If an auction house sells an illegal item, is the buyer made whole?
Zoins
Posts: 34,113 ✭✭✭✭✭
I just read this article which indicates Christie's sold an illegal item to Hobby Lobby for $1.6 million, which now needs to be forfeit so the item can be returned to the original country.
In a case like this, is the buyer out $1.6M? Or is Christie's out $1.6M? Can Christie's get the money back from the seller?
https://www.cnn.com/2021/07/27/politics/epic-of-gilgamesh-hobby-lobby/index.html
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I am not a lawyer but I’m sure the buyer is made whole in these situations.
TurtleCat Gold Dollars
I'm not so sure. It's 7 years later. The auction house statement did not include reparations. I imagine it would take a lawsuit, likely including the consignor and auction house.
I don't know but I will guess that would result in lawsuits right back over the chain of previous possession as far as it can go.
Great transactions with oih82w8, JasonGaming, Moose1913.
The forfeiture is between HL and USG.
Whether HL has a claim against C would depend on the contract. Whether C was acting as the seller or merely an intermediate and any contract between C and the seller.
Always read your contract(s). In this case, btw, it was a private sale and not an auction.
(That C is an auction house is irrelevant, but TOS would apply if you had bought it at auction - they are available on the web, for example for a London sale at https://www.christies.com/media-library/pdf/conditions-of-sale/london-conditions-of-sale.pdf)
ANA 50 year/Life Member (now "Emeritus")
I would excuse anyone reading the posted link for thinking it was an auction as the article said it was an auction in the opening sentence.
On something this big, the courts and lawyers will decide. If the involved parties don't come to an agreement, it will take years to sort out. By then the legal fees will probably approach the value of the thing.
The game of hot potato typically hammers the holder at discovery (Part of the back story of the recent 1854s no doubt) Recourse typically can only be granted by parties who were knowing participants in fraud. IE you would have to prove the auction house knowingly or should have known that they were dealing in stolen goods or the consignor had a known history of fraud (to them) and they chose fees over integrity. A few houses have been caught up by continually taking wine from bad sources and helping obfuscate the source to encourage bids. I think there is some precedence involving sales or art coming from the holocaust too but those are the exceptions not the rule. Most houses are pretty protected and many an artifact has had to go back to host countries at buyers remorse in the antiquities field.
That said if you are a good customer, sometimes, I am sure they will settle if the future prospects of your business outweighs the loss all while pointing a spot light back at the consignor who will also have some splainin to do
11.5$ Southern Dollars, The little “Big Easy” set
It should be the Auction house's loss
BHNC #203
The question is well above my pay grade.
There are likely to be some very wealthy lawyers.
Reading the article it looks like Christie's tried to hide information.
Now it can go back to Iraq and be destroyed by radicals.
The legal complexities involved will certainly enrich some law firms. I would really be interested to see what is eventually resolved. Too bad about the fate of the piece, I would guess it will either vanish with no explanations, or, instead of being destroyed, sold on the black market to begin another journey. Cheers, RickO
As a matter of practice I suspect the bidder is made whole. To do otherwise would be really bad PR for the auction house.
When buying real estate, Title Insurance is available.
Is there such a thing for collectibles? And if so, would it cover something like this?
I bought a coin once that was sold illegally, at auction - I was made whole - but can't tell you how - nondisclosure agreement.
Just some quick thoughts...
First, the choice of law will be important.
It is possible that as part of the consignment contract, the consignor agreed to defend and indemnify the auction house in connection with the items consigned. That may not shift the entire exposure to the consignor based upon the consignor's reasonable expectations as to the potential legal issues surrounding the actual sale of the consigned item and his expectation that the auction house should be well versed in this area.
The real question will likely be the law itself... when the law was passed... and how that fits into the timetable of the auction and ultimate sale/purchase.
The reasonable expectations and level of sophistication on the part of successful bidder could come into play.
Experience the World through Numismatics...it's more than you can imagine.