Abstract
This chapter focuses on the process of making contracts by auction and by tender. Both auctions and tenders are an attempt to achieve the best price by competition without entering into negotiations. Auctions are typically used to sell valuable chattels, such as paintings or houses or other buildings. The assumption is that if the sale by auction is effectively advertised, a number of potential buyers will attend and that the process of bidding is likely to drive the price up to an acceptable level. Competitive tendering can also be used for selling but is more commonly used for the procurement of services, particularly in the construction industry. Here the assumption is that those who desire the work will bid the lowest price they can afford, thus ensuring a low price for the person procuring the service. The chapter also discusses reserve prices.
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