Rago/Wright, a conglomerate of six independent auction houses across the country, has what the company’s chief executive officer calls a “cat” button on its website. C-A-T isn’t an acronym but rather a nod to the number of bidders who try to walk back winning bids by blaming their cats for jumping on their keyboards and accidentally clicking the “send” button.
“We’ve put a lock on the bid button, so that bids can’t take place accidentally,” said Richard Wright. “You now have to unlock the bid button so that you can place a legitimate bid.” The other option is to close the door to keep the cat out of the room where someone is bidding online, but auction staff can’t be everywhere. Those looking for an excuse can always find a pet.
Wright “really doesn’t like it” when someone tries to renege on a winning lot by claiming their wife didn’t care for it. He added, “I mean, come on, do you really need to blame your wife?”
Buyers attempting to back out of bids or avoid paying for items is nothing new in the auction world. Wright estimated that one percent of Rago/Wright’s auction sales become problematic when buyers either can’t or won’t pay. While one percent might seem negligible, the house sells tens of thousands of lots each year, resulting in hundreds of problematic transactions. The issue has grown in recent years due to the rise of online bidding platforms. In-person attendees can’t hide behind a screen—they raise a paddle or a hand as bids escalate. But those bidding remotely may be less familiar with auction protocols and the binding nature of a winning bid.
To participate in most auctions, prospective buyers must register in advance, provide valid identification such as a driver’s license and supply a credit card or bank account number. Some houses also require a registration fee or deposit. Jay Frederick Krehbiel, executive chairman of Freeman | Hindman auction house in Chicago, told Observer that “we will also ask for deposits in advance of bidding,” with deposit amounts based on the estimated value of the lots in question.
Still, some “people fail to understand that they are subject to a binding contract,” Joshua F. Eldred, president and chief executive officer of Eldred’s auction house in Massachusetts, told Observer. “When yours is the winning bid, you legally own it,” whatever that “it” may be.
That said, not every “oops” bidder is trying to game the system. Eldred noted that some buyers experience legitimate hardships between the time they bid and the time of payment, including medical issues. Others may be serious collectors who accidentally bid on the wrong lot, or who get swept up in the moment. “The bids can go up very quickly,” Eldred said. “At one point, it is going up at $100 intervals, and then it is going up at $1,000 intervals” before the bidder realizes what’s happening. Auctions are high-energy events, and it’s not uncommon for bidders to get carried away. Newcomers might not realize that the hammer price—the final bid—doesn’t reflect the full cost. State taxes, buyer’s premiums and shipping can double the total. That $150 print may end up costing $275 all told.
Auction houses aren’t heartless, and they often try to work with bidders in tough situations. The first course of action is typically to contact the underbidder to see if they’re still interested in the lot. “Underbidders almost never agree to pay what they offered before,” Wright said. “They know that the sale didn’t go through, and they now have leverage to get a lower price.”
There are also bad-faith actors. Wright pointed out that some people register to bid with no intention of paying. “They think that they can get a piece released to them without having actually paid for it,” he said—something that never happens.
When a buyer defaults, the auction house usually enforces the sale. It may allow installment payments, paying the consignor up front and recouping the funds over time, or it may relist the item in a future sale, with the defaulting bidder now treated as the consignor. The consignor may recover less than the original price, since items that reappear at auction are often perceived as tarnished. “What’s wrong with it that someone is trying to sell it so soon?” Wright asked. Still, recouping something is better than nothing.
In some cases, litigation is the only path forward. Eldred said his auction house has pursued buyers in small claims court and once filed a lawsuit against a buyer who backed out of a $40,000 purchase—a case that was settled before reaching trial. There’s no set dollar threshold for taking legal action, but the high cost of litigation means lawsuits usually involve expensive lots and come only after other avenues have failed.
Late last year, for example, Christie’s filed suit against Milan-based real estate investor Nanni Bassani Antivari, who won a bid for Jean Siméon Chardin’s 1760 painting Le Melon Entame (The Cut Melon) for €26.7 million ($28 million) and then failed to pay.
“Litigation is in nobody’s interest—not the seller’s, not the auction house’s and certainly not the buyer’s—but it does happen,” Krehbiel said. In one case, a young man placed a bid using his “parents’ account— and I would note it was an adult child—and, in that case, we worked with the parent on payment terms over many months.” In another, involving “a Chinese vase where the buyer decided to walk away, we kept a $25,000 deposit.”
Lawsuits are generally seen as a last resort and a mark of failure by auction houses, which try to exhaust all other options. None of the major houses—Bonhams, Christie’s, Phillips or Sotheby’s—responded to questions for this article. But legal actions happen all the same. In 2015, Christie’s sued New York City dealer Jose Mugrabi after he placed a $37,125,000 winning bid for Jean-Michel Basquiat’s The Field Next to the Other Road on behalf of a client, paid an initial $5 million installment and then failed to pay the rest. The year prior, Sotheby’s brought a lawsuit against Michael Jackson after one of his representatives bid $1.6 million for two paintings by Adolphe William Bouguereau—L’Amour A L’Epine and Les Agneaux—which the singer later declined to purchase.
In 2020, art dealer Joseph Nahmad sued Phillips for backing out of a $5 million guarantee on a Rudolf Stingel painting, citing the pandemic as the cause. Just last month, Phillips sued collector David Mimran for failing to honor his guarantee after a $15 million Jackson Pollock painting failed to meet its reserve.
These disputes aren’t as rare as one might think—they’re just kept quiet until court documents make them public. Another consequence auction houses can impose is blacklisting defaulting bidders. While houses maintain their own internal no-bid lists, major online bidding platforms like Artnet Auctions, LiveAuctioneers and Invaluable keep broader databases of banned buyers that also prevent them from bidding with affiliated companies.
Which is all to say, think carefully before you push that button.
More for art collectors
