Auction Bidders – 5 Rights You Need To Know!


Are you hoping to pick up a bargain at a public auction but are put off by the media uproar over allegations of undisclosed “vendor” or “ghost” bidding?  If so, read on……

Auctioneers and the CPA

The Consumer Protection Act and Regulations impose very strict and detailed obligations on auctioneers in regard to how they must advertise and conduct auctions. Which gives you, the bidder, a raft of important rights.

You need to know them – particularly these: –

  1. All prospective bidders must register before bidding. You will need to comply with FICA (the Financial Intelligence Centre Act) and, if you are bidding on behalf of a third party, you must have proper written authority to do so (with a company resolution if bidding on behalf of a company).
  2. Auctions must be properly advertised (amongst the many detailed rules for adverts – any “advance notices” as below must be disclosed).
  3. “Rules of Auction” must be prepared and available for inspection.
  4. Advance notice must be given of (i) Any reserved or “upset” price i.e. minimum price below which bids may be declined (if such a price is applicable), (ii) Any right to bid by or on behalf of the seller or auctioneer. Note that any violation of this second requirement would entitle you to “approach a court to declare the transaction fraudulent”.
  5. The “bidder’s record” (with names and bidder numbers of all bidders) must be available for inspection free of charge before, during and after the auction. Bidders must be given “a paddle or other device” with their bidder’s number attached so as to be “clearly visible to the persons present at the auction.”

And a Caution   

The provisions in the Act relating to the “Consumer’s rights to safe, good quality goods” do not apply to auctions – instead, auctioneers may not “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.B. Special rules apply to electronic, Internet, game/livestock and motor vehicle auctions, whilst the Regulations don’t apply where lots are donated to charity auctions. The above is of necessity only a short summary of very detailed provisions – take specific advice in need.



Buying Properties In A Shelf Company? Pitfalls And Precautions


Shelf (i.e. pre-registered) companies can be very useful vehicles for the acquisition of assets, particularly property.

Beware the pitfalls – who can sign and who can’t?

Just make sure if you buy a shelf company that you don’t sign any contracts for your new company before you are actually appointed as director – until then, only the currently-appointed director has the legal authority to bind the company.

The dangers of not observing this basic precaution were illustrated in a recent High Court matter where the purchaser of a shelf Close Corporation signed an agreement of sale to buy a property just two weeks before becoming a member.

Holding that the purchaser had no right to bind the CC before his appointment, and that the CC could not thereafter ratify the agreement, the Court declared the sale agreement to be invalid.


The agency authorisation


Note that if you must sign a property sale agreement urgently, i.e. before you replace the incumbent director, he/she can authorise you to do so accordingly as an authorised agent. Such authority must be given to you prior to your signing and in writing.



Living Together: The Risk, And The Remedy  


With couples increasingly cohabiting before (or instead of) formally marrying, and with the Domestic Partnerships Bill of 2008 still on ice, it bears repeating –

  • There is no such thing in South Africa as a “Common Law Marriage”
  • Any cohabiting couple needs to urgently take advice on concluding a formal “cohabitation agreement” – don’t risk not having one!

The Risk


A recent Supreme Court of Appeal case illustrates the dangers of not doing so: –

  • A couple had lived together as life partners for 16 years, pooling their assets and resources and maintaining a joint household to which each contributed.
  • Ms S had assisted Mr P with his various businesses and had contributed her earnings from employment (as well as the proceeds of her own furniture and car) to their joint expenses.
  • The couple was at one stage engaged, there were promises of security and “what is mine is yours”, and Ms S had been referred to as a “spouse” on a retirement village application.
  • When the relationship ended, Ms S was left with virtually nothing.

The 35% Result


The only way for a life partner in Ms S’s position to secure a share of accrued assets is to prove the existence of a “universal partnership”. That is never easy to do, and requires proof of all of the following:-

  1. That each party has brought something into the partnership, and
  2. That the partnership was carried on for their joint benefit, and
  3. That the object was to make a profit.

As a result there are many unfortunate cases of life partners left destitute after decades of cohabitation. Where, as in this matter, the other party strenuously denies the existence of any such partnership, the dispute will probably end up grinding through the courts and appeal courts. Fortunately for Ms S, she was in this particular case able to prove the existence of a “tacit” universal partnership – her High Court award of 35% of the net assets of the partnership was accordingly confirmed on appeal.

The Remedy


The parties would have been much better off if only they had opted upfront for the certainty of a formal cohabitation agreement. The alternative is dispute, acrimony, delay, cost – and quite possibly destitution for the loser.