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Business Laws and Ethics · Sale of Goods Act, 1930

Auction Sale Rules under the Sale of Goods Act, 1930

Updated 10 October 2026 · Fact-checked

An auction sale is governed by Section 64 of the Sale of Goods Act, 1930. Each lot is a separate contract, the sale is complete at the fall of the hammer, and a bidder may retract until then. The seller may bid only if that right is expressly reserved. Pretended bidding makes the sale voidable by the buyer.

Understand Auction Sales and Short Title, Extent and Commencement

The Sale of Goods Act, 1930 is a short Act that sets out how contracts for the sale of goods are made and performed. Section 1 gives its basic identity. It is called the Sale of Goods Act, 1930. It extends to the whole of India. It came into force on 1 July 1930. The word "Indian" was dropped from the title in 1963, and the earlier exclusion of Jammu and Kashmir was removed with effect from 31 October 2019.

An auction is a sale in which goods are offered to the public and sold to the bidder who offers the most. Section 64 lays down special rules for it. The auctioneer invites offers. Each bid is an offer. The sale becomes a contract only when the auctioneer accepts a bid.

The first rule is about lots. If goods are put up in lots, each lot is prima facie a separate contract of sale. So a buyer who wins lot 1 has no contract for lot 2. The word "prima facie" means the rule applies unless the terms of the auction show otherwise.

The second rule is about completion. The sale is complete when the auctioneer announces it by the fall of the hammer or in another customary manner. Until then, any bidder may retract his bid. This is why a bid is only an offer and not a binding promise.

The remaining rules protect honest bidding. The seller may bid only if the right to bid was expressly reserved, and then only the seller or one person on his behalf. Without such a reservation, seller bidding is unlawful and the buyer may treat the sale as fraudulent. The sale may be subject to a reserved or upset price. If the seller uses pretended bidding to raise the price, the buyer may avoid the sale.

Key rules to remember

Short title, extent, commencement (Section 1)
Sale of Goods Act, 1930 | whole of India | in force from 1 July 1930
The word "Indian" was omitted in 1963. The exception for Jammu and Kashmir was omitted w.e.f. 31-10-2019.
Lots (Section 64(1))
Each lot = prima facie a separate contract of sale
"Prima facie" means the rule can be displaced by the terms of the auction.
Completion and retraction (Section 64(2))
Sale complete on fall of hammer or other customary manner; until then any bidder may retract
Retraction is possible only before the announcement of completion.
Right to bid (Section 64(3))
Seller or one person on his behalf may bid only if the right is expressly reserved
Express reservation is essential. It cannot be implied.
No reservation (Section 64(4))
No reserved right to bid: seller cannot bid or employ a bidder; sale may be treated as fraudulent by the buyer
The auctioneer also may not knowingly take a bid from the seller or such person.
Reserved price (Section 64(5))
Sale may be notified to be subject to a reserved or upset price
Notification is needed for the sale to be subject to the price.
Pretended bidding (Section 64(6))
Pretended bidding to raise price: sale voidable at the buyer's option
The option lies with the buyer, not the seller.

How to solve Auction Sales and Short Title, Extent and Commencement questions

Most questions give a short auction scenario and ask whether a bidder, the seller or the buyer has any right. Use the same steps each time.

  1. 1Identify whether the question is about Section 1 facts or an auction under Section 64.
  2. 2For an auction, list the facts: lots, bids, whether the hammer fell, who bid, and whether any right to bid or reserve price was notified.
  3. 3Check completion first. If the hammer has not fallen, any bidder may retract his bid.
  4. 4If goods were sold in lots, treat each lot as a separate contract unless the facts say otherwise.
  5. 5If the seller or his agent bid, check whether the right to bid was expressly reserved. Only one person on the seller's behalf is allowed.
  6. 6If bidding was pretended to raise the price, say the sale is voidable at the buyer's option.
  7. 7Quote the sub-section of Section 64 and give a one-line conclusion.

Quickest way: Hammer, Lots, Seller-bid check

When to use it: Use for short MCQs and short-note scenarios where you have only a minute or two.

  1. Has the hammer fallen? If no, the bidder can withdraw.
  2. Were there lots? Each lot is a separate contract.
  3. Did the seller bid? Look for an express reservation. If none, the buyer may treat the sale as fraudulent.
  4. Was bidding pretended? The sale is voidable at the buyer's option.
  5. For Section 1 facts, remember: 1930, whole of India, 1 July 1930.

Common mistakes in Auction Sales and Short Title, Extent and Commencement

  • Saying a bidder cannot withdraw once he has bid.

    Students treat a bid like a binding promise.

    Fix: A bid is only an offer. Until the auctioneer announces completion, any bidder may retract his bid.

  • Saying the sale is void when the seller bids without reservation.

    Students mix up void, voidable and fraudulent.

    Fix: Under Section 64(4) the buyer may treat such a sale as fraudulent. For pretended bidding under Section 64(6), the sale is voidable at the buyer's option.

  • Allowing the seller to appoint several bidders when the right to bid is reserved.

    Students remember the reservation but not its limit.

    Fix: When the right is expressly reserved, the seller or any one person on his behalf may bid.

  • Treating all goods in an auction as one contract.

    Students overlook the lot rule.

    Fix: Goods put up in lots are prima facie separate contracts, one for each lot.

  • Writing that the Act still excludes Jammu and Kashmir or is called the Indian Sale of Goods Act.

    Old textbooks and notes are used.

    Fix: Write that the Act extends to the whole of India, and its title has no word "Indian".

  • Giving the commencement date as the date of enactment or 1 April 1930.

    Students guess the date.

    Fix: Section 1(3) says the Act came into force on 1 July 1930.

Worked examples

Example 1

At an auction, Ravi Traders puts up 10 machines in 10 lots. Meena bids ₹4,00,000 for lot 3, and before the auctioneer lets the hammer fall, she says she withdraws her bid. The auctioneer says she is bound. Advise.

Show the solution
  1. Rule: under Section 64(2), the sale is complete when the auctioneer announces it by the fall of the hammer or in other customary manner.
  2. Until that announcement, any bidder may retract his bid.
  3. Here the hammer had not fallen when Meena withdrew.
  4. Under Section 64(1), lot 3 is a separate contract in any case, so her bid concerns only that lot.

Answer: Meena is not bound. She may retract her bid because the hammer had not fallen and the sale was not complete.

Example 2

Anil sells his vintage cars by auction. The auction was not notified as subject to any right to bid on behalf of the seller. Anil's friend Sunil bids on his behalf and raises the price of a car to ₹9,00,000, and Kiran is the highest bidder at that price. Can Kiran act against the sale?

Show the solution
  1. Rule: under Section 64(3), the seller or one person on his behalf may bid only if that right is expressly reserved.
  2. No right to bid was reserved here.
  3. Under Section 64(4), it is then unlawful for the seller to bid or employ a person to bid, and the auctioneer may not knowingly take such a bid.
  4. A sale contravening this rule may be treated as fraudulent by the buyer.
  5. If Sunil's bids were pretended bidding to raise the price, Section 64(6) also makes the sale voidable at the buyer's option.

Answer: Yes. Because no right to bid was reserved, Anil could not bid through Sunil. Kiran may treat the sale as fraudulent, and, if the bidding was pretended, avoid it as voidable.

Exam tips

  • Learn Section 64 as six short points, (1) to (6), and quote the sub-section in your answer.
  • In scenario questions, look first for the hammer, then for lots, then for any seller bidding.
  • Use the exact terms: retract, reserved or upset price, pretended bidding, voidable at the option of the buyer.
  • For one-line MCQs on Section 1, remember the title, the whole of India and 1 July 1930.
  • Keep written answers short: rule, facts applied, conclusion.

Practice questions from Sale of Goods Act, 1930

Auction Sales and Short Title, Extent and Commencement in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Auction Sales and Short Title, Extent and Commencement: frequently asked questions

When is an auction sale complete?

It is complete when the auctioneer announces completion by the fall of the hammer or in another customary manner. Until then, any bidder may retract his bid.

Can the seller bid at his own auction?

Only if the right to bid was expressly reserved by or on behalf of the seller. Then the seller or one person on his behalf may bid. Without reservation, seller bidding is unlawful and the buyer may treat the sale as fraudulent.

What is a reserved or upset price?

It is a price notified in advance, to which the sale is made subject. Section 64(5) allows the sale to be notified as subject to such a price.

What are the short title, extent and commencement of the Act?

It is called the Sale of Goods Act, 1930. It extends to the whole of India. It came into force on 1 July 1930.