally binding, but they are never as good as a written contract, since if a dispute arises, it may be impossible to prove what the terms of the agreement were. An oral contract may be interpreted differently by each party, may be remembered differently by each party, or may be misstated intentionally by a disgruntled party.
A written contract should contain specific terms for every aspect of the agreement that may apply. Even if items are discussed and "understood" by all parties, they should be written into the contract.
Generally speaking, if a dispute arises over a contract and the dispute goes to court, oral modifications or agreements to a written contract cannot be used to contradict a written contract. Every item left unsaid leaves room for disagreement.
It is fairly common for changes to be made in a contract after the contract is signed, but it is necessary to have written documentation of any changes if a dispute arises.
Form - Contracts are not required to be in any particular form. Contract forms may be very useful, but a letter stating all the terms and conditions and signed by both parties is just as binding.
Content - Each party to a contract is presumed by law to know and understand everything that is in a contract he or she has signed. Claims that a party did not know such a provision was in the contract are not allowable. Uncertainties or disagreements must be ironed out before signing.Top
The object, or purpose, of a contract must be legal. If the object is not legal, the contract can be voided and is not binding.
All parties to a contract must have capacity, or the ability to make binding contracts. This means that a person must be mentally competent and at least eighteen years old. If a party is under eighteen; the contract must be signed by a parent, legal guardian, or trustee of the owner's property.
All parties must also have authority to act. For instance, only officers designated with authority to sign for the corporation can sign contracts for the company. Consignors or buyers for companies or corporations must have authority to sign for their respective companies or corporations. All parties should request proof of authority before signing a contract.
Interpretation - If a dispute arises, if a provision is clear and the words have a plain meaning, that is the meaning they will be given. If words have a special meaning in the trade or profession to which a contract pertains, that special meaning will normally be given. Sometimes it is necessary to determine the meaning of a provision by its context, or by looking at the contract as a whole. If the meaning of a contract cannot be clarified, there is a general rule that the contract will be interpreted against the person who wrote the contract.
Breach of Contract - Breaching a contract means breaking the agreement. If you do not do something you have agreed to do in a contract, it is a breach of a contract. Any person contemplating breaching a contract, or who believes another party has breached a contract with him, should contact an attorney.Top
|Contact Us||James Ford - Texas Auctioneer Lic. 12478||281-479-7848|
|Serving Texas from the Greater Houston Metro Area|