Quote:
Originally Posted by BobC
Scott,
You're in the auction business also, and thus know better than most the position Leland's is in. Everyone seems to keep talking about this being between Leland's and the auction winner, but what about the consigner? Your consigners enter into a consignment agreement with you, just as I'm assuming Leland's does with their consigners. You technically work for your consigners. So how does a typical AH consignment agreement in the case of a winner bidder that refuses to pay, for whatever reason, work? Does an AH have the ability to just unilaterally decide to cancel the auction with no input or say on the part of the consigner? And if so, is that because it is specifically written into the consignment agreement to protect an AH?
I can fully understand just canceling auctions in cases where someone backs out on paying just a few hundreds/thousands of dollars. The time, effort, and potential legal expense and other costs to go after such a winning bidder can make it totally senseless as you'll end up likely spending more than you'd get if the winner just paid you. But now we're talking $500K, and the further potential loss from a possible change to the football's significance. So if the AH refuses to go after the winning bidder on behalf of the consigner, can the consigner just step in then and go after the reneging auction winner themselves?
Or what about the consigner suing the AH for refusing to go after the auction winner on their behalf then?
According to some attorneys on here, the auction description may be a factor in letting the winning bidder off the hook from going through with the transaction. And assuming it was the AH that was responsible for writing the description, I could understand that maybe giving the consigner even more cause to go after the AH. In which case the consigner could possibly have cause to sue an AH for being harmed by the AH's mistakes as well. Heck, I could even see an attorney for an auction winner in a case like this one with Brady's football, prevailing over an AH because of the item's description, and then immediately turning around and contacting the consigner to offer to do the same for them against the AH. Probably wouldn't be the first time something like that may have happened either.
Will be interested to hear your responses from an AH viewpoint.
Oh, and as for agreeing with others that this thread is possibly just an academic discussion, I would definitely think not. If nothing else, it will help to educate members as to potential issues and problems that may occur were they to sell through an AH. And by examining and discussing the causes of these issues, and how they may end up being resolved, it may also let people better know what questions to ask and what things to look for in an AH's consignment and other agreements. That way a consigner can make a more educated choice in which AH they end up choosing, and hopefully never get stuck in the middle of a situation like the consigner of this Brady football apparently finds themselves in now.
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I would definitely be on the horn to the consignor the minute Brady unretired. I am somewhat picky who I work with. I have driven an entire collection back to Ohio in a 12 foot box truck at my expense because the consignor was trouble. I have had consignors think that somehow the law was going to be on the side of them enriching themselves through fraud. So while there's no guarantee I would hope my consignor would be on the understanding side. This could be tough if it was life-changing money, which, in this case it might have been. Yes my fiduciary duty is to my consignor, NOT the buyer. However fiduciary duty only extends so far. I don't have to do something illegal, or even unethical in the name of fiduciary duty.
Real world scenario for my smaller company we have three ways of dealing with no pays and they are at our discretion as outlined in the consignor agreement.
1. Pay the consignor as if the item had been paid for. We take possession and auction again in a future sale to try and be made whole. This is the approach we take almost all of the time.
2. Do not pay the consignor but place in a future auction on their behalf.
3. Return the item to the consignor.
While we've done consignments that have totaled over $500,000 our big single item is only 1/10 that amount so it's obviously not a situation we find ourselves in, yet. I think a more interesting situation that isn't currently covered by my contract is buyer pays, but then, understandably, wants his money back. What do I tell my consignor then? The only way this is addressed in our contract is if an item is returned because of authenticity issues. That isn't the case here. It's tough when there is no "bad guy" actor. Everyone will be unhappy, but oddly, that's probably how it should be in a weird case like this.