Chapter V

Legal Responsibility

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 law, he shall bear liability according to law. 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 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 law, where losses have been caused to the State, they shall be liable for compensation.

Article 60 If anyone, in violation of the provisions of Article 11 of this Law, establishes an auction enterprise without permission and registration, the enterprise shall be banned by the administrative department for industry and commerce, the illegal gains shall be confiscated and he may also be fined not less than one time 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 the second paragraph of 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 have the right 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, prior to the auction sale, that they cannot guarantee the genuineness or quality of an object of auction, they shall not be liable for the guaranty of the object.

In the absence of such declaration, the period for limitation of action for claim of compensation shall be one year, counted from the day the party concerned comes to know or should have known that his rights were encroached upon.

The period for limitation of action for claim of compensation for personal damage or property losses occasioned by defects in an object of auction shall be governed by the relevant 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 one time but not more than five times the amount of the commission for auction. If the violation is serious, his business license shall be revoked.

Article 63 Where, in violation of the provisions of Article 23 of this Law, an auctioneer 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, in violation of the provisions of Article 30 of this Law, a client 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, in violation of the provisions of Article 37 of this Law, bidders or bidders and auctioneers 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 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% but 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% but 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 regarding the proportion of commission, he shall return the part that exceeds the prescribed proportion to the client and vendee. The price control authority may impose on the auctioneer a fine of not less than one time but not more than five times the amount of the commission for auction.

Chapter VI

Supplementary Provisions

Article 67 This Law shall be applicable 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 prior to the implementation of this Law, that do not meet the conditions provided for in this Law shall, within the prescribed time limit, meet such conditions; with regard to those that fail to meet the said conditions within the time limit, the administrative department for industry and commerce shall cancel their registration and rescind their business licenses. Specific measures in this regard shall be formulated separately by the State Council.

Article 69 This Law shall go into effect as of January 1, 1997.