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SQESalespersons Qualifying Examination✓EAQEEstate Agents Qualifying Examination

EAQE Property valuation question: binding contract formed

EAA EAQEProperty valuation

At a public auction of a mortgagee's flat, Mr Wu makes the highest bid above the reserve price and the auctioneer's hammer falls. When is a binding contract formed?

A When the hammer falls, accepting his bid
B When the assignment is signed at completion
C When Mr Wu's bank approves his mortgage
D When the auction catalogue is published

Show the answer and explanation

Answer: A. When the hammer falls, accepting his bid

Answer: When the hammer falls. Why not the others: - At completion: Completion performs a contract that already exists. - When the bank approves a mortgage: Unless the conditions of sale say otherwise, an auction sale is not conditional on finance. - When the catalogue is published: The catalogue is an invitation to bid, not an offer. Rule: At an auction, each bid is an offer; the contract is made when the auctioneer accepts the highest bid by the fall of the hammer, provided any reserve price is met. Source: EAA, A Study Guide to Estate Agency Law and Practice, Part 6, para 18; as at Oct 2026

Common mistake

Thinking an auction sale is conditional on financing or only binds at completion.

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An original question written to the published EAQE syllabus. Figures in the explanation carry their effective dates; check them against the current law before relying on them. Independent exam practice. Not affiliated with or endorsed by the Estate Agents Authority (EAA) or the examination administrator.