Order of the President of the People's Republic of China
No. 70
The Auction Law of the People's Republic of China, which was adopted at the 20th session of the Standing Committee of the Eighth National People's Congress of the People's Republic of China on July 5th, 1996, is hereby promulgated and shall be implemented as of January 1st, 1997.
Jiang Zemin, President of the People's Republic of China July 5th, 1996
Auction Law of the People's Republic of China
(Adopted at the 20th session of the Standing Committee of the Eighth National People's Congress on July 5th, 1996, promulgated by Order No. 70 of the President of the People's Republic of China on July 5th, 1996, and effective as of January 1st, 1997; Revised at the 11th session of the Standing Committee of the 10th National People's Congress of the People's Republic of China on August 28th, 2004)
Contents
Chapter I General Provisions
Chapter II Objects of Auction
Chapter III Parties to Auction
Section 1 Auctioneer
Section 2 Client
Section 3 Bidder
Section 4 Vendee
Chapter IV Auction Procedures
Section 1 Authorization of Auction
Section 2 Announcement of Auction and Display of Objects of Auction
Section 3 Execution of Auction
Section 4 Commission
Chapter V Legal Liability
Chapter VI Supplementary Provisions
Chapter I General Provisions
Article 1 This Law is formulated with a view to standardizing acts of auction, maintaining order of auction and protecting the lawful rights and interests of all the parties in activities of auction.
Article 2 This Law applies to auction activities conducted by auction enterprises within the territory of the People''s Republic of China.
Article 3 Auction refers to the means of selling and buying by which specific articles or goods or property rights are transferred through public bidding to the bidder that offers the highest price.
Article 4 The parties in activities of auction shall observe the pertinent laws and administrative rules and regulations and adhere to the principles of openness, fairness, justice and good faith.
Article 5 The department in charge of administration of the auction trade under the State Council shall conduct supervision over and administration of the auction trade throughout the country.
The departments in charge of administration of the auction trade under the people''s governments of provinces, autonomous regions, municipalities directly under the Central Government, or cities divided into districts shall conduct supervision over and administration of the auction trade in their respective administrative regions.
Chapter II Objection of Auction
Article 6 Objects of auction shall be articles or goods or property rights which are owned by the client or which the client may dispose of according to the law.
Article 7 Articles or goods or property rights banned for sale by laws or administrative rules and regulations shall not be made objects of auction.
Article 8 As regards the articles or goods or property rights whose transference is subject to examination and approval as prescribed by laws or regulations of the State Council, the parties concerned shall, before their auction, conduct the formalities for the examination and approval according to the law.
As regards the cultural relics under authorization for auction, they shall, before their auction, be subject to appraisal and permission given according to the law by the administrative department for cultural relics at the locality of the auctioneer's residence.
Article 9 As regards articles or goods confiscated or used to offset tax money or fines by the administrative organs of the State in conformity with law and other articles or goods, all of which should be auctioned through authorization as prescribed by regulations of the State Council, the auction shall be conducted by auctioneers designated by the people's governments of the provinces, autonomous regions or municipalities directly under the Central Government or of the cities divided into districts, where such property is located.
Auction of articles or goods confiscated or used to offset tax money or fines by the People''s Courts according to the law and other articles or goods that are retrieved but cannot be returned to their owners shall be governed by the provisions of the preceding paragraph.
Chapter III Parties to Auction
Section 1 Auctioneer
Article 10 An auctioneer refers to an enterprise legal person that is established in conformity with this Law and the Company Law of the People's Republic of China and engaging in activities of auction.
Article 11 Auction enterprises may be established in cities divided into districts. Establishment of an auction enterprise shall be subject to examination, verification and approval by the department in charge of the auction trade under the people's government of the province, autonomous region, or municipality directly under the Central Government in the place where the enterprise is to be established and shall be registered with the administrative department for industry and commerce for obtaining a business license. Article 12 To establish an auction enterprise, the following conditions shall be satisfied:
(1) having a registered capital of RMB one million Yuan or more;
(2) having its own name, organizational structure, premises and Articles of Association;
(3) having auction masters and other employees commensurate with the trade;
(4) having rules for the auction trade that accord with the provisions of this Law and other relevant laws;
(5) observing the regulations of the State Council relating to development of the auction trade; and
(6) other conditions as prescribed by laws or administrative rules and regulations.
Article 13 An auction enterprise engaging in the auction of cultural relics shall have a registered capital of RMB 10 million Yuan or more and employees with the professional knowledge about auction of cultural relics.
Article 14 Auction activities shall be presided over by auction masters.
Article 15 An auction master shall fulfill the following requirements:
(1) having acquired a 3-year college education or a higher education and professional knowledge about auction;
(2) having worked two years at least in an auction enterprise; and
(3) being a person of good conduct.
Anyone, who has been discharged from public employment or whose qualification certificate of auction master been revoked for less than five years or who has been subject to criminal punishment for intentional offense, shall not be employed as an auction master. Article 16 Examination for qualification of auction masters shall be arranged unified by the Auction Trade Association. Persons who pass the examination shall be issued qualification certificates for auction masters by the aforesaid association.
Article 17 The Auction Trade Association is a public organization legal person established in conformity with law and a self-disciplined organization for the trade of auction. The Auction Trade Association shall, pursuant to this Law and its own Articles of Association, conduct supervision over auction enterprises and masters.
Article 18 An auctioneer shall be entitled to request his clients to make clear the origins and defects of the objects of auction. An auctioneer shall make defects of the objects of auction known to bidders.
Article 19 An auctioneer shall have the duty of taking care of the articles or goods delivered by his clients to him for auction sale. Article 20 After accepting entrust, the auctioneer may not entrust another auctioneer to perform the auction without prior consent of his client.
Article 21 An auctioneer shall keep the identity of his client or vendee confidential if so requested.
Article 22 An auctioneer and his employees may not get involved as bidders in the auction sale which is arranged by themselves and may not entrust another to act as a bidder on their behalf.
Article 23 An auctioneer may not put his own articles or goods or property rights on an auction sale which is arranged by himself.
Article 24 When an auction transaction is concluded, the auctioneer shall deliver the money paid for the objects of auction to the clients as agreed and transfer the objects of auction to the vendees as agreed.
Section 2 Client
Article 25 a client refers to a citizen, legal person or other organization that authorizes an auctioneer to auction his or its articles, goods or property rights.
Article 26 A client may conduct the formalities for authorization of auction by himself or through his agent.
Article 27 A client shall make clear the origins and defects of the objects of auction to the auctioneer.
Article 28 A client shall be entitled to determine the reservation price for the objects of auction and require the auctioneer to keep it confidential.
As regards auction of State assets, assessment of which is required pursuant to law or regulations of the State Council, assessment shall be made by the appraisal institution established according to the law, and reservation prices for the objects of auction shall be determined on the basis of the assessment made.
Article 29 A client may withdraw the objects of auction before the auction sale commences. In such a case, the client shall pay to the auctioneer the expenses as agreed; in the absence of such an agreement, the client shall pay to the auctioneer a reasonable amount of expenses.
Article 30 A client may not participate in bidding and may not authorize others to bid on his behalf.
Article 31 where it is agreed that the objects of auction shall be transferred by the client, after the auction transaction is concluded, the client shall transfer the objects of auction to the vendees.
Section 3 Bidder
Article 32 A bidder refers to a citizen, legal person or other organization that participates in the bidding for objects of auction. Article 33 where requirements for selling and buying of objects of auction are provided for by law or administrative rules and regulations, a bidder shall fulfill those requirements.
Article 34 A bidder may take part in bidding by himself or authorize his agent to participate in it.
Article 35 A bidder shall be entitled to be informed of defects of the objects of auction and be entitled to inspect them and to have access to information relating to them.
Article 36 Once a bidder bids for a price, it shall be irrevocable, and it shall lose its binding force as soon as another bidder offers a higher price.
Article 37 Bidders or bidders and auctioneers may not collude with each other out of ill intention to harm the interests of others.
Section 4 Vendee
Article 38 A vendee refers to a bidder who purchases an object of auction at the highest price offered by him.
Article 39 A vendee shall pay for the object of auction at the price agreed, in the case of failing that, he shall bear liabilities for default or, with the consent of the client, the auctioneer may put the object of auction up at auction again.
In case the object of auction is auctioned again, the former vendee shall pay the commission that he himself and the client should pay for the first auction sale. Where the price for the second auction sale is lower than that for the first one, the former vendee shall make up the difference.
Article 40 In case a vendee fails to obtain the object of auction as agreed, he shall be entitled to request the auctioneer or client to bear liabilities for default.
Where a vendee fails to collect the object of auction as agreed, he shall pay the storage charge incurred thereby.
Chapter IV Auction Procedures
Section 1 Authorization Auction
Article 41 When a client authorizes auction of articles or goods or property rights, he shall provide his identity certificate and, as required by the auctioneer, the ownership certificate for the objects of auction, or certificates and any other materials testifying that he may dispose of the objects of auction according to the law.
Article 42 The auctioneer shall verify the pertinent certificates and materials offered by the client. When an auctioneer accepts authorization, he shall enter into a contract for authorization of auction with the client.
Article 43 The auctioneer may have the objects of auction evaluated, if he deems it necessary.
In case the conclusion of the expert evaluation does not conform to the descriptions of the objects of auction as specified in the contract for authorization of auction, the auctioneer shall be entitled to demand modification or cancellation of the contract. Article 44 In a contract for authorization of auction, the following particulars shall be specified:
(1) the name or title and address of the client and auctioneer;
(2) title, specifications, quantity and quality of the object of auction;
(3) reservation price offered by the client;
(4) time and place of the auction;
(5) time and manner of delivery or transference of the object of auction;
(6) commission, manner and time limit for its payment;
(7) manner and time limit for payment of the purchase;
(8) liabilities for breach of the contract; and
(9) other matters as agreed upon between parties.
Section 2 Announcement of Auction and Display of Objectives of Auction
Article 45 The auctioneer shall announce the opening of an auction seven days before the date of auction.
Article 46 The following particulars shall be specified in the announcement of auction:
(1) time and place of auction;
(2) objects of auction;
(3) time and place for display of the objects of auction;
(4) formalities supposed to conduct for participating in bidding; and
(5) other matters in need of announcement.
Article 47 Announcement of an auction shall be released through newspapers or other media.
Article 48 The auctioneer shall display the objects of auction before the auction sale and provide pertinent information and conditions for bidders to check the objects of auction.
The duration of display shall be at least two days.
Section 3 Execution of Auction
Article 49 The auction master shall announce the auction rules and points for attention before the auction sale commences.
Article 50 Where there is no reservation price for an object of auction, the auction master shall make it clear prior to the auction sale.
Where there is a reservation price for an object of auction and the highest price offered by a bidder does not reach the reservation price, the offer shall be non-binding force and the auction master shall cease the auction sale of the aforesaid object.
Article 51 When the highest offer is confirmed by the auction master by knocking the gavel or any other way of public confirmation, the auction transaction is concluded.
Article 52 After a transaction is concluded, the vendee and the auctioneer shall affix a written confirmation.
Article 53 When an auction sale is under way, minutes of auction shall be made and signed by the auction master and the recorder, as well as the vendee if a transaction is concluded.
Article 54 The auctioneer shall properly keep the complete set of account books pertaining to business operation, the auction minutes and any other relevant materials.
The period for maintaining the account books, auction minutes and other relevant materials as specified in the preceding paragraph shall beat least five years, counting as of the date of expiration of the contract for authorization of auction.
Article 55 Where there is necessity to make changes in certificates or licenses or to transfer ownership of property rights, pursuant to law, with regard to the objects of auction, the client and vendee shall conduct the formalities to the relevant administrative organ by producing the transaction certificate prepared by the auctioneer and relevant materials.
Section 4 Commission
Article 56 The client and vendee may enter into an agreement with the auctioneer on the proportion of commission.
Where a transaction is concluded in the absence of such an agreement, the auctioneer may charge a commission of not more than five percent of the transaction price from the client and the vendee respectively. The proportion of commission to be charged shall be determined according to the principle that it is in inverse proportion to the transaction price.
In case no transaction is concluded, the auctioneer may charge the client the expenses as agreed. In the absence of an agreement, the auctioneer may charge the client a reasonable amount for the expenses of auction.
Article 57 With respect to the auction of articles or goods specified in Article 9 of this Law, where a transaction is concluded, the auctioneer may charge the vendee a commission of not more than five percent of the transaction price.
The proportion of commission to be charged shall be determined according to the principle that it is in inverse proportion to the transaction price. In case no transaction is concluded, the provisions of Paragraph 3, Article 56 of this Law shall apply.
Chapter V Legal Liability
Article 58 Where a client, in violation of the provisions of Article 6 of this Law, authorizes auction of articles or goods or property rights that he does not own or he has no right to dispose of according to the law, he shall bear liability in jure. Where the auctioneer knowingly auctions articles or goods or property rights that the client does not own or has no right to dispose of according to the law, he shall bear joint and several liability.

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