What are rights and obligations of parties involved in auction of goods in Viet Nam?

Auction of goods is a competitive commercial activity, enables the seller to sell his or her goods at the highest price, and the buyer can buy the goods as much as the budget can afford. What is the current Vietnamese law on auction of goods? Join Lawyer X to find out through the following situation: “Hello, lawyer, I intend to organize an auction of goods in Viet Nam. Can you provide me with some legal regulations on the rights and obligations of subjects in auction of goods in Viet Nam? Thank you, lawyer! “

Legal grounds

Commercial law

What is auction of goods?

Auction of goods means a commercial activity whereby sellers themselves conduct or hire auction organizers to conduct public sale of goods to select purchasers that offer the highest prices. The auction of goods in commerce must be conducted on the principles of publicity, honesty and assurance of legitimate rights and interests of auction participants.

Auctions of goods shall be performed by either of the following two modes:

– Upward bidding mode, which is an auctioning mode whereby the person who offers the highest price as compared with the reserve price shall have the right to purchase the auctioned goods;

– Downward bidding mode, which is an auctioning mode whereby the person who first accepts the reserve price or the lower price next to the reserve price shall have the right to purchase the auctioned goods.

Subjects in auction of goods

Subjects in auction of goods comprise:

– Auction organizers are traders that register the business of providing auctioning services or sell their own goods in cases where goods sellers conduct auctions by themselves.

– Goods sellers are owners of such goods or persons mandated by goods owners to sell goods or persons entitled to sell goods of others according to the provisions of law.

– Auction participants are organizations and individuals that register to participate in auctions.

– Auctioneers are auction organizers or persons authorized by auction organizers to run auctions.

*Persons not allowed to participate in auctions

– Persons who do not have civil act capacity, lose civil act capacity, or have restricted civil act capacity under the provisions of the Civil Code, or persons who, at the time of auction, are unable to cognize or control their acts;

– Persons working in auctioning organizations; their parents, spouses and children;

– Persons who have personally conducted the assessment of to be-auctioned goods; their parents, spouses and children;

– Persons who do not have the right to purchase auctioned goods as provided for by law.

Rights and obligations of subjects in auction of goods

*Rights of auction organizers

 Unless otherwise agreed, auction organizers shall have the following rights:

– To request goods sellers to provide fully, accurately and promptly necessary information on auctioned goods, to create conditions for auction organizers or auction participants to examine auctioned goods and hand over auctioned goods to goods purchasers in cases where auction organizers are not goods sellers;

– To determine reserve prices in cases where auction organizers are sellers of auctioned goods or persons authorized by goods sellers;

– To organize auctions;

– To request goods purchasers to make payments;

– To receive auction service charges paid by goods sellers according to the provisions of Article 211 of Commercial law

 *Obligations of auction organizers

– To organize auctions of goods in compliance with the principles and procedures provided for by law and by auction modes agreed upon with goods sellers.

– To notify and post up in a public, full and accurate manner necessary information on auctioned goods.

– To preserve auctioned goods when they are entrusted by sellers for safe-keeping.

– To display goods, goods samples or documents introducing goods for auction participants to consider.

– To compile documents on auctions of goods and send them to goods sellers and purchasers and relevant parties according to the provisions of Article 203 of Commercial law

– To deliver auctioned goods to purchasers according to contracts for provision of goods auctioning services.

– To carry out the procedures for transferring ownership rights over auctioned goods which are subject to the ownership registration as provided for by law, unless otherwise agreed with goods sellers.

 – To pay to goods sellers proceeds from the sale of goods, including differences collected from persons that withdraw their offered prices defined in Clause 3, Article 204 of Commercial law or return unsold goods to goods sellers according to agreements. In case of no agreement, to pay money to goods seller within three working days after receiving money from goods purchasers, or to return the goods immediately within a reasonable time after auctions;

*Rights of goods sellers that are not auction organizers

Unless otherwise agreed, goods sellers shall have the following rights :

– To receive money amounts for auctioned goods and differences collected in cases specified in Clause 3, Article 204 of Commercial Law or receive goods back in case of unsuccessful auctions;

– To supervise the organization of auctions of goods.

*Obligations of goods sellers that are not auction organizers

Unless otherwise agreed, goods sellers shall have the following obligations:

– To deliver goods to auction organizers, create conditions for auction organizers and auction participants to examine goods, and supply in a full, accurate and timely manner necessary information on auctioned goods;

– To pay auction organizing service charges according to Article 211 of Commercial law

 Goods auction-organizing service contracts

– Goods auction organizing service contracts must be made in writing or in other forms of equivalent legal validity.

– In cases where auctioned goods are objects of pledges or mortgages, goods auction organizing service contracts must be approved by pledgees or mortgagees, and sellers shall have to notify auction participants of the pledged or mortgaged goods.

– If the auction is agreed upon in pledge or mortgage contracts but pledgors or mortgagors are absent without plausible reasons or refuse to enter into goods auction organizing service contracts, such contracts shall be entered into between pledgees or mortgagees and auction organizers.

*Determination of reserve prices

– Goods sellers must determine reserve prices. In cases where auction organizers are authorized to determine reserve prices, goods sellers must be notified thereof before auctions are posted up.

– In cases where auctioned goods are objects of pledges or mortgages, pledgees or mortgagees must reach agreements with pledgors or mortgagors on the determination of reserve prices.

– If the auction is agreed upon in pledge or mortgage contracts but pledgors or mortgagors are absent without plausible reasons or refuse to enter into goods auction organizing service contracts, the reserve prices shall be determined by pledgees or mortgagees.

Notification to persons with rights and obligations related to goods being objects of mortgage or pledge In cases where goods are objects of pledge or mortgage, auction organizers, simultaneously with posting up goods auctions, must notify persons with related rights and obligations within seven working days before such goods are auctioned according to the provisions of Article 197 of Commercial law

*Time limit for notification and posting up of goods auctions

– Within seven working days before a goods auction is held, the auction organizer must post up the auction at the auction venue, the place of goods display and his/her/its head office according to the provisions of Article 197 of Commercial law.

– In cases where auction organizers are also goods sellers, the time limit for posting up auctions shall be decided by goods sellers themselves.

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