There is a section of the Fair Trading Act that applies to auctions that are conducted by (or on behalf of) anyone who carries on business as an auctioneer and at these auctions:

  • the property is sold on behalf of a seller
  • bids for the property are placed with the auctioneer in real time, whether in person, by telephone, via the internet, or by any other means
  • the property is sold when the auctioneer indicates.

A person is carrying on business as an auctioneer if they are in trade and charge a fee or commission or other payment for conducting the sale.

“On behalf of a seller” means that the offer of goods or services makes it clear that the auctioneer is selling someone else’s property for them, as an agent or similar. They are not selling their own property. Property is not sold “on behalf of” someone if the owner of the property sells it directly.

These rules don't apply to auctions such as those on sites like Trade Me. This is because in an online auction like Trade Me, goods are sold directly by a seller to a winning bidder and not through an auctioneer.

Who is an auctioneer?

Auctioneers include:

  • those registered under the Auctioneers Act 2013 or not required to be registered
  • those engaged by a registered auctioneer to conduct auctions on its behalf
  • some motor vehicles dealers and real estate agents even though they are exempted from registration under the Auctioneers Act.

The Auctioneers Act

The Auctioneers Act 2013 requires any person who carries on business as an auctioneer to be registered.

Registered auctioneers are required to keep a written record of the details of each auction. This includes details on:

  • the seller
  • the property
  • the person who conducted the auction
  • the bids received
  • the price of sale
  • the date on which the proceeds were paid to the seller.

Sellers, the Commission and the police can ask to see the written record of an auction. The auctioneer must make the written record of an auction available for inspection by the Commission if requested.

Go to the Ministry of Business, Innovation and Employment website for more information about auctioneer registration.

The law says that:

  • a notice of auction terms must be made available for consumers to view before and during the auction
  • an auction starts when the auctioneer invites the first bid and ends when the auctioneer makes it clear the bidding is closed
  • a bid can be withdrawn at any time before the end of the auction
  • vendor bidding is allowed in certain situations
  • an item is considered to be sold at auction if it is unsold at the end of the auction but the auctioneer accepts an offer from a customer who attended the auction within 1 working day of the auction.

Notice of auction terms

The terms of the auction must be readily available to all potential bidders before and during the auction; for example a notice at the entrance of an auction room, having brochures of the terms available, or on a website.

The notice of auction terms must be in writing and include:

  • if any reserve price applies
  • if vendor bids are allowed
  • if the seller is in trade.

These rules only apply to property that is usually purchased for personal, domestic or household use.

Vendor bids

A vendor bid is a bid made by the seller or any person on their behalf (including an agent or auctioneer). The Fair Trading Act auction rules allows an auctioneer to accept a vendor bid during an auction where:

  • the notice of auction terms specifies that vendor bids are permitted (for that lot)
  • a reserve price is set
  • the vendor bid is below the reserve price
  • the auctioneer clearly identifies each vendor bid when it is made during the auction.

Auctioneers should clearly identify vendor bids; for example, the “seller is bidding” or “vendor bid”.

After the auction

Within 10 working days of the auction, the auctioneer must give the seller the proceeds of the sale (less auction costs and fees) and an account of the sale.

Details of the sale must include:

  • the winning bid
  • the amount of any tax
  • the auctioneer’s commission or other deductions
  • the net amount payable to the seller.

A seller can ask for the proceeds and an account of the sale earlier than 10 working days. In this case, the auctioneer must comply with the request within 5 working days.

An auctioneer does not need to comply with these post-auction requirements if:

  • the seller is in trade or is selling goods not normally purchased for personal, domestic, or household use or consumption, and the seller agrees that these requirements need not apply
  • the auction was for land or an interest in land and was conducted by a licensed real estate agent where the provisions outlined in the Real Estate Agents Act applies instead.

Consumer Guarantees Acts

The Consumer Guarantees Act will apply if the seller is in trade and the property is of the type usually purchased for personal, domestic or household use. Read more about being in trade.

Under the Consumer Guarantees Act, goods must:

  • be of acceptable quality
  • be fit for a particular purpose
  • arrive on time and in good condition
  • match the description
  • be supported by available spare parts and repair facilities (by manufacturers).

We enforce the Fair Trading Act which gives consumers rights and sets rules businesses must comply with. The Commission can investigate a business and take enforcement action where the rules have been broken.

Read more about our role.