G Mart Auction House is an auction centre for houses and apartments. Jennifer bid RM230,000 for an apartment. This was the highest price bid. The auctioneer had raised his hammer but Jennifer informed the auctioneer that she wants to withdraw her bid. Advise Jennifer whether any contract has been formed. Would your advice be different if Jennifer withdrew after the fall of the hammer?

Use ILAC (Issue, Law, Application and Conclusion) for your answer. For every law you refer, you have to apply them to the question to show that they are relevant and accurate.

Answer:

A contract was not formed.

Step-by-step explanation

Issue

Whether a contract existed between Jennifer and G Mart Auction House.

Law

Sale of Goods Act

Application

According to the Sale of Goods Act, a sale by auction becomes complete when their is a fall of the hammer or until an announcement is made. Before either is done, the highest bidder may withdraw the bid. As a general rule, a contract is formed when their is an offer and an acceptance made. An auction sale however does not begin by giving an offer but by an invitation to treat which means the invitation by the public to make offers. Once offers are made and the auctioneer falls the hammer, their is deemed to be an acceptance.

In the present case, the first scenario, invitation to make offers were made by the Auctioneer. Jennifer made her offer and was considered as the highest bidder. She however did retract her offer before fall of hammer. In this case, no contract was created because acceptance was not made and the offer was withdrawn by the offeror.

In the second scenario, had the offer been withdrawn after fall of the hammer, a contract would have been created and the only way out of it would be by Jennifer applying to rescind the contract which would have entitled the Auctioneer to damages.