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Simple English definitions for legal terms
auction
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A quick definition of auction:
An auction is a way of selling things where people bid on the item they want to buy. The person who offers the highest amount of money gets to buy the item. There are different types of auctions, like ones where the seller sets a minimum price and ones where there is no minimum price. In a Dutch auction, the price starts high and gets lower until someone buys the item. Sometimes, people agree not to bid against each other in a knock-out auction.
A more thorough explanation:
An auction is a sale where people bid on items and the highest bidder gets to buy the item. The sale is complete when the auctioneer announces it in a customary manner, like pounding a hammer. There are different types of auctions:
- Absolute auction: The property is sold to the highest bidder without any minimum price limit. The owner cannot withdraw the property after the first bid is received, reject any bids, or nullify the bidding by outbidding all other bidders.
- With reserve auction: The property will not be sold unless the highest bid exceeds a minimum price.
- Dutch auction: There are different types of Dutch auctions. One type is where the property is initially offered at an excessive price that is gradually lowered until the property is sold. Another type is where several identical items are offered simultaneously, one to a bidder, and sold to the highest bidders for the amount of the lowest winning bid.
- Knock-out auction: Two or more bidders have agreed in advance not to bid against one another. This type of auction is not allowed in most jurisdictions.
Examples of auctions include:
- A charity auction where people bid on items to raise money for a cause.
- An art auction where people bid on paintings or sculptures.
- An online auction where people bid on items from their computer or phone.
These examples illustrate how auctions work. People bid on items they want and the highest bidder gets to buy the item. The auctioneer announces when the sale is complete and the item is sold to the highest bidder.