Auction Contract, Agency, and Fiduciary Duties
What this domain tests
This domain tests the auction agreement and the agency relationship: how the auctioneer is authorized, what fiduciary duties apply, how conflicts are disclosed, and when the auctioneer can bind the seller or buyer.
Core rules
- The auctioneer usually acts as the seller's agent under a written auction or listing agreement. That agreement should state commission, buyer premium, reserve, expenses, withdrawal rights, advertising, settlement timing, and indemnity.
- Agency duties under Louisiana law include loyalty, obedience to lawful instructions, disclosure of material information, confidentiality, and accounting for money and property. The auctioneer may not make a secret profit or compete with the seller.
- Authority is limited. The auctioneer cannot waive a reserve, change sale terms, or accept a lower price unless the seller authorized it. Special authority should be in writing.
- A buyer premium is a buyer-side charge, not a shift of agency. The auctioneer still represents the seller unless a written dual-agency disclosure says otherwise.
- The sale contract with the buyer is formed under the auction terms; the auctioneer's agency does not make the auctioneer a party unless the contract says so.
Worked example
An auctioneer learns a lot is worth far more than the reserve. Without telling the seller, he has a friend bid at the reserve and later resells the lot for a profit. The friend's bid is a secret profit and a breach of loyalty; the seller may rescind or recover the profit, and the conduct supports license discipline. Disclosure and seller consent would have changed the analysis, but silence does not.
Traps
Thinking the buyer premium makes the auctioneer the buyer's agent; relying on oral authority to drop a reserve; failing to disclose an ownership interest in consigned goods; and mixing seller funds with business funds.