Hypothetical #12 - Third World Slab Co

MrEureka · June 20, 2005 9:14PM

You are a dealer and you own your own certification service. Most of the coins you grade are your own. One such coin is a 1795 Flowing Hair dollar that you know to be whizzed, plugged and artificially toned. You slabbed it as "AU55 PQ". A man walks up to your table and explains that he is getting into the coin business and will be selling his coins on eBay. He explains that he needs to buy certified coins because he is uncomfortable with his own grading skills. You sell him the coin for $20,000, a fair price if the coin had been accurately graded. Two weeks later, he finds out you burned him and wants to return the coin. Are you obligated to issue a refund?

construct · June 20, 2005 9:21PM

Yes. I have made all kinds of representations about that coin that weren't so. If I don't give him his money back, I'm a crook if I wasn't one before.

291fifth · June 20, 2005 9:37PM

A selling dealer like this wouldn't refund the money. He is in business to make money via overgrading...it is his business plan. Also, keep in mind that the coin business doesn't have any grading standard. All it has is someone's opinion regarding grade. To say those opinions vary is an understatement.

Steve27 · June 20, 2005 10:03PM

"Are you obligated to issue a refund? "

Yes, because he was relying on your expertise (see the Uniform Commercial Code for more info on this one).

braddick · June 20, 2005 10:18PM

<< "Are you obligated to issue a refund? " Yes, because he was relying on your expertise (see the Uniform Commercial Code for more info on this one). >>

I believe you're also obligated to serve a wee bit of time in the pokie.

DHeath · June 20, 2005 10:33PM

You sold him a $20k coin for $20k, but you lied to do it. Refund him, sell the coin raw, and close up shop.

Longacre · June 20, 2005 10:54PM

The coin was not represented correctly, but if the price was fair market value, then there is nothing to complain about.

ritepath · June 20, 2005 11:10PM

did it come with a money back guarantee?

RYK · June 20, 2005 11:24PM

Yes, because you intentionally misrepresented the coin. Shame on you.

ziggy29 · June 20, 2005 11:26PM

I would. But the type of dealer who knowingly slabs badly overgraded and problem coins in their own third world holder is not going to have the type of professional ethics to do so.

Julian · June 20, 2005 11:57PM

This HYPO cannot apply to me, so.......

Shamika · June 21, 2005 12:00AM

Since you are describing me as an unethical TPG, the coin is sold!

Personally, however, I would never have slabbed the coin to begin with. But that's just me.

mgoodm3 · June 21, 2005 1:08AM

Coin misrepresented.

ss350camaro · June 21, 2005 1:08AM

I would say yes, and if he refuses, then Legal action would be taken.

SMS · June 21, 2005 1:26AM

<< 

<< "Are you obligated to issue a refund? " Yes, because he was relying on your expertise (see the Uniform Commercial Code for more info on this one). >>

I believe you're also obligated to serve a wee bit of time in the pokie. >>

The only problem is that there is the ASSUMPTION that ANA standards for grading were used here. The fact that it was graded as "AU55 PQ" show that it is not. The industry has a different number of "grading standards". Just as there are a number of different types of "stocks" on the market. Do you have the right to sue because you purchased the wrong type of stock and now have no voting power in a corporation? Of course not. If you are going to make a purchase for the intent of placing the item back into the market, you have an obligation to properly educate yourself regarding your product.

In the case of the person being a market consumer, the law has already been found in favor of the consumer. But, this is an entirely different situation. This is contractually based, not consumer based. The individual is not a consumer, but a contractor. There is also too much information that is not given in the hypothetical, including whether or not the two entities drew up any kind of sales contract, whether the new dealer asked regarding the grading standards that were used, guarantees, indemnities, etc.

Again, education is the key here. This is a contractual situation (the individuals are noted in the hypothetical as conducting a business agreement, not a consumer sale).

csw · June 21, 2005 1:27AM

Are you obligated to issue a refund?

Most likely yes.

Your only representation was that the coin was "AU55 PQ." This term has a meaning that is widely accepted in the coin industry, and that meaning excludes from its definition coins that are whizzed, plugged, and artificially toned. Accordingly, even though you did not affirmatively state that the coin was whizzed, plugged, and AT, you essentially represented that it wasn't these things by asserting that it was "AU55 PQ." You will be liable for the difference between the coin's value as represented ($20K) and the coin's actual value.

Note, however, that this analysis assumes that "AU55 PQ" has a standardized meaning. The "PQ" portion of it might well be considered "puffing," for which a seller is not liable, just as a seller who sells a car to a buy representing that the car is "terrific" or "a great deal" isn't responsible if the car is not "terrific" or "a great deal." As for the "AU55" portion, many people here believe that grading is subjective and that graders shouldn't be held responsible if the grade assigned is not accurate. If I were the seller, I would take that position strenously, arguing that I employed my own grading criteria, that the coin is accurately graded according to my own criteria, and that I am not obligated to issue a refund. I've said here many times that I think that that's a bunch of crap, and that the courts should take the position that grading is objective, but my opinion is neither here nor there. Note that if grading is subjective, then only the grossest mis-grades can ever have any consequences to the graders. That's not the way things should be, imo.

JrGMan2004 · June 21, 2005 1:38AM

I would try not to put myself in such a situation, because I would not so grossly misrepresent a coin...

morgannut2 · June 21, 2005 2:10AM

Yes, it's gross misrepresentation, not puffing his product. The dealer should be banned from future coin shows.

mrearlygold · June 21, 2005 2:26AM

Didn't something similar to that happen with the PNG years ago??

What ever happend with that? Do you or anyone know what I'm referring to?

Tom

Robgetty · June 21, 2005 3:11AM

You already are a cheat by slabbing the coin AU55PQ when you know that the coin is damaged.

Why should he expect you to be honorable now?

PerryHall · June 21, 2005 3:19AM

<< You already are a cheat by slabbing the coin AU55PQ when you know that the coin is damaged.

Why should he expect you to be honorable now? >>

Fear of a lawsuit or severe beating.

jcping · June 21, 2005 3:27AM

It depends on whether company has "grade guarantee" policy. If yes, refund him.
If now, since it is a sight-seen deal, toooooooo bad. An expensive lesson for new comers to learn.
At least, I paid my dues to learn.

mozin · June 21, 2005 4:36AM

If I went through all the trouble to deceive this buyer I certainly would not give a refund. My certification service will be in the dump a little sooner due to this transaction. The buyer should have known what he was doing with his $20K.

Lest someone get the wrong idea about this hypothetical "me" dealer I would NEVER intentionally deceive.

CalGold · June 22, 2005 7:25AM

No. It was lablel "PQ" which of course means Plugged Quoyne.

CG

MrEureka · June 22, 2005 9:01AM

I agree that there was sufficient reliance that this is a case of fraud and that the seller must refund the money.

With respect to CSW's comment that: the courts should take the position that grading is objective. If grading is subjective, then only the grossest mis-grades can ever have any consequences to the graders.

Even if there were only one grading company, grading would remain subjective. However, I disagree that subjectivity provides a license to steal. If a TPG's grading practices or other representations mislead and damage buyers in any way, it's fraudulent.

ddink · June 22, 2005 10:38AM

You should, but someone who did something like this clearly lacks the integrity to do so.

Newmismatist · June 22, 2005 12:07PM

<< Are you obligated to issue a refund? >>

I think both a Judge or Jury would say yes - Be a fun case to take to trial before a jury - Might be able to convince them that it was an intentional fraud and then the fun starts - every have a case where the jury comes out and asks the Judge if they can award MORE than the Plaintiff asked for?

Hypothetical #12 - Third World Slab Co

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