Going, going, gone … at auction

Sotheby’s recently sold a framed image of a girl reaching out for a red, heart-shaped balloon for $1.4 million.

Then moments later a shredder hidden inside the “artist’s frame” started up and the art “self-destructed …”

Here’s a story about this particular painting: https://www.npr.org/2018/10/06/655252676/we-just-got-banksy-ed-girl-with-balloon-sells-for-1-4m-before-self-destructing

Many in the auction industry cited the phrase “as-is” which is often how property at auction sells — essentially caveat emptor.

We ask today if this transaction is “as-is” or something else? We wrote about this concept generally in 2014 here: https://mikebrandlyauctioneer.wordpress.com/2014/06/25/as-is-with-the-emphasis-on-is/

It appears to us that when something sells “as-is” that such applies to the condition of the property at the time the contract is formed.

Typically at auction, the final contract is formed at, “Sold!” At that moment, and thereafter, there are several issues.

1. For property to sell “as-is” there must be a reasonable opportunity to inspect/preview.
   
   We wrote about that and related issues here: https://mikebrandlyauctioneer.wordpress.com/2015/11/10/an-auctioneers-as-is-primer/.
2. Auctioneers/sellers generally must disclose any latent material issues about property they are selling.
3. If the auctioneer/seller maintains possession and/or control of the subject property thereafter, they have to take reasonable steps to preserve and care for that property.
4. Minutes, hours, days, weeks … property is subject to normal wear and tear but no more than a typical buyer should expect.

In the case of this Banksy painting here’s our conclusions:

1. I would assume the buyer had ample opportunity to inspect this painting.
2. I doubt Sotheby’s disclosed that a shredding mechanism was embedded in the frame.
3. It would appear Sotheby’s did not take customary care of this painting after it was sold.
4. Property destruction is typically not considered “normal wear and tear.”

As well, it appears someone other than the auctioneer, buyer and seller was involved in this … as there are reports that a remote control of some sort was used to activate the shredder.

In conclusion, it would appear to me the buyer would retain the right to purchase this painting, although he could unilaterally decline.

Depending upon the contract between the auctioneer and seller (and any related insurance coverage) the seller may be compensated for any loss.

As well, any third-party involved in this property destruction would almost certainly incur liability to the auctioneer/seller … and this is a developing story so I’m sure there’s more to be considered — even that maybe now the damaged (shredded) painting has increased in value over its prior state.

Daxdi, Auctioneer, CAI, CAS, AARE has been an auctioneer and certified appraiser for over 30 years.

His company’s auctions are located at: Daxdi, Auctioneer, RES Auction Services and Goodwill Columbus Car Auction.

He serves as Distinguished Faculty at Hondros College, Executive Director of The Ohio Auction School, an Instructor at the National Auctioneers Association’s Designation Academy and America’s Auction Academy.

He is faculty at the Certified Auctioneers Institute held at Indiana University and is approved by the The Supreme Court of Ohio for attorney education.

Sotheby’s recently sold a framed image of a girl reaching out for a red, heart-shaped balloon for $1.4 million.

Then moments later a shredder hidden inside the “artist’s frame” started up and the art “self-destructed …”

Here’s a story about this particular painting: https://www.npr.org/2018/10/06/655252676/we-just-got-banksy-ed-girl-with-balloon-sells-for-1-4m-before-self-destructing

Many in the auction industry cited the phrase “as-is” which is often how property at auction sells — essentially caveat emptor.

We ask today if this transaction is “as-is” or something else? We wrote about this concept generally in 2014 here: https://mikebrandlyauctioneer.wordpress.com/2014/06/25/as-is-with-the-emphasis-on-is/

It appears to us that when something sells “as-is” that such applies to the condition of the property at the time the contract is formed.

Typically at auction, the final contract is formed at, “Sold!” At that moment, and thereafter, there are several issues.

1. For property to sell “as-is” there must be a reasonable opportunity to inspect/preview.
   
   We wrote about that and related issues here: https://mikebrandlyauctioneer.wordpress.com/2015/11/10/an-auctioneers-as-is-primer/.
2. Auctioneers/sellers generally must disclose any latent material issues about property they are selling.
3. If the auctioneer/seller maintains possession and/or control of the subject property thereafter, they have to take reasonable steps to preserve and care for that property.
4. Minutes, hours, days, weeks … property is subject to normal wear and tear but no more than a typical buyer should expect.

In the case of this Banksy painting here’s our conclusions:

1. I would assume the buyer had ample opportunity to inspect this painting.
2. I doubt Sotheby’s disclosed that a shredding mechanism was embedded in the frame.
3. It would appear Sotheby’s did not take customary care of this painting after it was sold.
4. Property destruction is typically not considered “normal wear and tear.”

As well, it appears someone other than the auctioneer, buyer and seller was involved in this … as there are reports that a remote control of some sort was used to activate the shredder.

In conclusion, it would appear to me the buyer would retain the right to purchase this painting, although he could unilaterally decline.

Depending upon the contract between the auctioneer and seller (and any related insurance coverage) the seller may be compensated for any loss.

As well, any third-party involved in this property destruction would almost certainly incur liability to the auctioneer/seller … and this is a developing story so I’m sure there’s more to be considered — even that maybe now the damaged (shredded) painting has increased in value over its prior state.

Daxdi, Auctioneer, CAI, CAS, AARE has been an auctioneer and certified appraiser for over 30 years.

His company’s auctions are located at: Daxdi, Auctioneer, RES Auction Services and Goodwill Columbus Car Auction.

He serves as Distinguished Faculty at Hondros College, Executive Director of The Ohio Auction School, an Instructor at the National Auctioneers Association’s Designation Academy and America’s Auction Academy.

He is faculty at the Certified Auctioneers Institute held at Indiana University and is approved by the The Supreme Court of Ohio for attorney education.