My brother in law and I were having drinks after work last week. He mentioned that he had begun collecting art and had purchased a few items from fine art online auctions.
He had won an auction for an antiquity sculpture from around the time of the beginning of the millennium. Aside from the my questions about the validity of the piece and its provenance, he said that he won the auction for $5,500. There was a bid premium of about 22% added to that price. But when he received the invoice from the auction house, the invoice was for $550 plus 22% premium. In essence he was undercharged by over $6,000. He promptly paid the invoiced amount and received a revised copy stating that the invoice for the sculpture was “paid in full”.
He received the sculpture about 2 weeks later. I told him that they will likely discover their error when they settle their accounts with the seller of the items; and that he should expect a notification from the auction house for the remaining amount.
He implied that since they marked the invoice “paid in full”, they have no recourse against him. I told him that I don’t think it works that way…since it was clearly an error in the invoice and that he had bid the winning bid amount of $5,500 that he would be on the hook for the full amount.
I’ll have to ask my wife, the contracts instructor. But I think you may be mistaken.
I’m not sure what other written documents were made at time of the auction, but usually the written contract is considered to be the most reliable representation of an agreement between parties. Price is one of the critical elements of most contracts, to which you look to the written document (as well as, IIRC, date, time of performance, quantity.) Add in that the auction house is a commercial business at what they are doing, which generally gives a break to some for schmuck complying with the business’ documents. Also, ambiguous contract terms are generally construed against the party that wrote the contract.
Now, if on the day of the auction your BIL signed something saying, “I agree to purchase for $5500, upon presentation fo final invoice w/in 10 days”, that might be enough to question the terms of the final invoice.
Like I said, I’l ask my wife. But based on my remote recollection of a couple of contracts courses I didn’t attend terribly regularly about 35 years ago, I’d say your BIL is in a pretty secure position. Now, if he is worried about ethics, or what is right - well, that is not a legal question!
Talked to the boss. She says that is called a scrivener’s error. If the object is clearly worth closer to $5500 than $550, he’s on the hook to pay the full amount, even if he’d prefer not to.
I fully agree with this and I don’t think any court would give it more than a few seconds of thought. Even if he could find some contract law doctrine based on the writings, the BIL would be unjustly enriched by $6k by keeping the painting due to a clerk’s error.
I am reminded of a story my accountant sister told me:
She was managing the liquidation of a failed business and one of the first acts is to call in all debts. One customer mistakenly paid an invoice for several thousand Pounds twice.
As soon as they realised their error they phoned to ask for the cheque to be returned. My sister took the view that, while it was an error, that customer had now become an unsecured creditor.
I also recall the story that when Hong Cong was handed back to the Chinese, Chris Patten added “E&OE” to his signature on the complicated agreement.
