Would you follow through and pay? Brady's last TD

[Snowman]

This thread is hilarious, watching all the lawyers arguing back and forth, often in bad faith, as one would expect.

I've got good money that says the buyer doesn't pay for it, Leland's says something along the lines of "ya, we didn't expect you to", and no lawyers ever even get involved. Anyone care to place a wager?

[Aquarian Sports Cards]

Originally Posted by Snowman

This thread is hilarious, watching all the lawyers arguing back and forth, often in bad faith, as one would expect.

I've got good money that says the buyer doesn't pay for it, Leland's says something along the lines of "ya, we didn't expect you to", and no lawyers ever even get involved. Anyone care to place a wager?

I think it's more in the nature of an academic discussion. I can't see Leland's fighting this one out, so I basically agree with you.

[BobC]

Originally Posted by Aquarian Sports Cards

I think it's more in the nature of an academic discussion. I can't see Leland's fighting this one out, so I basically agree with you.

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.

[Snowman]

I'm curious about how people view a similar topic, but from a different perspective. There were a lot of Kobe Bryant cards that were instantly snatched up from ebay a mere seconds after the news broke about his death. Especially auto cards. Due to the limitations of eBay's selling platform, the sellers couldn't even hand logged in to change the price in time even if they wanted to. If these cards were sitting in display cases at a card shop, there's zero chance that the owner of the shop would have honored those sticker prices after the news broke. But what about on ebay? Should the seller who listed a Kobe auto card for $5k be obligated to proceed with the sale after it instantly quadrupled in value after his death? I say no.

Note, this is quite different than canceling a sale after a player wins the super bowl, MVP, or something similar where everyone knows the big game or vote is coming up.

And no, the odds of death are not "baked in" to the market at any given moment for a player of Kobe's age, unlike with Willie Mays where everyone knows he is in his 90s and is the oldest living HOFer.

[Peter_Spaeth]

Originally Posted by Snowman

I'm curious about how people view a similar topic, but from a different perspective. There were a lot of Kobe Bryant cards that were instantly snatched up from ebay a mere seconds after the news broke about his death. Especially auto cards. Due to the limitations of eBay's selling platform, the sellers couldn't even hand logged in to change the price in time even if they wanted to. If these cards were sitting in display cases at a card shop, there's zero chance that the owner of the shop would have honored those sticker prices after the news broke. But what about on ebay? Should the seller who listed a Kobe auto card for $5k be obligated to proceed with the sale after it instantly quadrupled in value after his death? I say no.

Note, this is quite different than canceling a sale after a player wins the super bowl, MVP, or something similar where everyone knows the big game or vote is coming up.

And no, the odds of death are not "baked in" to the market at any given moment for a player of Kobe's age, unlike with Willie Mays where everyone knows he is in his 90s and is the oldest living HOFer.

To me it would be fair to let the seller off the hook due to the changed and unpredictable circumstance.

[Lorewalker]

Originally Posted by Peter_Spaeth

To me it would be fair to let the seller off the hook due to the changed and unpredictable circumstance.

How do we know this is not more bad faith from one of you hilarious lawyers? What is beyond hilarious, but typical, about this thread is the same guy who just slammed all the lawyers who have posted on this thread now comes here to ask a legal opinion.

[Peter_Spaeth]

Originally Posted by Lorewalker

How do we know this is not more bad faith from one of you hilarious lawyers? What is beyond hilarious, but typical, about this thread is the same guy who just slammed all the lawyers who have posted on this thread now comes here to ask a legal opinion.

I think it's good faith when you agree with him.

[Aquarian Sports Cards]

Originally Posted by BobC

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.

Will answer your other questions, but this made me laugh out loud. You practically defined "academic discussion" while maintaining this isn't one.

[BobC]

Originally Posted by Aquarian Sports Cards

Will answer your other questions, but this made me laugh out loud. You practically defined "academic discussion" while maintaining this isn't one.

Then we may have different definitions/understandings of what on academic discussion is or should be. I've always thought of an academic discussion as one where there is no specific goal or result to come from the discussions, and that those involved are participating and talking merely for the sake of talking and for passing the time or entertainment purposes, more or less.

I thought it was fairly clear in my engaging in this discussion that, among other things, I'd like to find out the reasons why this potential legal issue arose, and how the courts may view and act upon it, so as to better ascertain what to look out for in the future should I seek the services of an AH, and to try to not let myself ever fall into a situation like the consigner of the Brady football now looks to be in. I also mentioned how my questions and their responses could then help educate others on here to better know what to look for and ask about should they look to engage and consign with an AH at some point in the future as well. I would think those are very specific goals/results that I was looking for, and thus not making this simply a complete academic discussion, at least not to me. My apologies if that was not clear and evident before.

Looking forward to your responses and getting more insight from the AH side of the issue. And you never know, questions and discussions like this may just prompt you to review your own company's contracts and agreements, and get you thinking about some possible changes you may need/want to make to them. If there's one thing I've learned in all my years of dealing with people and businesses, things constantly change, and you need to review, and possibly update/change what and how you do those things every so often, as a result.

[Aquarian Sports Cards]

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.

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.

[BobC]

Originally Posted by Aquarian Sports Cards

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.

Thanks for responding.

And it sounds like your terms specifically let the consignor know the decision is yours in deciding what to do if a bidder doesn't pay.

Obviously this Brady football case is one that no one likely ever thought of, but now it has happened. And the fact that attorneys could argue that the AH description was a significant part of why an auction winner could just walk away from a transaction, puts the AH in the crosshairs. Leland's may be between a rock and a hard place on this.

So Scott, you don't have to answer this if don't want to, I'll understand, but if you're in Leland's place, what do you do? For $500K you aren't going to use Option #1, at least I'd think not. The buyer and seller are okay and there's no court activity and expenses, but you're probably facing a huge loss when you go to resell the football. Option #2 would still leave the buyer happy, but the seller would be pissed as you've transferred the potential loss to them. And if your auction description was at least partly at fault, chances are the consignor sues you for either not going after the winning bidder, or for the loss in value via the subsequent sale. Either way, you end up making the seller whole, AND incurring a ton of legal expenses. And Option #3 pretty much has the same results as Option #2, except the seller takes the football and sells it through someone else, you still probably get sued by the seller to make them whole, incur a ton of legal expenses, but now you don't even get to offset what would have been your sales commission against what you may now owe the seller. And in this particular case I guess there could also be an Option #4, where you initially go after and sue the auction winner. But failing to win that case, you're still stuck having to face Option #1, #2, or #3, on top of the additional legal expenses you incurred from first trying to win the Option #4 suit. It seems like if you can afford it, and you don't expect to win in court, you actually might be best off taking Option #1 right out of the gate.

What do you think?

[Aquarian Sports Cards]

Originally Posted by BobC

Thanks for responding.

And it sounds like your terms specifically let the consignor know the decision is yours in deciding what to do if a bidder doesn't pay.

Obviously this Brady football case is one that no one likely ever thought of, but now it has happened. And the fact that attorneys could argue that the AH description was a significant part of why an auction winner could just walk away from a transaction, puts the AH in the crosshairs. Leland's may be between a rock and a hard place on this.

So Scott, you don't have to answer this if don't want to, I'll understand, but if you're in Leland's place, what do you do? For $500K you aren't going to use Option #1, at least I'd think not. The buyer and seller are okay and there's no court activity and expenses, but you're probably facing a huge loss when you go to resell the football. Option #2 would still leave the buyer happy, but the seller would be pissed as you've transferred the potential loss to them. And if your auction description was at least partly at fault, chances are the consignor sues you for either not going after the winning bidder, or for the loss in value via the subsequent sale. Either way, you end up making the seller whole, AND incurring a ton of legal expenses. And Option #3 pretty much has the same results as Option #2, except the seller takes the football and sells it through someone else, you still probably get sued by the seller to make them whole, incur a ton of legal expenses, but now you don't even get to offset what would have been your sales commission against what you may now owe the seller. And in this particular case I guess there could also be an Option #4, where you initially go after and sue the auction winner. But failing to win that case, you're still stuck having to face Option #1, #2, or #3, on top of the additional legal expenses you incurred from first rying to win the Option #4 suit. It seems like if you can afford it, and you don't expect to win in court, you actually might best off taking Option #1 right out of the gate.

What do you think?

I have to follow my conscience and return the money. If my consignor wants to litigate that decision then all the arguments that have been advanced in this thread come into play, but between me and my consignor instead of me and my buyer. How was the item listed on the consignment contract? If it was listed as Tom Brady's final TD ball then I think I have a chance. If it was listed in some more nebulous fashion I feel like I'm at risk.

I will say if my company had the $500k (we don't) and it wouldn't cripple us, I would likely pay the consignor. On my scale I have done things like that in the past, it's just my scale is much smaller. Doesn't mean I haven't had to suck up a few that hurt, just that pain is relative. I would think one of the HUGE auction houses shelling out $500k isn't all that different than me shelling out a few grand. That being said I really don't know enough about Leland's to know if they could absorb that kind of hit, and would never presume to say everyone should do things the way I would.

I'd be curious to see if this would be covered by errors and omissions insurance. At the very least my insurance company would likely get involved in the litigation if it came to that, to prove this wasn't an error or omission but an unforeseeable event and back to the arguments we've all been having. I know I'd sure as hell file the claim to get them involved if it came down to it.

[BobC]

Originally Posted by Aquarian Sports Cards

I have to follow my conscience and return the money. If my consignor wants to litigate that decision then all the arguments that have been advanced in this thread come into play, but between me and my consignor instead of me and my buyer. How was the item listed on the consignment contract? If it was listed as Tom Brady's final TD ball then I think I have a chance. If it was listed in some more nebulous fashion I feel like I'm at risk.

I will say if my company had the $500k (we don't) and it wouldn't cripple us, I would likely pay the consignor. On my scale I have done things like that in the past, it's just my scale is much smaller. Doesn't mean I haven't had to suck up a few that hurt, just that pain is relative. I would think one of the HUGE auction houses shelling out $500k isn't all that different than me shelling out a few grand. That being said I really don't know enough about Leland's to know if they could absorb that kind of hit, and would never presume to say everyone should do things the way I would.

I'd be curious to see if this would be covered by errors and omissions insurance. At the very least my insurance company would likely get involved in the litigation if it came to that, to prove this wasn't an error or omission but an unforeseeable event and back to the arguments we've all been having. I know I'd sure as hell file the claim to get them involved if it came down to it.

Thank you for the very interesting and straightforward answer, and I'd probably agree and do what you did. I guess one major question can be who comes up with and is responsible for the actual auction description. I assume the consignor tells the AH what the item is, but that is probably embellished a bit by the AH then, so responsibility may be a bit murky.

And thanks for bringing up the insurance aspect. I totally forgot about that. It is another reason to go with your Option #1 if your insurer is on board. You watch, if this Brady football case ends up costing some insurance company big money, don't be shocked if down the road you see something about policy changes or new requirements from your insurer because of this.

Tell you what, I hope you personally never have to face an issue like this one yourself.

And from what I was just reading in Steve's link to Leland's auction terms, I think they may be in a worse position than I ever would have expected. Can only imagine what their consignment agreement and terms look like.