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

[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.

[FrankWakefield]

The 30 day and 14 day differing due dates... that's a mess.

As to when it's binding, I'd say that's when a bidder bids.

When is the consignor bound, when he sends the lots to the auction house AND they agree to terms. After all, why do auction folks want you to send stuff to them up front... so the house can be sure of what it is and that the consignor actually has (read had) it.

It is a mess.

ONLY thing that comes to mind that could have compounded it... just imagine that PSA graded NFL footballs...

[JimC]

Has someone already asked what happens if it turns out the ball was deflated?

[Tabe]

Originally Posted by JimC

Has someone already asked what happens if it turns out the ball was deflated?

Why would it be?

[Steve D]

Originally Posted by Tabe

Why would it be?

Well, Brady did deflate its value (at least temporarily) with his un-retirement. Further proving that he does like deflated balls.


Steve

[steve B]

Originally Posted by Tabe

Why would it be?

To fit a medium flat rate box instead of a large one.

[BobC]

Originally Posted by FrankWakefield

The 30 day and 14 day differing due dates... that's a mess.

As to when it's binding, I'd say that's when a bidder bids.

When is the consignor bound, when he sends the lots to the auction house AND they agree to terms. After all, why do auction folks want you to send stuff to them up front... so the house can be sure of what it is and that the consignor actually has (read had) it.

It is a mess.

ONLY thing that comes to mind that could have compounded it... just imagine that PSA graded NFL footballs...

Good lord Frank, all we need now is a graded football, you're right, what a mess.

I still can't believe those auction terms include no mention of a bid being a binding contract. As I mentioned to Scott Russell, this Brady football debacle could get some AHs to maybe review and do a little updating to their terms and rules. LOL