If an auction firm adds value by making a variety discovery, should they get to renegotiate the cons

Longacre

Hypothetically, let's say an auction firm takes in a consignment and makes a major variety discovery. Let's also assume that the consigment agreement has already been negotiated and signed.

For the contract lawyers in the house, does the fact that the coin originally consigned is significantly different from the coin that is now the subject of the consignment (because it is a new discovery), allow for the consignment agreement to be renegotiated?

If there is no legal basis for doing so, should the auction house be given some sort of bonus or additional compensation because the formerly common coin is now worth significantly more?

Shouldn't the auction house get a bigger piece of the action because they added value to the consignment in the form of top research and discovery? The consignor didn't know what the coin was, and it was the auction house that did all of the work. Why should just the consignor benefit rather than give a little something more to the auction house? What do you think?

RichieURich

IMO the auction house will do just fine if they publicize the new discovery. Plus the consignor will be real happy if the coin goes for "moon money". Such goodwill created IMO is worth more than a few extra points the auction house might be able to wrestle out of the consignor.

Longacre

<< <i>IMO the auction house will do just fine if they publicize the new discovery. Plus the consignor will be real happy if the coin goes for "moon money". Such goodwill created IMO is worth more than a few extra points the auction house might be able to wrestle out of the consignor. >>




This is business , Rich.

Coinosaurus

It is business and thus competitive. If one auction house put the "variety" clause into its standard contract, do you think consignors would be more or less likely to use that firm?

Longacre

<< <i>It is business and thus competitive. If one auction house put the "variety" clause into its standard contract, do you think consignors would be more or less likely to use that firm? >>




Maybe the firm with the "variety clause" will be hungrier to make a new discovery, thus creating a financial benefit to both parties.

Julian

I agree with Rich. The auction house will certainly get good publicity and will certainly earn more from that then they will by trying to get a few extra points.

I don't think that one firm would do it, because the others would not have it. However, since there is so much gibberish in these contracts, nearly no one reads them word for word, and the clause could certainly be inserted without much notice at all.

BECOKA

To me it is in the best interest of the Auction company to get you the most for the consignment and in return the auction company profits on the buyer fees.

In this case you may choose said auction company because they have experts to make this happen.

No I don't think any bonus is in order.

mrpotatoheadd

From Heritage Auction Galleries:

The hardworking Processing staff transfers your consignment from Input to Cataloging. Our staff then inspects each item in your consignment and highlights all of its positive attributes through our world-renown detailed descriptions. Of course, the catalogers must also provide exceptionally accurate descriptions for the benefit of Heritage's registered bidders. The catalogers incorporate all pertinent historical information and pedigrees in the description of your item - features that make your items even more desirable to bidders.

From Ira and Larry Goldberg:

One straighforward fee includes all our services, presenting your material in its best light. This includes research, detailed cataloging, expert photography, extensive marketing and insurance.

(bold added)

First two auction houses I looked at- I'd guess many others operate similarly.

ziggy29

I don't see why they should -- they get a percentage of hammer, not a fixed commission. If they find something that triples its value, they have tripled their take. Seems fair to me, and it's why it's good to have an arrangement where interests are aligned instead of in conflict.

Longacre

<< <i>From Heritage Auction Galleries:

The hardworking Processing staff transfers your consignment from Input to Cataloging. Our staff then inspects each item in your consignment and highlights all of its positive attributes through our world-renown detailed descriptions. Of course, the catalogers must also provide exceptionally accurate descriptions for the benefit of Heritage's registered bidders. The catalogers incorporate all pertinent historical information and pedigrees in the description of your item - features that make your items even more desirable to bidders.

From Ira and Larry Goldberg:

One straighforward fee includes all our services, presenting your material in its best light. This includes research, detailed cataloging, expert photography, extensive marketing and insurance.

(bold added)

First two auction houses I looked at- I'd guess many others operate similarly. >>





Thanks for providing the language. I wonder if "historical material" and "pedigrees" only encompass things that are known in the past and don't cover a new, unique discovery of a variety. The same thing with "research", which implies that information that is accessible from the past is used in the writing of a description. One could argue that the discovery of a unique variety is neither "historical material", "pedigree information", nor "research". Therefore, a variety discovery might fall outside of the parameters of the contract, and the auction firm may have the right to additional compensation. What do you think?

PerryHall

The auction firm is rewarded when the coin brings moon money and they take their standard % of hammer, in addition to the good publicity etc.

Nysoto

This happened recently 1806 O.130 Discovery Mark Borckardt discovered the coin while cataloging, Mark is one of the best attributors of bust coins among catalogers, many others would have mis-attributed the coin. Whatever "deal" was made will probably remain private, but I would expect that Mark received something more than a pat on the back, as this is a $700 type in VF that realized $40,250 as a new discovery.

mrpotatoheadd

<< <i> One could argue that the discovery of a unique variety is neither "historical material", "pedigree information", nor "research". Therefore, a variety discovery might fall outside of the parameters of the contract, and the auction firm may have the right to additional compensation. What do you think? >>

I think that argument sounds like someone looking for a loophole to get away with something that they wouldn't want to have done to them, if the tables were turned.

ColonialCoinUnion

I believe most auctions companies would conclude that the publicity garnered by their discovery is worth far, far more to them than the additional points they might re-negotiate on the consignment.

If that wasn't true, an auction company could keep the discovery a secret, buy the anonymous coin out of the auction for a pittance and "discover" it later.

IGWT

If the auction company has the right to back out, so does the consignor, who might actually have the better argument on the issue. In any event, the auction company will likely receive increased compensation for the discovery as a result of a higher hammer price. Isn't that and the publicity gained from someone else's coin enough?

dbldie55

So it would be best to keep the discovery quiet, buy the coin out of the auction and then announce the discovery. That way they do not need to worry about renegotiating anything.

CaptHenway

<< <i>I don't see why they should -- they get a percentage of hammer, not a fixed commission. If they find something that triples its value, they have tripled their take. Seems fair to me, and it's why it's good to have an arrangement where interests are aligned instead of in conflict. >>



What he said.
TD

EagleEye

Anything that strayed from the original agreement would show a great lack of integrity. If the consignor decides to reward the company or attributor after the sale, that would be a generous gesture, but they would not be required to do so. Perhaps the employee would get a good bonus around this time of year as well.

When I worked for another company I attributed a previously unique Bust half variety. I turned a $150 coin into a $9,000 coin. I recieved a pat on the back and recognition for the discovery. I was given a good bonus that year and a raise later, though.

AuctionExpert

The auction house should not get a bigger slice of the pie in this example. They will get paid more because they made the pie bigger. Win/win.

CalGold

Longacre, what are thinking? If the auction house tried to renegotiate the contract here is what would happen:

Auction House: We want to renegotiate our commission.

Consignor: No.

Auction House: Then we will reject your consignment and cancel the contract.

Consignor: Fine. I'll take my coins to your competitor. And, oh, thanks for the attribution.


CG