What is the primary purpose of an agency agreement in an auction?

The primary purpose of an agency agreement in an auction is to outline the terms of the relationship between the auctioneer and the seller. This agreement serves as a foundational document that defines the roles, responsibilities, and expectations of both parties involved in the auction process. It typically includes details such as the commission structure, duties of the auctioneer, the rights of the seller, and the duration of the agreement. This clarity helps ensure that both the auctioneer and the seller are on the same page, minimizing potential disputes while facilitating a smoother auction process.

While other options may present aspects related to the auction, they do not directly address the essential function of the agency agreement. For instance, a sales forecast pertains to predicting auction outcomes and is not a primary purpose of this agreement. Similarly, establishing the auction venue and setting bidding increments are procedural elements that might be discussed in the context of an auction, but they are not foundational to the relationship governed by the agency agreement.