In the second article in the series on online art sales the author explores eBay model of online auctions, describes differences between online participation in an actual physical auction and online-only auctions, whether you are eligible to use the 14-days right of withdrawal and much more*
*intro by ArtLaw.club
Mediator, Business Writer, Trademark and Patent Attorney
Sale of art in the online environment.
Part 2: Online auctions
In the previous article, I started talking about sales of art in the online environment and elaborated on various online marketplaces that offer a possibility of viewing art online and subsequently enabling the actual sale thereof. In this article, I would like to address the other form of online art sales, namely online auctions.
Online auctions are not one homogenous type of sales, as there exist different auction models. In what follows I would like to provide an overview of these models and highlight the nuances which the use of this or that model implies.
1. The eBay model
First of all, perhaps the most widely known model of online auctions is the “eBay model”. Called after the online auction platform of the same name, this model for the online auctions assumes being a marketplace, a facilitator, a communication enabler, however, not a party to the eventual sale. The online auctions operating on the eBay model do not sell on consignment. On the contrary, they just provide a venue for the sellers and potential buyers.
To give some examples, I would like to start with eBay itself. Alike online marketplaces, eBay is an online platform, thus, basically, a specific type of an online marketplace, which instead of just having a listed price (and a possibility to make an offer), has a competitive auction format of conducting a sale. In its User Agreement - https://www.ebay.com/help/policies/member-behaviour-policies/user-agreement?id=4259) eBay provides that it is “a marketplace that allows users to offer, sell and buy just about anything in a variety of pricing formats and locations. The actual contract for sale is directly between the seller and the buyer. eBay is not a traditional auctioneer.” This, and especially the last statement, imply that eBay does not physically possess the items, nor does it act as a representative of neither the seller nor the buyer. eBay as mentioned, just enables the sale. The platform, nonetheless, assumes some risk, as there is, for example, a money-back guarantee in case items are not delivered, or in case they turn out not to match the description. This means that if an item is not delivered or does not correspond to its description, eBay will reimburse the buyer and afterward will see to recover the reimbursed amount from the seller. More detailed eBay Rules and Policies are available here — https://www.ebay.com/help/policies/default/ebays-rules-policies?id=4205.
Aside from eBay, there are quite some other online auction websites where one can buy art, like, for example, LiveAuctioneers, the-saleroom or iGavel. Terms and conditions of LiveAuctioneers state that it is “only a Venue”, further elaborating: “We are not an auction house and are not conducting the live auctions. Our service allows you to participate in live auctions conducted by the Auction House. We are solely a passive conduit to facilitate communication between you and the Auction House.” (https://www.liveauctioneers.com/termsandconditions). The-saleroom affirms a similar position, saying that: “The website is only a means of communication to view online auction content and/or participate in auction sales and we are not an online auctioneer. Therefore, we are not a party to the contract for sale and purchase entered into between you, the bidder, and the auctioneer.” (https://www.the-saleroom.com/en-gb/about-us/legal/website-terms-and-conditions). Likewise, iGavel stresses: “Please note that the individual Sellers using the iGavel site are independent businesses with their own conditions of sale which may be applicable for the lots which they offer on the iGavel site in addition to the user agreement and conditions of sale described below which pertain to iGavel as a sponsor of this site.” and further: “iGavel is not an auctioneer. While some of the Sellers on the site are auctioneers and are licensed according to the jurisdiction where they are located, iGavel is only a venue to sell fine art, antiques, and collectibles online. iGavel is not a party to any third party transactions which take place” (https://bid.igavelauctions.com/ClientInfo.taf?_function=info&id=296).
Therefore, all online platforms I mentioned so far (in this and previous article on the matter), even though some of them provide the possibility of the auction format of sale, explicitly mention that they are not an online auctioneer, but just a “venue”, or a “passive conduit to facilitate communication”. Does the situation change if the online platform provides additional services to buyers and sellers? Looks like it does not.
The renowned Artnet, which is the leading art price database, art market reports’ and art news' website, also hosts auctions. Artnet auctions provide a possibility to buy Modern and Contemporary paintings, prints, photographs, etc. However, also Artnet explicitly states that: “Artnet Auctions was created to provide a secure marketplace for buyers and sellers to trade in works of art. Although Artnet may provide comparable pricing data, facilitate transactions (through escrow or other arrangements), Artnet is not the seller, vendor, co-seller, or co-vendor of any artwork purchased through the auction or through any post-auction sales transaction.” (https://www.artnet.com/auctions/faq/)
2. The Auction house model
The second model for the online auctions is the actual auction house model, wherein there might also be two main sub-types: (1) online participation in an actual physical auction and (2) online-only auctions. Funnily enough, one of the examples of the first sub-type (online participation in an actual auction) is a cooperation between Sotheby’s and… eBay.
This story has started almost twenty years ago. In the early 2000s, when e-commerce, especially, online art sales was rather an exception than the usual way of doing business, Sotheby’s was already exploring the possibilities of the online. At first, in the late 1990s, there was a short-lived partnership with Amazon, which ended up with a friendly dissolution. Two years later, in early 2002, it followed by the first attempt of Sotheby’s at partnering with eBay. However, a year later due to the failure to generate a profit for this new online venture, the two companies also decided to part ways. Only in mid-2014 Sotheby’s and eBay announced a second attempt at partnering. This time the partnership between the two companies is focused only on live broadcasting auctions and exists to this day. Sotheby’s Live Auctions is, thus, hosted at eBay. On its page, this model is described as “the classic Sotheby's experience, with an innovative twist.” (https://pages.ebay.com/sothebys/about.html). The Sotheby’s in this cooperation is acting in its traditional capacity of an auction house, hence the representative of a seller, selling items on consignment, while eBay is (as always) just a platform enabling the sale, but not a member to the eventual deal.
Christie’s also offers a possibility to bid online on its auctions. On the website of the auction house, one might read that: “All of Christie’s auctions are fully accessible for online browsing and bidding, meaning you can easily place a bid from the comfort of your home through Christie’s LIVE™, or alternatively by telephone.” Therefore, the online aspect of the bidding is, in essence, the same as, for example, with telephone bids. This is just another way how to “raise a paddle”.
It is important to mention also that an item sold in such a broadcasted auction would not qualify as sold through distance selling. The real-life auction is a public auction, which is an exception from the right of withdrawal according to Article 16 (k) of the EU Consumer Rights Directive 2011/83/EU (https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A32011L0083). In other words, even though the “paddle” was raised at a distance (online), one cannot use the 14-days right of withdrawal, normally applicable to the distance (and off-premises) agreements. The situation is different in online-only auctions, which is the second sub-type of the auction house model of online sales.
Online-only auction is a time-limited opportunity for buyers to compete to buy online the desired item from the selection provided. Online-only auctions are currently offered by Christie’s, Sotheby’s, Philips and some other auction houses.
While it might be tempting to assume that this model is the same as the eBay model, this assumption is incorrect. The online-only auctions are held by the auction house who sources and offers items for sale. It is not a seller, thus, who is selling an item, it is an auction house on consignment from a seller. Furthermore, in contrast to online participation in real-life auctions, online-only auctions fall under the definition of a distance agreement. Therefore, bidders have 14 days after delivery of the item they bought at an online-only auction to opt to cancel the sales agreement and get reimbursed. This difference is substantiated by the fact that the potential buyers in the online-only auctions are not able to physically inspect the items before making the purchasing decision. Thus, to remedy the information deficit arising thereof, they are granted the right of withdrawal (under certain conditions provided in the Directive, that warrant a separate discussion).
On a final note, while there are differences between the eBay model and the auction house model for online sales, it is frequently confusing to the buyers. Certainly, terms and conditions are clearly laid out at all the online platforms, yet the management of expectations is not an easy game. Can one expect that the renowned name of the online auction platform is any sort of guarantee of the authenticity of the item? If not, is it always best to buy from the actual auction house or better from the artist him or herself? How to choose where it is best to “hunt” for art? What about the provenance? Does one always require a blockchain record of the online sale? Those are just very few questions that come to mind in this respect. What is sure is that online art sales are on the upward trend and most likely will one day become one of the main (if not the main) avenues of sales. Will that lead to more democratization of the art world, more inclusion? And despite all the possibilities already available, is the art world really ready for the online? I invite you to engage in further discussion on the matter of art and online, and I would love to come back to other aspects of this topic in my subsequent articles.