Consumer Protection Act

Consumer Protection Act No 68 of 2008

HOW DOES THE CPA APPLY TO AUCTIONS? 

REGULATION 18 – DEFINITIONS INTERPRETATION AND APPLICATION 

Regulation 18 (1) provides the following relevant definitions: 

 Auction house: Company or juristic person conducting auctions from time to time

Auction without reserve: Auction at which:

 (a) Goods are sold to the highest bidder without reserve;

 (b) The auction does not require a minimum bid;

 (c) The auction does not allow competing bids of any type by the seller or the agent of the seller;

 and

 (d) The seller of the goods cannot withdraw the goods from auction after the auction has

opened and there is public solicitation or calling for bids.

 Auctioneer: The person conducting the auction

 Bidders’ record: The document contemplated in regulation 26

 Closed Auctions: An auction where the auctioneer issues an invitation to take part in an auction only to a finite list of consumers

 Goods: Include where appropriate services

 Lot: Any group of goods sold or offered for sale as a unit and identified as such

 Vendor’s roll: The document contemplated in regulation 28(4)

Regulation 18(2) provides that the regulations are to be read together with section 45 of the Act:

Section 45 – Auctions 

45(1) In this section, “auction” includes a sale in execution of or pursuant to a court order, to the extent that the order contemplates that the sale is to be conducted by an auction.

 45(2) 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.

 45(3) A sale by auction is complete when the auctioneer announces its completion by the fall of the hammer, or in any other customary manner, and until that announcement is made, a bid may be retracted.

 45(4) Notice must be given in advance that a sale by auction is subject to –

 (a) a reserved or upset price; or

 (b) a right to bid by or on behalf of the owner or auctioneer, in which case the owner or auctioneer, or any one person on behalf of the owner or auctioneer, as the case may be, may

bid at the auction.

 45(5) Unless notice is given in advance that a sale by auction is subject to a right to bid by or on behalf of the owner or auctioneer –

 (a) the owner or auctioneer must not bid or employ any person to bid at the sale;

 (b) the auctioneer must not knowingly accept any bid from a person contemplated in paragraph

(a); and

 (c) the consumer may approach a court to declare the transaction fraudulent, if this subsection has been violated.

 45(6) The Minister may prescribe requirements to be complied with by an auctioneer, or different categories of auctioneer, in respect of –

 (a) the conduct of an auction;

 (b) the records to be maintained with respect to property placed for auction; and

 (c) the sale of any such property by auction.

 Regulation 18(3) states that the regulations apply to all auctions except auctions as listed in

 Regulation 18(4) being transactions of stock exchange or auction for goods declared to be donated and the proceeds are paid to a bond fides religious, educational, cultural, welfare, social or sports organisation.

 Regulation 18(5) states that any provisions in any agreement relating to goods sold or bought at an auction or advertised or offered for sale at an auction, or any agreement providing for conducting the auctions itself, in conflict with the regulations does not have any force or effect.

 Regulation 18(6) states that the regulations do not detract from any law relating to advertising, sale, purchase, delivery, rendering or financing of goods.

 Regulation 18(7) states that an auctioneer selling immovable property must comply with all other applicable laws in respect thereof including the legislation regulating the activities of estate agents

 Regulation 18(8) states that an auctioneer must comply with all general provisions of the regulations

REGULATION 19 – MANDATORY ADVERTISING OF AUCTIONS 

REGULATION 20 – GENERAL RULES ON ADVERTISING AUCTIONS

REGULATION 21 – RULES OF AUCTION 

SECTION 22 – AUCTIONEER AND AUCTION HOUSE TO HOLD AND ACCOUNT FOR CONSUMER’S PROPERTY 

 REGULATION 24 – PROHIBITED BEHAVIOR 

Regulation 24(1) states that an auctioneer may not –

(a) charge or receive any fee or commission in respect of the sale of movable goods unless such goods have been delivered to the purchaser;

 (b) charge or receive any fee or commission in respect of the sale of immovable property until the purchaser and the seller have signed a written agreement in respect of the sale of such immovable property;

 (c) charge or receive any fee or commission from the purchaser if the seller defaults or where such fee or commission has already been paid by the purchaser to the auctioneer, the auctioneer shall immediately refund the purchaser the amount paid, including deposit;

 (d) charge or receive any fee or commission from the purchaser, if the purchaser defaults, exceeding ten percent of the purchase price or the total cost of advertising and conducting an auction and such additional costs as may have been reasonably incurred in accordance with regulation 21(2)(1), whichever is the lesser;

 (e) charge or receive any fee or commission from the seller, unless agreed otherwise in writing, if the buyer defaults or where such fee or commission has already been paid by the seller to the auctioneer, the auctioneer shall immediately refund the seller the amount paid;

 (f) charge or receive any fee or commission from the seller if the seller defaults, unless agreed otherwise, exceeding ten percent of the purchase price or the total cost of advertising and conducting an auction and such additional costs as may have been reasonably incurred in accordance with regulation 21 (2)(1), whichever is the lesser;

 (g) enter into any agreement or arrangement with the seller to sell any goods unless the auctioneer has first provided the seller with an estimate of the total cost of the auction;

 (h) accept a bid from a person unless he or she is registered in the Bidders’ Record as contemplated in regulation 26;

 (i) set a minimum or reserve price without the express written permission of the seller;

 (j) remove an item or lot from an auction without the express written permission of the seller;

 (k) allow bidding on an item or a lot if the auction thereof has not been advertised as contemplated in regulations 19 and 20;

 (l) during an auction deviate from the sequence of goods as advertised;

 (m) knowingly misrepresent, or cause or permit to be misrepresented the value, composition, structure, character or quality or manufacture of the goods put up for sale at an auction;

 (n) hinder the access of any person to any advertisement contemplated in these regulations, rules of auction or vendor’s roll; or

 (o) pay any other person in order to be appointed as auctioneer, whether in general or for a particular auction or in respect of any specific goods.

REGULATION 25 – FALSE ENTRY IN AUCTION RECORD 

REGULATION 26 – BIDDER’S RECORD 

Regulation 26(1) states that An auctioneer must for every auction have a bidders’ record to record the identity of all bidders at an auction.

Regulation 26(2) states that Subject to regulation 30(2), the auctioneer must ensure that every prospective bidder must prior to the commencement of an auction register his or her identity in the bidder’s record, and such registration must with the necessary changes meet the requirements of Chapter 1 of the regulations in terms of the Financial Intelligence Centre Act, 2001, published in Notice No. R.1595 in Gazette No. 24176 of 20 December 2002, in respect of establishment and verification of identity, and sign that entry.

Regulation 26(3) states that The auctioneer must ensure that a person who intends to bid on behalf of another, produces a letter of authority expressly authorising him or her to bid on behalf of that person, and both that person and the person bidding on his or her behalf must meet the requirements of sub regulation (2)

Regulation 26(4) states that the auctioneer must ensure that if a person will be bidding on behalf of a company, the letter of authority contemplated in sub regulation (3) must appear on the letterhead of the company and must be accompanied by a certified copy of the resolution authorising him or her to do so.

Regulation 26(5) states that the bidders’ record is available for public inspection in respect of the names of bidders and the bidders numbers referred to in sub regulation (6) only, at any time, free of charge –

 (a) during an auction, at the premises where the auction is being held; and

 (b) before or after an auction, at the auction house or auctioneer’s place of business and during normal business hours.

Regulation 26(5) states that an auctioneer must record the bidder number contemplated in regulation 28(1) in the bidders’ record.

REGULATION 27 – OWNERSHIP 

Regulation 27 states that the auctioneer must ensure that a person who wishes to dispose of his or her property by way of an auction signs a declaration stating that he or she is the owner or rightful holder of the goods (who has the right to sell) and submits that declaration to the auctioneer.

REGULATION 28 – BIDDING 

Regulation 28(1) states that An auctioneer must provide a prospective bidder whose name appears in the bidders’ record with a bidder number before he or she may bid, as well as a paddle or other device to which that number is attached in such a way that it is clearly visible to the persons present at the auction.

Regulation 28(2) states that a bid taken from an unregistered person is invalid.

Regulation 28(3) states that the place where an auction is held must be open and accessible to any member of the public, subject to the auctioneer’s right to refuse a person the right to remain on the auction’s premises in the event that that person repeatedly behaves in such a way so as to disrupt the auction.

Regulation 28(4) states that an auctioneer must have a vendor’s roll in which all details of the auction are recorded, which must, as a minimum, include –

 (a) the advertising of the auction;

 (b) the rules of auction;

 (c) the bidders’ record;

 (d) the declarations contemplated in regulation 21 (2)(h) and 27;

 (e) a list of all goods on auction, including goods which were withdrawn from auction;

 (f) the names of the successful bidders, the goods or lots bought and the prices paid in respect thereof;

 (g) the details of any challenges to the validity of the auction or the conduct thereof, and the particulars of the persons making such challenges, if available;

 (h) any items or lots not sold;

 (i) the details of any reserved price or any matter contemplated in subsections (4) and (5) of section 45 of the Act.

Regulation 28(5) states that the auctioneer must afford consumers a reasonable period of time and opportunity to inspect the goods on offer prior to the commencement of an auction, and no fee may be charged for such opportunity, but an auctioneer may –

 (a) refuse or restrict access to such goods if the consumer after gaining access in any way acts unlawful or in contravention of the applicable rules of auction;

 (b) require the consumer to adhere to or submit to any security measures reasonably applicable in the circumstances.

Regulation 28(6) states that subject to any reserved price and acceptance of the highest bid by the seller, the highest bidder, when the auctioneer announces the completion of a sale by the fall of the hammer, or in any other customary manner, is the purchaser of the goods or lots on auction.

Regulation 28(7) states that no fee may be charged for participation in an auction, but this does not apply to refundable deposits.

Regulation 28(8) states that the auctioneer must upon concluding the proceedings of an auction –

 (a) announce that the auction has come to an end;

 (b) sign the vendor’s roll; and

 (c) certify that the proceedings of the auction were to the best of his or her knowledge conducted in accordance with these regulations, any other applicable law and the rules of auction.

REGULATION 29 – MOCK AUCTION 

REGULATION 30 – INTERNET OR ELECTRONIC AUCTIONS 

REGULATION 31 – RECORDS 

REGULATION 32 DEALS WITH MOTOR VEHICLE AUCTIONS 

32 In addition to any other requirement in these regulations, an auctioneer may not conduct an auction unless a notice containing the particulars and statements required in this sub regulation relating to the vehicle, being a motor vehicle as defined in section 1 of the National Road Traffic Act, 1996 (Act No 93 of 1996), is attached to the vehicle and has been attached to the vehicle at all times when the vehicle was available for inspection by prospective bidders, which must include –

(a) the name and business address of the auctioneer;

(b) if the auctioneer or auction house is conducting the sale on his, her or its own behalf, whether the auctioneer or auction house is liable to discharge the duty of repair, or not;

(c) if the auctioneer or auction house is conducting the sale on behalf of-

(i) a motor vehicle dealer or bank or other financing entity, the name in which that dealer, bank or entity is licensed and the business address of the dealer, bank or entity and whether the dealer, bank or entity is liable to discharge the duty of repair, or not; or

(ii) another person, a statement on whether there is a duty to repair, who is liable to discharge that duty to repair and the details of the repair, and if applicable, the name and address of the last owner of the vehicle who was not a dealer, bank or entity, or alternatively a statement that

the last owner’s name and address are available on request from the auctioneer or auction house;

(d) if the owner let the vehicle on hire to another person under a vehicle leasing agreement, the name and address of such other person, alternatively a statement that such person’s name and address are available on request from the auctioneer;

(e) the vehicle’s year of manufacture, if known;

(f) the vehicle’s year of first registration;

(g) the vehicle’s manufacturer and model designation;

(h) the vehicle’s registration number;

(i) the vehicle’s engine number;

  1. G)the vehicle’s identification number (VIN);

(k) a statement whether or not the reading of the odometer of that vehicle is

guaranteed; and

(I) a statement contemplated in regulation 21 (2)(i).    

REGULATION 33 DEALS WITH LIVESTOCK, GAME AND CLOSED AUCTIONS