Table Of ContentLegal Theory of Auction
The widespread understanding of auction structure considers auction as consisting
of three contracts: contract between the seller and the auctioneer, contract between
the auctioneer and the buyer and the sale contract between the seller and the buyer.
The book challenges this concept, arguing that the traditional tripartite concept of
auction is too narrow and does not correspond to the actual structure of auction
relations.
Demonstrating that an auction structure consists of a plethora of legal
relationships, including noncontractual relations, this book explores the legal
concept of auction sale and the structure of accompanying relations. The book
provides a historical overview of auctions and different auction models. Following
a brief introduction to the economic theory, auction models are examined against
the following legal criteria: price formation, publicity, parties’ autonomy, legal
form and applied technology to find a legal concept and nature of auction. The
book explores the legal position of key auction figures and auction objects to
identify the categories of legal relations that appear at auction. It explores the
legal nature of the main contract, as well as the relations between the consignor
and the auctioneer, the auctioneer and the bidders, the bidders themselves, the
consignor and the bidders. The book covers relations arising from droit de suite,
financial and bidding agreements to provide a comprehensive overview of lesser-
known legal relations that commonly arise in auction practice.
Kristijan Poljanec is a postdoctoral researcher in law at the University of Zagreb,
Croatia.
Legal Theory of Auction
Kristijan Poljanec
First published 2023
by Routledge
4 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
and by Routledge
605 Third Avenue, New York, NY 10158
Routledge is an imprint of the Taylor & Francis Group, an informa
business.
© 2023 Kristijan Poljanec
The right of Kristijan Poljanec to be identified as author of this work has
been asserted in accordance with sections 77 and 78 of the Copyright,
Designs and Patents Act 1988.
All rights reserved. No part of this book may be reprinted or reproduced or
utilised in any form or by any electronic, mechanical, or other means, now
known or hereafter invented, including photocopying and recording, or in
any information storage or retrieval system, without permission in writing
from the publishers.
Trademark notice: Product or corporate names may be trademarks or
registered trademarks, and are used only for identification and explanation
without intent to infringe.
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging-in-Publication Data
A catalogue record for this book has been requested
ISBN: 978-1-032-07919-6 (hbk)
ISBN: 978-1-032-33180-5 (pbk)
ISBN: 978-1-003-31858-3 (ebk)
DOI: 10.4324/9781003318583
Typeset in Times New Roman
by Apex CoVantage, LLC
To my beloved Ron, the most charming golden retriever
that ever lived.
Contents
Preface xiv
List of acronyms xvi
Table of cases xviii
Table of legislation xix
Introduction 1
Price-determination methods 1
Brief note on the auction history 2
The rationale for this book 2
About the comparative legal method adopted in this book 3
Lack of comparative researches 3
Local character of auction sales 4
Self-regulatory character of auction rules 5
Fragmentary character of auction law 5
The comparative method 6
The objectives of the comparison 7
Contents of this book and the problems covered 8
Defining the legal concept of auction 8
Defining the structure of auction relationships 9
Defining the legal concept of internet auction 9
Filling the gaps in the EU resale right regime 9
Defining the legal nature of auction guarantees and the
influence thereof on the position of the auctioneer 10
Finding a demarcation line between licit and illicit price-
influencing tactics at auction 10
1 Legal concept of auction 15
Introduction 15
Economic concept of auction 15
viii Contents
Models 16
One-sided and double-sided auctions 16
Private value and common value auctions 16
Open-bid auctions and sealed-bid auctions 17
Revenue equivalence theorem 18
The theorem 18
The critics of the theorem 19
Legal concept of auction 20
Typical models 21
Ascending (English) auction 21
Features 21
Public and private auctions 21
Written and oral auctions 22
Absentee bids 22
Limited and unlimited absentee bids 23
Descending (Dutch) auction 24
Features 24
Subcategories 24
Is Dutch auction an auction at all? 25
Auction and auction-like bidding mechanisms 26
Games of chance and auctions 26
‘Controlled’ uncertainty 27
No risk of losing the stake 27
Purpose 28
Competitive bidding 28
Public procurement and auction 28
Stock exchange and auction 29
Auction and the public promise of a reward 30
Interim conclusion 31
2 Auction relationships 38
Introduction 38
Auction participants 39
Seller 39
Auctioneer 40
The notion 40
Consigned and property auction 40
Bidders 41
Objects 41
Legal relationships at English auction 42
Consignment agreement 42
Contents ix
Continental law 42
Intermediation 42
Representation 44
Direct representation 44
Indirect representation 45
Auctioneer acting as sole contractor 46
Ambiguities concerning representation 47
Rights and duties of the auctioneer 48
Fiduciary duties of the auctioneer 48
Personal engagement in carrying out the
mandate 48
Avoidance of conflict of interest 48
Adherence to the consignor’s instructions 48
Receipt of the price 49
Rights 50
Brokerage fee 50
Damages 50
Advances 50
Anglo-American law 51
Agency 51
Rights and duties of the auctioneer 52
The authority of the auctioneer 52
Fiduciary duty 53
Personal engagement of the auctioneer 53
Receipt of the price 53
Rights 54
Brokerage fee 54
Indemnities 54
Relationship between the auctioneer and the bidders 55
Continental law 55
Anglo-American law 59
The relationships between the bidders 60
Contract of sale 60
Continental law 60
Theory of invitation 60
The existence of an offer 62
The effect of the last (in)valid bid for previous bids 63
Higher bid 64
Duration of a bid 64
Notification of the knock-down 64
Auction sale with a ‘retention of higher offer’ clause (in
diem addictio) 65
