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 unifiedly 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.
Article 59 Where a State organ, in violation of the provisions of
Article 9 of this Law and without permission, disposes of articles
or goods for the auction of which it should authorize the auctioneer
designated by the people''s government of the province, autonomous
region, municipality directly under the Central Government or of the
city divided into districts where such property is located, the
persons who are directly in charge and other persons who are
directly responsible for the offense shall be given administrative
sanctions according to the law, where losses have been caused to the
State, they shall be liable for compensation.
Article 60 Where anyone, in violation of the provisions of Article
11 of this Law, establishes an auction enterprise without permission
and registration, the enterprise shall be prohibited by the
administrative department for industry and commerce, the illegal
gains shall be confiscated and he may also be fined at least once
but not more than five times the amount of the illegal gains.
Article 61 Where an auctioneer or client, in violation of the
provisions of Paragraph 2, Article 18, or Article 27 of this Law,
fails to make clear defects of the objects of auction and thus
causes losses to the vendee, the vendee shall be entitled to claim
compensation from the auctioneer; where the client is responsible
for the loss, the auctioneer shall have the right of recourse
against the client.
Where an auctioneer and client declare, before the auction sale,
that they cannot guarantee the genuineness or quality of an object
of auction, they shall not be liable for the warrant of the defects.
In the absence of such declaration, the period for limitation of
action for claim of compensation shall be one year, counted as of
the day the party concerned came to know or should have known that
his rights were infringed upon. The period for limitation of action
for claim of compensation for personal or property damage occasioned
by defects in an object of auction shall be governed by the
pertinent provisions of the Law of the People''s Republic of China
on Product Quality and other laws.
Article 62 Where an auctioneer or any of his employees, in violation
of the provisions of Article 22 of this Law, participates in bidding
or authorizes another to bid on his behalf, the administrative
department for industry and commerce shall give the auctioneer a
disciplinary warning, and may impose on him a fine of not less than
once but not more than five times the commission for auction. If the
violation is gross, his business license shall be revoked.
Article 63 Where an auctioneer, in violation of the provisions of
Article 23 of this Law, puts his own articles or goods or property
rights up at auction that is arranged by himself, the administrative
department for industry and commerce shall confiscate his earnings
from the auction sale.
Article 64 Where a client, in violation of the provisions of Article
30 of this Law, participates in bidding or authorizes another to bid
on his behalf, the administrative department for industry and
commerce may impose on him a fine of not more than 30% of the
transaction price.

Article 65 Where bidders or bidders and auctioneers, in violation of
the provisions of Article 37 of this Law, collude with each other
out of ill intention and thus cause losses to another, the auction
shall be invalid and they shall be liable for compensation according
to the law. The administrative department for industry and commerce
shall impose on the bidders that participate in such collusion a
fine of not less than 10% and not more than 30% of the highest price
offered; it shall impose on the auctioneers that participate in such
collusion a fine of not less than 10% and not more than 50% of the
highest price offered.

Article 66 Where an auctioneer collects commission in violation of
the provisions in Section 4 of Chapter IV of this Law pertaining to
the proportion of commission, he shall return the part that exceeds
the stipulated proportion to the client and vendee. The price
control authorities may impose on the auctioneer a fine of not less
than once and not more than five times the commission for auction.

Chapter VI Supplementary Provisions

Article 67 This Law shall apply to foreign nationals, foreign
enterprises and organizations that authorize auction or participate
in bidding within the territory of the People''s Republic of China.

Article 68 Auction enterprises, established before the
implementation of this Law, that do not satisfy the conditions
prescribed in this Law shall, within the prescribed time limit,
satisfy such conditions; as regards those that fail to satisfy the
aforesaid conditions within the time limit, the administrative
department for industry and commerce shall cancel their registration
and revoke their business licenses. Specific measures in this regard
shall be formulated separately by the State Council.

Article 69 This Law shall be implemented as of January 1st, 1997.