Auction Business Operations, Contracts, and Recordkeeping
The written contract
Before the auction, the auctioneer and seller should sign a written contract. Typical required terms: identification of the auctioneer/business and seller; date, time, and place; description of property; commission and how computed; terms of sale (reserve or absolute, buyer's premium, deposit, closing date); who pays advertising and expenses; and signatures. Oral agreements are a classic exam trap-get it in writing.
Operations
Separate business and trust funds. Advertise accurately, disclose the buyer's premium, and state whether the sale is absolute or reserve. Maintain records for each auction-consignor, items, bids, sale prices, fees, disbursements-and retain them for the period required by board rule. Track renewal and continuing-education deadlines.
Traps
Contract silent on reserve: the default is with reserve, not absolute. “Commission” versus “buyer's premium”: the premium is paid by the buyer and is usually additional to the seller's commission-disclose it. Failing to specify who bears advertising, removal, or storage costs creates disputes.
Worked example
A seller signs a contract listing “10% commission” but says nothing about a buyer's premium. The auctioneer may charge a disclosed buyer's premium, but must disclose it in advertising and at the sale; hiding it is misrepresentation.
Rule of thumb: if a term affects money, it belongs in the written contract.