auction, Auction Law, auctioneer, auctioneers, auctions, breach of contract, buyers, Christie's, client, consent, contract, disclosure, illegal, manifestly unreasonable, terms and conditions, UCC 2-328, withdraw, withdrawal
Christie’s is one of the world’s oldest and best known auction houses. They opened in London, England in 1766 and in New York in 1977. Because of their notoriety, we felt it important to comment on a case they are involved in, regarding their auction terms & conditions.
As reported by Dan Duray, apparently a buyer of a Lot #67 is suing Christie’s because after the auction house declared this lot sold and the buyer paid in full, Christie’s wants to cancel the transaction and re-auction the lot. The buyer wants possession of his purchase.
According to Mr. Duray, Christie’s bidder/buyer standard terms and conditions say that in the case of error or dispute, the auctioneer can
Whether during or after the auction continue the bidding, determine the successful bidder, cancel the sale of the lot, or re-offer and resell any lot.
Here’s the complete article: http://theartnewspaper.com/market/auctions/collector-sues-christie-s-for-cancelling-hammons-sale/
Regarding these terms, the UCC 2-328 would suggest these terms are illegal, but the UCC 1-302 proposes the UCC 2-328 can be modified by agreement so long as good faith, diligence, reasonableness, and care is not disclaimed, and the ultimate agreement is not manifestly unreasonable.
It would seem to us that Christie’s terms and conditions in this regard are clearly not in good faith nor reasonable, and almost certainly manifestly unreasonable.
It’s shocking to us that Christie’s terms suggest an auctioneer can void a completed sale due to any error or dispute and then continue the bidding, choose the buyer, cancel the sale or sell the lot at some later date.
What constitutes an error or dispute? Virtually anything it would seem, and Christie’s and/or the seller decides? In other words, “Sold!” means the buyer is bound, but the seller is anything but compelled. How can that be considered reasonable or in good faith?
We fondly recall the thoughts and comments from Federal Judge James M. Peck citing that finality is of central importance to [bankruptcy estate] auctions: https://mikebrandlyauctioneer.wordpress.com/2012/03/19/court-auctions-does-money-trump-principle/
It will be interesting to see how this case progresses. We suspect this buyer will get his Lot #67. We also presume Christie’s terms and conditions will remain unchanged in this current environment of abhorrent expressions being recommended for auctioneers.
Further, you as an auctioneer have to decide; you can use these one-sided, adhesionary (so imbalanced …) and possibly coercive terms and conditions to the extent they don’t deter sellers and bidders (and we think they tend to) as they can act to protect you (dare we say, “bluff”) absent an informed seller/buyer (or their attorney.)
Yet, be prepared for a knowledgeable party in an auction transaction to take issue, as has this buyer in a New York district court. And we repeat, perception may be far more important than reality: https://mikebrandlyauctioneer.wordpress.com/2017/03/15/every-auction-lawsuit-perception-vs-reality/
Mike Brandly, Auctioneer, CAI, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, RES Auction Services and Goodwill Columbus Car Auction. He serves as Distinguished Faculty at Hondros College of Business, Executive Director of The Ohio Auction School and Faculty at the Certified Auctioneers Institute held at Indiana University.