Act puts the squeeze on auc­tion­eers

Consumer Pro­tec­tion Act pro­vides for trans­parency in the in­dus­try

Business Day - Business Law and Tax Review - - BUSINESS LAW & TAX REVIEW - EU­PHEMIA AN­NOR

THE Consumer Pro­tec­tion Act, 2008 ap­plies to ev­ery trans­ac­tion con­cluded within SA be­tween sup­pli­ers and per­sons (nat­u­ral or ju­ris­tic) whose an­nual turnover or as­set value is equal to or less than R2m.

One of the high­lights of the act is its reg­u­la­tion of the auc­tion in­dus­try, which up un­til now, has been op­er­at­ing un­der the radar with lit­tle in­ter­fer­ence from the leg­is­la­ture.

The leg­is­la­tion has seen many auc­tion­eers and auc­tion houses scram­bling to en­sure that their rules and reg­u­la­tions com­ply with the new act.

Sec­tion 45 of the leg­is­la­tion reg­u­lates the man­ner in which auc­tions must be car­ried out and al­most half of the act’s reg­u­la­tions deal with auc­tions. The pur­pose of the law is to pro­mote trans­parency in an in­dus­try where, un­til re­cently, the consumer’s rights have been shrouded in am­bi­gu­ity.

In terms of the act’s reg­u­la­tions, save for closed auc­tions and live­stock auc­tions which are con­ducted on a weekly or monthly ba­sis un­der the same rules and at the same time, no goods may be sold at an auc­tion un­less it has been ad­ver­tised at least 24 hours prior to its com­mence­ment.

The ad­ver­tise­ment must be in a leg­i­ble for­mat and size and must con­tain a ref­er­ence as to where the rules of auc­tion can be ob­tained.

The ad­ver­tise­ment must con­tain the date, place and time of the auc­tion and be ad­ver­tised in a man­ner that al­lows the pub­lic to have a rea­son­able op­por­tu­nity to be­come aware of the auc­tion, the goods on of­fer and the rules gov­ern­ing the auc­tion.

The reg­u­la­tions also re­quire that at least 24 hours prior to the com­mence­ment of an auc­tion, the auc­tion­eer drafts the rules of the auc­tion which must meet the re­quire­ments of the reg­u­la­tions.

The auc­tion rules may not ex­clude li­a­bil­ity in re­spect of in­ac­cu­rate in­for­ma­tion pro­vided in the ad­ver­tise­ment of the auc­tion.

The reg­u­la­tions con­tain a num­ber of pro­vi­sions which are aimed at main­tain­ing a cer­tain level of trans­parency re­gard­ing the man­ner in which auc­tions are con­ducted.

Auc­tion­eers may not sell goods at an auc­tion un­less they have a writ­ten agree­ment with the sell­ers of the items. It is now a re­quire­ment for all bid­ders to reg­is­ter be­fore the start of an auc­tion. The in­for­ma­tion needed for reg­is­tra­tion must com­ply with the Fi­nan­cial In­tel­li­gence Cen­tre Act, 2000.

The reg­u­la­tions re­quire that a per­son who bids at an auc­tion on be­half of an­other must pro­duce a let­ter of au­thor­ity.

Con­sumers also have the right to in­spect the goods on of­fer at an auc­tion prior to the com­mence­ment of the auc­tion, with­out hav­ing to pay any fee to do so. The reg­u­la­tions fur­ther pro­vide that where the auc­tion­eer or seller re­serves the right to bid in an auc­tion, a state­ment to this ef­fect must be put in the auc­tion rules.

Fur­ther­more, it is manda­tory for an auc­tion­eer to keep a ven­dors roll, in

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