As agent to the vendor, an auctioneer has many duties and responsibilities, but is not liable to the same extent as the vendor.
The position was examined in great detail in a case concerning the sale of a motor car at auction in 1925, which still stands as good law.
It emerged the vehicle was the subject of a hire purchase agreement and some of the instalments were still unpaid.
Following an action brought by the buyer against the auctioneers, the court concluded that “an auctioneer who sells goods not as owner but as auctioneer only, though not naming his principal, does not, without more, warrant the title to the goods sold”.
The judge added that “the auctioneer cannot question his principal about his right to sell, and the buyer is well aware of the auctioneer’s position”.
The latter adjudication may not ring very true today, given the emphasis on due diligence. However, the position remains fundamentally that the auctioneer does not automatically warrant the title of his principal, the vendor. I told my client that based on this venerable case law, we did not have a case.
There are, nonetheless, scenarios where an auctioneer can be held liable in a title dispute.
An even earlier case, regarding the sale of ‘chaldrons of soil’ in 1814, makes clear that the auctioneer does have some responsibilities and it too remains good law.
In this case a jury decided the auctioneer had been aware of a title dispute before the sale but had failed to communicate this to the plaintiff. On that basis, the auctioneer was held liable.
Taken together we can conclude from these two cases that, perhaps to the surprise of many, an auctioneer does not, as a matter of course, underwrite good title to the goods they are selling.
An auctioneer does not as a matter of course underwrite good title to the goods they are selling
They do, however, underwrite to the purchaser that the vendor has given authority to sell and that he/ she has no information that there is any problem with the title of the consigned work.
Finally, consider the following, again real-life, sequence of events: an important institution holds hundreds of works and gives instructions to an auction house to remove a number of these works for sale.
Unfortunately, due to a breakdown in communication, the auctioneer removes a piece which was meant to stay put – a mistake not discovered until after it has sold at auction.
This time, because on the facts it was indeed the auctioneer’s fault, the auctioneer was liable to repay the purchaser as they could not ‘warrant that they had authority from their principal to sell’.
Milton Silverman is senior commercial dispute resolution partner at Streathers Solicitors LLP, London.