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Simple English definitions for legal terms
auction sale
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A quick definition of auction sale:
An auction sale is when people gather to buy and sell things. The person who offers the most money for an item gets to buy it. In some auctions, there is a minimum price that must be met before the item can be sold. There are different types of auctions, like Dutch auctions where the price starts high and goes down until someone buys it, or knock-out auctions where some people agree not to bid against each other. Once the auctioneer announces that the sale is complete, the item belongs to the highest bidder.
A more thorough explanation:
An auction sale is a type of sale where property is sold to the highest bidder. The sale is complete when the auctioneer announces it in a customary manner, such as by pounding a hammer. There are different types of auction sales:
- Auction without reserve: In this type of auction, there is no minimum price, and the owner cannot withdraw the property after the first bid. The highest bid creates an enforceable agreement.
- Auction with reserve: In this type of auction, the property will not be sold unless the highest bid exceeds a minimum price.
- Dutch auction: This type of auction can have different meanings depending on the context. It can be an auction where the property is initially offered at an excessive price that is gradually lowered until the property is sold. It can also be an auction 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: This is an auction where two or more bidders have agreed in advance not to bid against one another. This type of auction is not allowed in some jurisdictions.
Examples of auction sales include:
- An auction without reserve for a painting where the bidding starts at $1 and goes up until someone bids the highest amount, creating an enforceable agreement.
- An auction with reserve for a car where the minimum price is $10,000, and the car will not be sold unless the highest bid exceeds that amount.
- A Dutch auction for a box of apples where the auctioneer starts with a high price and gradually lowers it until someone buys the box.
- A knock-out auction for a rare stamp where two collectors agree not to bid against each other, and one of them wins the auction.
These examples illustrate how auction sales work and the different types of auctions that can take place.