Skip to content

CMA Intermediate · Business Laws and Ethics · Sale of Goods Act, 1930

An auction of a vintage car owned by Suresh is advertised without any notice that the seller has reserved a right to bid. During the auction, Suresh's friend Anil, at Suresh's request, bids to push up the price, and the auctioneer knowingly accepts these bids. Which statement is correct under the Sale of Goods Act, 1930?

The buyer may treat the sale as fraudulent. Where no right to bid on behalf of the seller was notified, Section 64(4) forbids the seller from bidding or employing someone to bid, and a sale contravening this rule may be treated as fraudulent by the buyer.

  1. AThe sale is valid, as one person may always bid on behalf of the seller
  2. BThe sale is void for all purposes and cannot be enforced by anyone
  3. CThe sale may be treated as fraudulent by the buyerCorrect
  4. DThe sale is valid, but only the auctioneer may be penalised

Explanation

Under Section 64(4), where the sale is not notified as subject to a right to bid on behalf of the seller, the seller may not bid himself or employ another to bid, and the auctioneer may not knowingly take such bids. Any sale contravening this rule may be treated as fraudulent by the buyer. Option A is wrong because the right to bid must be expressly reserved.

Did you get it right without looking?

One question tells you little. A timed set on Sale of Goods Act, 1930 shows your real accuracy, how long you take and where you lose marks.

Practise Sale of Goods Act, 1930Free diagnostic mock

More Sale of Goods Act, 1930 questions