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CMA Foundation · Fundamentals of Business Laws and Business Communication · Sale of Goods Act, 1930

At an auction conducted by Hindustan Auctioneers, a bidder offers ₹5,00,000 for a machine. Before the auctioneer lets the hammer fall, the bidder changes his mind and withdraws the bid. Under the Sale of Goods Act, 1930, what is the legal position?

The bidder may withdraw his bid. In an auction sale, the contract is complete only when the auctioneer announces completion by the fall of the hammer or another customary manner. Until then the bid is merely an offer, and any bidder may retract it freely.

  1. AThe bidder cannot retract because a bid is a binding contract once made
  2. BThe bidder may retract his bid, as the sale is not complete until the auctioneer announces completionCorrect
  3. CThe bidder may retract only with the written consent of the seller
  4. DThe bidder may retract only if the bid was above the reserve price

Explanation

Under Section 64(2), the sale is complete when the auctioneer announces it by the fall of the hammer or in other customary manner. Until that announcement, any bidder may retract his bid. The claim that a bid binds at once is wrong because the bid is only an offer until accepted by the auctioneer.

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