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Posted By: Corey R. Shanus

Joann,

Interesting thread. Here's an issue I've been wondering about, especially with all the discussion about altered cards.

Suppose someone buys a graded slabbed card at an auction, sends it in to another grading service for a cross over and is told the card is altered. Let's say too, so as to simply the issue, that the evidence that the card is altered is legally irrebutable. What recourse, if any, does the buyer have against the auction house and/or the consignor? And, let's also assume that in the terms and conditions of sale the auction house stated not only that all sales are final but they will not be responsible for any misrepresentations/errors made by any reputable grading service.

At first glance it would seem the auction house has protected itself. However, given that in my view at least the auction house knew or reasonably should have known that some statistically significant percentage of graded slabbed cards will not withstand re-examination, do they have an additional disclosure obligation that goes beyond merely saying they will not be held accountable for grading company misrepresentations/inaccuracies? Will it be found that unless and until they have a disclosure along the lines of "Not only will we not be responsible for grading company misrepresentations/inaccuracies, we explicitly want to alert bidders that in our view some statistically significant percentage of graded slabbed cards are in fact altered and as a result have a market value (if the alteration is known) substantially less than its nonaltered value"? Or, can the auction house argue that bidders know or reasonably should know this and therefore no additional disclosure is required?

I raise this issue because I feel it is only a matter of time before people who have bought at auction for staggering sums graded slabbed cards find a number of the cards are altered, and will look for legal recourse wherever they can find it.