Auction houses in trouble

Christie’s Auction House Sued Over Francis Bacon Guarantee By Erik Larson

With some successful bidders not paying auction houses for work they purchased last summer and autumn as the market was crashing, it will be interesting to see how auction houses and the consignors will deal with the issue. Consignors do not have recourse to the successful buyer and don't even know who he or she is. Auction houses do have a contract and potential recourse with the bidders but have historically not been keen on pursuing them aggressively so as not to upset their client base. If consignors start making a large fuss, auction houses may have to fight a tug of war between the buyers and sellers.

March 20 (Bloomberg) -- Christie’s International’s New York unit was sued by a Florida art collector over claims the auction house failed to sell as promised a self-portrait by Irish painter Francis Bacon for at least $40 million.

Christie’s, based in London, owes the minimum guarantee to collector George Weiss after his 1964 “Study for Self Portrait” by Bacon failed to find a buyer at the auctioneer’s November 2008 Post War and Contemporary Art sale, according to a breach-of-contract complaint filed today in federal court in New York.

Christie’s and rival Sotheby’s in July 2008 made competing offers to Weiss to include the painting in their respective auctions, according to the complaint. In September, after Weiss chose Christie’s, the auction house said it wouldn’t follow through on the minimum-bid guarantee, citing “the changed climate of the art market,” according to the complaint.

“For years, the major auction houses, including Christie’s and Sotheby’s, have offered guaranteed price arrangements for select works in order to bring major pieces to market,” Weiss said in the complaint. “Christie’s reneged upon the minimum price guarantee.”

Toby Usnik, a Christie’s spokesman, declined to comment, citing company policy.