Decree-Law 155/2015 was published on 10 August 2015. This creates the legal framework for the auction trade, which shall enter into force on 10 September 2015. This legal regime shall not affect any special regimes that are in effect, namely the legal framework for gold and silver working and assayers, when this involves the sale by auction of articles with precious metals.
Natural or legal persons currently engaged in the auction trade shall have a period of 180 days to comply with the provisions stipulated in the new legal framework.
The new law contains definitions of various concepts, namely what is understood by the auction trade, in other words, “the activity of selling movable and immovable property, both tangible and intangible, by means of a mandate granted by the owner of the property or resulting from a judicial decision, at an auction, through a bidding process directed by an auctioneer to buyers appearing in person or taking part by means of distance communication, in which the property is sold to the best bid, the successful bidder being required to acquire the property”.
THE AUCTION TRADE
- Authorisation system
The auction trade can only be engaged in within national territory by natural or legal persons duly licensed by the Directorate-General of Economic Activities (DGAE).
The authorisation application is submitted to the Balcão do Empreendedor service, accompanied by various documents, including a written solemn affirmation of the absence of any of the circumstances that may determine the unfitness of the applicant. With regard to this point, the auction trade may only be engaged in by natural or legal persons considered to have good standing, under the terms of the law, which states that causes of lack of good standing include some of the following circumstances: (i) having been declared insolvent by a judicial decision in the last five years, being liquidated, wound up or having its business suspended, being subject to any ban against the sale of assets or being in any similar situation, or having its case in progress, unless it is covered by a special business recovery plan, company recovery system through an extrajudicial agreement or extrajudicial reconciliation procedure; (ii) having been condemned for crimes listed in the law, provided they are punishable by prison term of more than six months; (iii) having been condemned for unlawful or unfair competition; or (iv) being prevented from engaging in commercial activity. In the case of a legal person, these circumstances concern its representatives.
In the event of a favourable decision, it is accompanied by a notification of the applicant to submit proof of compulsory insurance, a financial guarantee or equivalent instrument, without which it may not start the activity. If the DGAE receives proof of the compulsory insurance, the applicant is issued a document authorising it to engage in the activity.
- Obligations of auction companies
Among other obligations, to engage in the auction trade a company must have civil liability insurance, a financial guarantee or equivalent instrument, of a mandatory minimum value of €200,000.00, intended to be cover any non-pecuniary losses caused to third parties resulting from the activity, due to its own actions or omissions or those of its operators, representatives or employees, for whom it may be held liable under civil law, under the terms defined in the law.
The contract for the provision of auction services must be set down in writing, in digital format with electronic signatures, or in two copies, signed by both parties, and must contain elements as defined in the law. In addition, and without prejudice to the obligations arising out the law applicable to auctions, electronic auctions shall be subject to additional regulations.
With regard to duties to clients and buyers, auction companies are expressly forbidden from acting as a party in any transaction that relates to the properties included in the auction contract to which it is a party or from selling on credit without the written consent of the clients.
With regard to buyers, an auction company may require their prior registration when they are interested in bidding for items, as well as the payment of a deposit, the rules provided for in the Portuguese Civil Code applying in this case for the deposit agreement, without prejudice to it being free as required by the new legal framework.
The remuneration of the auction company is payable on the completion of the auction transaction. This right to remuneration, to be paid by the client owner of the items auctioned, is not affected by the legal right of preference, nor by the annulment or declaration of invalidity of the sale, when the company did not contribute to the resulting fault, nor could reasonably have been aware of it.
Temporary provisions: natural or legal persons currently engaged in the auction trade have a period of 180 days to comply with the provisions of the law, from the date it comes into effect.