A LEGAL dispute in the US Federal court over auction guarantees could lead to a tightening of the terms and conditions under which they are issued.
The case centres on a claim for breach of contract lodged
against Christie's by a collector who claims the auction house
backed out of a $40m guarantee for a Francis Bacon self-portrait
that failed to sell in the New York autumn contemporary art
Weiss Family Art, a family trust led by the Connecticut
collector George A. Weiss, offered Francis Bacon's Study for
Self Portrait No. 1 from 1964 at Christie's Postwar and
Contemporary Art sale in New York in November 12, 2008.
But, in a difficult sale, the lot which had been expected to
bring in the evening's highest price failed without any actual
bidding at $27.5m.
Weiss Family Art filed the complaint with United States Southern
District Court of New York on April 3. It contends that during the
consignment process in July 2008, Sotheby's and Christie's made
competing offers to sell the picture.
In order to win the consignment from their rival, Christie's
sweetened the deal with a $40m guarantee - a sum promised to the
seller regardless of the sale's outcome.
However, according to the complaint, by September, after Weiss
had consigned the picture to Christie's, the auction house said
they could no longer honour the guarantee, citing "the changed
climate of the art market".
It is not clear what response the Weiss family gave at the time,
but the picture remained with Christie's who offered it for sale
two months later. The catalogue entry did not carry the guarantee
symbol, although catalogue entries for other lots in the sale
The trust claim "Christie's reneged upon the minimum price
guarantee" and is suing for the $40m it says it was promised, plus
Christie's have declined to comment.
The controversial guarantee process, that has helped bring many
major works of art to the market in the past decade, is now under
review following the failed gambles that accompanied the economic
downturn. After incurring substantial losses, both Sotheby's and
Christie's have all but abandoned guarantees for the coming year
although have not ruled out using them completely.