Hazel paid a £5,600 deposit following a successful bid at a property auction. If she cannot proceed, how much of her deposit would normally be returned?

Hazel paid a £5,600 deposit following a successful bid at a property auction. If she cannot proceed, how much of her deposit would normally be returned?

• A. Nil.
• B. £5,600.
• C. £560.
• D. £5,040.

Answer: (A)

In auctions, the deposit paid by the winning bidder acts as security for the seller. If the buyer cannot proceed, a default typically leads to forfeiture of the deposit—the buyer loses it and the seller keeps it as liquidated damages. So, when Hazel cannot proceed after winning the bid, none of the deposit is normally returned. The correct outcome is nil.

In auctions, the deposit paid by the winning bidder acts as security for the seller. If the buyer cannot proceed, a default typically leads to forfeiture of the deposit—the buyer loses it and the seller keeps it as liquidated damages. So, when Hazel cannot proceed after winning the bid, none of the deposit is normally returned. The correct outcome is nil.