Auction Action; What You Need To Know

6th August 2019 by

Buying a classic at auction can be a minefield. Our motoring specialist solicitor steers you through it. 

On February 26th, 1990, I was sitting with my father in the ADT Auction Centre at Blackbushe, Surrey. We were awaiting a Jaguar Sovereign V12, a minimal-mileage, main dealer demonstrator. At the call of “going twice”, dad made his first, successful bid. The auctioneer remarked that seeing members of the public in attendance was unusual but welcome.

The auction catalogue consisted of 12 pages showing 125 entries, each with a single-line description. Notes to Buyers referred to Conditions of Sale; found exhibited around the premises or in small-print available free from the office, these stated: “It’s important that prospective purchasers read these before bidding.”

Pre-auction examination of the Jag and its title consisted of a brief appraisal of conditions, plus a check of the logbook and service record. Buying at auction was then relatively straightforward and risk free.

The Background

The notion of the classic car being more than a casual hobby gathered pace in the 1990s. The auction house developed to cater for more than just the trade buyer; the new clientele was looking to drive something less than everyday, or to invest, or for a way to better enjoy their pension fund. In order to cope with this new market, auction buying became more complicated. To accommodate the less practiced buyer, the business needed to expand and clarify its ways of working.

Now, specialist classic and collector auctions are held almost weekly. There are also one-make auctions. Values have soared, and at the top of the market, the car has become art. Of course, the buying process has become commensurately more complicated.

Terms and conditions now run to at least ten pages, with forms of contract between seller and buyer, and buyer and auction house, annexed to the catalogue. Documentation inspection must be viewed through a new prism.

The law about purchases generally adheres to an ancient Latin maxim, “caveat emptor”; “let the buyer beware”. It’s the buyer’s duty to make the running, ask the questions, inspect and interrogate. If the buyer neglects to act diligently, the fault can rest in only one place. The law regarding car purchases specifically is governed by the catalogue T & Cs, and to a lesser extent by statute – the Sale of Goods Act 1979. The T & Cs will deal with the following issues as a minimum.

The role of the auctioneer is paramount. They act solely for the seller, not the buyer. Statements made in the catalogue, or by the auctioneer or their staff, are taken to have been made by the seller. The seller appoints the auctioneer as an agent, and so it follows that the contract for sale is between the seller and the buyer.

Some people mistakenly believe that the sale is by the auction house, as prior to the hammer dropping the buyer will probably have dealt with the house exclusively. The terms will therefore explicitly state that no duty of care is owed to the buyer.

The catalogue will briefly describe the car’s make, model year and colour. Otherwise, the vehicle will be expressly sold “as is”. Cars are available for pre-auction inspection, and non-expert buyers are encouraged to obtain professional advice. It’s for the buyer to satisfy themselves as to history, provenance, condition, authenticity, age and road worthiness.

Catalogue estimates are usually shown in a range based upon the seller’s opinion. The projected figures don’t include VAT, buyer’s premium or other charges, such as storage.

The seller’s obligations to the buyer are couched in very restrictive language. The seller does not make any representations, or provide any warranties or guarantees, or give any binding promise in terms of the car’s quality or its fitness for purpose. Often the seller will not accept liability for negligent misstatements, breach of contract and misrepresentation under the Misrepresentation Act 1976.

In truth, for a buyer to recover from a seller at auction, proof will be needed of fraud or intention to deceive. The bar here is set high, as evidence of actual deceit will be required.

The Process

As mentioned, the auction house has no obligation to the buyer by virtue of its role as agent for the seller until the hammer falls, and then only in the terms of obligation due to pay for and collect the car, and so forth. I dealt with one individual who didn’t pay the price due, saying he didn’t realise that having the car hammered down to him was the point at which the contract to buy came into being. By the way, risk passes at the time of contract, so the buyer must insure the vehicle, while title passes on payment and delivery.

Turning to costs, some clients can engage the auction process without grasping the extent of the costs involved. The buyer’s premium can vary from 5% to 25% of the sale price. There may also be storage and/or handling charges. Credit cards, company and overseas debit cards usually incur a further 2%. In addition, VAT will be due on the premium. Occasionally VAT will be due on the hammer price, but that should be indicated in the catalogue. There may also be VAT due on certain imported cars.

So apart from understanding the auction process, what else must the prudent buyer do to ensure that expectations are fully met? Inspection is the key word; first of the documentation, and secondly of the car’s actual condition.

The documentation must be examined in fine detail. There should be a V5c showing the registered keeper’s name and address, to whom further enquiries can be made; and if the keeper isn’t the owner, who the latter is. The form also records VIN/engine numbers, body configurations, number of seats, colour and so on. Ministry of Transport test certificates show mileage. Service records record routine maintenance plus repairs and upgrades. For an historic car, there may be race and rally entries, and possibly private correspondence.

Where a never-registered race car has no logbook, V5c or MoTs, the documentation needs even closer scrutiny. Factory records should be examined where possible. One-make clubs often have access to vital, extensive historical documents. For a particularly valuable or rare car, the cost of engaging an automotive historian to verify provenance might be justifiable. A copy of the file should be taken to aid subsequent enquiries.

Assuming the paper examination reveals nothing untoward, the buyer should engage the services of an inspection engineer familiar with the model, or at least a mechanically knowledgeable friend. An independent third-party view will always be helpful. Model spec plus engine numbers should be verified. Ensure claimed “matching numbers” are indeed correct. I recently heard of a “matching number” Jaguar MK II 3.8 purchase; not only was the engine number incorrect, but it was a 3.4.

Yes, it’s far more fun to go for a pre-auction lunch with friends then do a quick salesroom tour before going onto action, but it’s all down to the individual. Lastly, I can tell you that our Sovereign V12 is still running beautifully, after some 82,000 miles.

For more information on this topic or anything about our services please contact Clive Robertson on 020 7822 4000 or email