An auctioneer is the agent of the seller and the purpose of the auction is to obtain the best possible price for the benefit of the seller. The intention of an auction is not to provide the public with an opportunity to obtain bargains. Therefore a bid on behalf of the seller by the auctioneer is permitted as long as there is prior notice in the auction conditions that vendor bidding will be allowed.
No one is compelled to bid at an auction nor to bid higher than any other bid, including a vendor bid up to the reserve price. A vendor bid does not deprive a bidder of a sale below the reserved price. That is the result of the reserve price itself. Acceptance of a bid below the reserve price is within the control of the seller.
Thus the bidding by the auctioneer on behalf of the seller was not a misrepresentation, nor was it a sham bid to artificially raise the sale price (which is unlawful). Vendor bidding is prohibited at auctions without reserve by the common law but is permitted by the Consumer Protection Act as long as there is proper notice in advance of the right of the owner or auctioneer to bid.
Hansa Silver (Pty) limited v Obifon (Pty) Limited t/a The High Street Auction Company.
