An article by Guild Commercial Partner Nigel Adams from Goodman Derrick LLP
An auction is an exciting event, especially when there are lots of highly polished and desirable classic cars on view. This short guide is designed to help those who know little or nothing about the auction process to avoid potential problems which can arise at auction.
If you are a novice, it is sensible to spectate at a few auctions to become familiar with how they are run, what entry requirements there may be, etc. It is important to understand how auction houses calculate their fees (buyer’s premium) so you are aware of what your total outlay will be on any car you bid for.
When you decide to attend an auction as a potential bidder, determine beforehand which lot or lots you are interested in bidding for and what your top bid will be before the auction starts. If possible, it is worth making enquiries of a marque expert to find out if a car you are interested in has a known history – whether good or bad.
It is vital to inspect the car you are interested in. Check the auction terms to find out the limits of what you can do (such as having a mechanic or other expert give the car a check over) and the times when viewing/inspections are allowed. Check if the car can be started. These investigations should help you spot any problems. Unscrupulous vendors sometimes use auctions to pass on problem cars to the unwary, so be warned!
Terms and conditions
Auctions will be governed by a set of written terms and conditions. It is worth taking the time to read them to familiarise yourself with your rights and obligations. For example, when will payment be due if you are a successful bidder? Will you have to provide evidence of your ability to pay to the auctioneer before the auction, etc?
Auction terms and conditions will also limit the liability of the auctioneer to you and possibly also the vendor, so be aware in advance. One area in which this is most likely to be the case is in relation to the description of the lots which is given. You need to exercise caution when relying on a description of a car in an auction catalogue.
Ownership – what now?
If you are buyer, once the hammer comes down you will likely be bound by the obligation to pay the hammer price and buyer’s premium to the auction house. Check the position on insurance and relevant timings on payment and removal of your new car.
If the car breaks down on the way home or fails in some other way, then whether you can return it will depend to a large extent on the terms governing the sale. It is common for most auction terms to restrict or remove any ability to return a car following an auction. It is unlikely that any warranties will have been given to you about the car and you will probably have been fixed with the responsibility of satisfying yourself that the car is authentic, useable etc which is why it is important to check a car as thoroughly as you can before bidding.