Significant Comic Art Auction at Profiles in History 30 July 2016

[jaybuck43]

BWS Studios has posted an agreement online:

 

http://www.barrywindsor-smith.com/galleria/tar.html

 

 

 

 

 

Thanks for the link.

 

It's missing the "glossary" or "definitions" section. There's a term mentioned in quotes in section 2(a) "gross art profit" which indicates there should be a separate definition of that term somewhere in the agreement, but there isn't. That's a gap.

 

So the scenario could reasonably be interpreted as profit to the seller. That's proceeds actually received over and above original purchase price. That would be the check cut to the seller from the auction house and not the hammer or final price.

 

However, the new buyer's basis would be the price he paid, all in.

 

So the original buyer could have paid $5k for a piece.

 

He sells it at auction for $10k, receiving $8k.

 

He pays a TAR on the profit between the $5k purchase and the $8k proceeds...15% of $3,000.

 

The auction buyer signs the TAR and his purchase basis is $10k (or whatever total purchase price is).

 

Absent a specific definition of "gross art profit" it would revert to standard definitions of terms and the actual profit to the original buyer. He's not entitled to a % of the money the original buyer never saw (BP, Tax, etc).

 

Chris, wanna go halfsie on a BWS TAR piece? I really want to get standing to tear this agreement to shreds.

[comix4fun]

 

I, personally, love that someone threw in the "living plus 21 years" in one part but failed to define any of the material terms for calculation.

 

 

The upside is, everyone can bid and buy without worrying that they're actually going to get stuck dealing with a document that's actually iron clad.

 

 

I can see most buyers not paying it any mind at all.

[buyatari]

 

I, personally, love that someone threw in the "living plus 21 years" in one part but failed to define any of the material terms for calculation.

 

 

The upside is, everyone can bid and buy without worrying that they're actually going to get stuck dealing with a document that's actually iron clad.

 

 

I can see most buyers not paying it any mind at all.

 

Have auction houses agreed to participate in this process? If they were to hold the work until the paperwork and payments were fully completed it would have an impact.

[delekkerste]

Thanks for the link.

 

It's missing the "glossary" or "definitions" section. There's a term mentioned in quotes in section 2(a) "gross art profit" which indicates there should be a separate definition of that term somewhere in the agreement, but there isn't. That's a gap.

 

So the scenario could reasonably be interpreted as profit to the seller. That's proceeds actually received over and above original purchase price. That would be the check cut to the seller from the auction house and not the hammer or final price.

 

However, the new buyer's basis would be the price he paid, all in.

 

So the original buyer could have paid $5k for a piece.

 

He sells it at auction for $10k, receiving $8k.

 

He pays a TAR on the profit between the $5k purchase and the $8k proceeds...15% of $3,000.

 

The auction buyer signs the TAR and his purchase basis is $10k (or whatever total purchase price is).

 

Absent a specific definition of "gross art profit" it would revert to standard definitions of terms and the actual profit to the original buyer. He's not entitled to a % of the money the original buyer never saw (BP, Tax, etc).

 

Chris, "gross art profit" is defined in 2(d). There is no missing glossary or definitions of terms section. And, it's bad for the seller. Under your example, he would pay 15% of $5,000 ($10K-$5K), not $3,000. 15% of $3,000 would be the "net" art profit, not the "gross". This is further evidenced in 2(d) which defines "gross art profit" as the difference between the agreed value on the standing TAR and the one in the new TAR. The value on the new TAR will be $10K in your example, not $8K. There is no one value for the buyer and another one for the seller - there is only the new single TAR value.

 

It's obvious why BWS did this - otherwise, the seller could claim all kinds of expenses that would lower his "net" art profit and thus BWS' 15% take. He avoids that by going for the "gross" art profit. Remember, this is how Hollywood used to screw investors before they got wise to it, by loading up a film's budget with costs (often shared with other films), so that a blockbuster like "Forrest Gump", which made a ton of money in reality, showed a loss on paper to investors. BWS is protecting himself against such shenanigans by the seller. So, if you cut a bad deal with the auction house and there is a big spread between the gross and net art profit, you are SOL.

[comix4fun]

 

I, personally, love that someone threw in the "living plus 21 years" in one part but failed to define any of the material terms for calculation.

 

 

The upside is, everyone can bid and buy without worrying that they're actually going to get stuck dealing with a document that's actually iron clad.

 

 

I can see most buyers not paying it any mind at all.

 

Have auction houses agreed to participate in this process? If they were to hold the work until the paperwork and payments were fully completed it would have an impact.

 

 

 

I can't imagine any American auction house selling these pieces would want to expand their liability or responsibility to include voluntarily taking on those tasks, gratuitously.

 

That would put them in the place of the original buyer. Everything you mentioned (paperwork and payments fully completed) are the original buyer's responsibility to chase down and fulfill, not the auction house or new buyer.

[Jamie.Merwin]

Sounds to me that the guy who agrees to this deal should be TARred and feathered

[comix4fun]

Thanks for the link.

 

It's missing the "glossary" or "definitions" section. There's a term mentioned in quotes in section 2(a) "gross art profit" which indicates there should be a separate definition of that term somewhere in the agreement, but there isn't. That's a gap.

 

So the scenario could reasonably be interpreted as profit to the seller. That's proceeds actually received over and above original purchase price. That would be the check cut to the seller from the auction house and not the hammer or final price.

 

However, the new buyer's basis would be the price he paid, all in.

 

So the original buyer could have paid $5k for a piece.

 

He sells it at auction for $10k, receiving $8k.

 

He pays a TAR on the profit between the $5k purchase and the $8k proceeds...15% of $3,000.

 

The auction buyer signs the TAR and his purchase basis is $10k (or whatever total purchase price is).

 

Absent a specific definition of "gross art profit" it would revert to standard definitions of terms and the actual profit to the original buyer. He's not entitled to a % of the money the original buyer never saw (BP, Tax, etc).

 

Chris, "gross art profit" is defined in 2(d). There is no missing glossary or definitions of terms section. And, it's bad for the seller. Under your example, he would pay 15% of $5,000 ($10K-$5K), not $3,000. 15% of $3,000 would be the "net" art profit, not the "gross". This is further evidenced in 2(d) which defines "gross art profit" as the difference between the agreed value on the standing TAR and the one in the new TAR. The value on the new TAR will be $10K in your example, not $8K. There is no one value for the buyer and another one for the seller - there is only the new single TAR value.

 

I did see that section, but that's not a real definition not in a legal sense, as it expands the explanation to throw in additional terms that need defining, then points to another section that adds another term that needs defining.

 

If that's what this TAR is supposed to accomplish they've left a giant potential argument for differing interpretation.

 

That's not how terms are typically defined in a contract. It also is vague as it pertains to actual sale price. To the seller, the actual sale price is the check they receive from the auction house. At least that's what the sophisticated seller, and his counsel, are going to claim.

 

It's hopelessly brief and incomplete.

 

If they wanted it to cover auction scenarios without having a fight on their hands, it should have been laid out with that contingency mentioned. It's not a bad idea to have examples cited.

 

We aren't talking pennies here. Something longer than a single sentence would have been advisable if they wanted to enforce it in the face of the myriad of basic US contract law issues this faces.

[buyatari]

 

I, personally, love that someone threw in the "living plus 21 years" in one part but failed to define any of the material terms for calculation.

 

 

The upside is, everyone can bid and buy without worrying that they're actually going to get stuck dealing with a document that's actually iron clad.

 

 

I can see most buyers not paying it any mind at all.

 

Have auction houses agreed to participate in this process? If they were to hold the work until the paperwork and payments were fully completed it would have an impact.

 

 

 

I can't imagine any American auction house selling these pieces would want to expand their liability or responsibility to include voluntarily taking on those tasks, gratuitously.

 

That would put them in the place of the original buyer. Everything you mentioned (paperwork and payments fully completed) are the original buyer's responsibility to chase down and fulfill, not the auction house or new buyer.

 

If an auction house is not involved then the seller wouldn't be able to complete the paperwork which he is required to do before releasing the artwork. The seller doesn't know the buyer by name when selling via an auction house. I wonder if any Garbage Pail Kids names have been submitted.

[comix4fun]

 

I, personally, love that someone threw in the "living plus 21 years" in one part but failed to define any of the material terms for calculation.

 

 

The upside is, everyone can bid and buy without worrying that they're actually going to get stuck dealing with a document that's actually iron clad.

 

 

I can see most buyers not paying it any mind at all.

 

Have auction houses agreed to participate in this process? If they were to hold the work until the paperwork and payments were fully completed it would have an impact.

 

 

 

I can't imagine any American auction house selling these pieces would want to expand their liability or responsibility to include voluntarily taking on those tasks, gratuitously.

 

That would put them in the place of the original buyer. Everything you mentioned (paperwork and payments fully completed) are the original buyer's responsibility to chase down and fulfill, not the auction house or new buyer.

 

If an auction house is not involved then the seller wouldn't be able to complete the paperwork which he is required to do before releasing the artwork. The seller doesn't know the buyer by name when selling via an auction house. I wonder if any Garbage Pail Kids names have been submitted.

 

 

I was thinking more along the lines of collecting payment for the artist, delivering payment and paperwork to the artist, and taking on responsibility for completion and payment. Especially since the consignor is the one who owes the money and is the part (presumably) under contract.

 

Section 13 covers new buyers who are informed of the TAR but do not sign it as well.

[delekkerste]

We aren't talking pennies here. Something longer than a single sentence would have been advisable if they wanted to enforce it in the face of the myriad of basic US contract law issues this faces.

 

I don't know all the ins and outs of contract law, but I think the terms/intention of the TAR are clear enough:

 

1. The contract is saying that BWS gets 15% of the "gross art profit" - that is 2(a).

 

2. "Gross art profit" is defined as the agreed value on the TAR less the agreed value on the old TAR - that is 2(d). No subtractions for commissions, shipping, taxes or any other expenses. Gross is gross.

 

3. "Agreed value" is defined as being the actual sale price if sold for money or FMV if transferred in any other way - that is 2(e).

 

Easy peasy.

 

Could/should additional definition of terms and scenarios and "for the avoidance of doubt" legalese have been inserted to leave no doubt anywhere? Sure. It should, for example, specify who/how FMV would be determined in the event of the piece being gifted or donated, for example. But, in the case of a straight sale at auction, I think it's pretty clear here what is being asked for and agreed upon. Whether it holds up in court (or not) for other reasons specific to contract law, I leave up to you lawyer types, but, otherwise, I think it's pretty clear what the contract is specifying.

 

I mean, sure, you and Jay are going to flex your lawyer muscles and say, "this won't hold up!" But, let me turn it around - if I was BWS and hired you or Jay to defend this TAR, I bet you guys could very easily do a 180-degree turn and defend the heck out of this thing, belittling the F out of a lawyer who tries to argue that this isn't clear enough.

[comix4fun]

We aren't talking pennies here. Something longer than a single sentence would have been advisable if they wanted to enforce it in the face of the myriad of basic US contract law issues this faces.

 

I don't know all the ins and outs of contract law, but I think the terms/intention of the TAR are clear enough:

 

1. The contract is saying that BWS gets 15% of the "gross art profit" - that is 2(a).

 

2. "Gross art profit" is defined as the agreed value on the TAR less the agreed value on the old TAR - that is 2(d). No subtractions for commissions, shipping, taxes or any other expenses. Gross is gross.

 

3. "Agreed value" is defined as being the actual sale price if sold for money or FMV if transferred in any other way - that is 2(e).

 

Easy peasy.

 

Could/should additional definition of terms and scenarios and "for the avoidance of doubt" legalese have been inserted to leave no doubt anywhere? Sure. It should, for example, specify who/how FMV would be determined in the event of the piece being gifted or donated, for example. But, in the case of a straight sale at auction, I think it's pretty clear here what is being asked for and agreed upon. Whether it holds up in court (or not) for other reasons specific to contract law, I leave up to you lawyer types, but, otherwise, I think it's pretty clear what the contract is specifying.

 

 

The problem is....your 2) doesn't match the TAR's 2)(d). That's the key component.

 

You had to interpret the TARs terms to get there. It doesn't say anything about "commissions, expenses, shipping or taxes".....none of those words exist in the TAR term you mention. And if you can intrepret it one way then, because of omission, vagueness, or failure (intentional or otherwise) on the drafter's part to lay out terms with clarity, then others can reasonably interpret it another way.

 

Also it's another of the several one-sided terms in this TAR that are just begging to get torn apart.

[delekkerste]

The problem is....your 2) doesn't match the TAR's 2)(d). That's the key component.

 

You had to interpret the TARs terms to get there. It doesn't say anything about "commissions, expenses, shipping or taxes".....none of those words exist in the TAR term you mention. And if you can intrepret it one way then, because of omission, vagueness, or failure (intentional or otherwise) on the drafter's part to lay out terms with clarity, then others can reasonably interpret it another way.

 

Also it's another of the several one-sided terms in this TAR that are just begging to get torn apart.

 

If BWS paid you to defend the TAR, let's face it - you could very easily do so if the shoe was on the other foot (say, if BWS hired you for stacks of sweet cash plus some sweet, sweet vintage art thrown in for good measure)!

 

2. "Gross art profit" is defined as the agreed value on the TAR less the agreed value on the old TAR - that is 2(d).

 

Yes, I put in the clarification, but there is really no clarification needed, as 2(e) specifies that the agreed upon value is simply the actual sale price.

 

I'm not saying that someone couldn't challenge the meaning of "actual sale price", but you gotta be *spoon*ing me if you're telling me that a good lawyer like yourself or Jay couldn't quite easily laugh the opposition out of the room if they tried to argue that (if it was in your interest to do so).

[westform]

I guess I'm missing something here. But, I can't figure out why anyone would even remotely consider buying a piece of comic art from a dealer, auction house or artist that required you to enter into a 'TAR' agreement. It would take away my enjoyment of the piece to know that I now 'owned' it with an artist and his team of lawyers. Whether it holds up in court at a later date or not, why even go down that road. Lots of art out there folks. This one is a NO brainer. Pass!

[suspense39]

http://www.hollywoodreporter.com/thr-esq/dean-valentine-mark-grotjahn-art-lawsuit-royalties-287748

[comix4fun]

The problem is....your 2) doesn't match the TAR's 2)(d). That's the key component.

 

You had to interpret the TARs terms to get there. It doesn't say anything about "commissions, expenses, shipping or taxes".....none of those words exist in the TAR term you mention. And if you can intrepret it one way then, because of omission, vagueness, or failure (intentional or otherwise) on the drafter's part to lay out terms with clarity, then others can reasonably interpret it another way.

 

Also it's another of the several one-sided terms in this TAR that are just begging to get torn apart.

 

If BWS paid you to defend the TAR, let's face it - you could very easily do so if the shoe was on the other foot (say, if BWS hired you for stacks of sweet cash plus some sweet, sweet vintage art thrown in for good measure).

 

2. "Gross art profit" is defined as the agreed value on the TAR less the agreed value on the old TAR - that is 2(d).

 

Yes, I put in the clarification, but there is really no clarification needed, as 2(e) specifies that the agreed upon value is simply the actual sale price.

 

I'm not saying that someone couldn't challenge the meaning of "actual sale price", but you gotta be *spoon*ing me if you're telling me that a good lawyer like yourself or Jay couldn't quite easily laugh the opposition out of the room if they tried to argue that (if it was in your interest to do so).

 

 

It would be a race as to whether we laughed them out of the courtroom over that point, or if they laughed us out of the courtroom over the "lack of privity".

 

I wouldn't want to work on this case on a contingent fee, I'll tell you that much.

[delekkerste]

It would be a race as to whether we laughed them out of the courtroom over that point, or if they laughed us out of the courtroom over the "lack of privity".

 

I wouldn't want to work on this case on a contingent fee, I'll tell you that much.

 

Jay/Chris: "This TAR isn't worth the paper it's printed on! None of these terms are adequately defined! Reasonable people can interpret this language in any number of different ways!"

 

BWS: "Hey guys - here's a $100K retainer and all the missing pages from "Red Nails". Congrats, you're both my new lawyers."

 

Jay/Chris: "Why, this language couldn't be any clearer if it was written in stone with the Ten Commandments! A five-year old couldn't not understand the crystal-clear definitions of these terms!"

[comix4fun]

http://www.hollywoodreporter.com/thr-esq/dean-valentine-mark-grotjahn-art-lawsuit-royalties-287748

 

 

California is the one state that's attempted to pull a modified version of the European standard here. It's limited though as the seller must reside in, or the transaction occur in, California. The percentage is 5%.

 

There's a constitutional question along side the regular letter of US copyright law questions (no such right exists there).

 

It gets dicier when an artist seeks to enforce a written agreement across all owners, and space and time and jurisdictions to parties unknown and uncertain at a rate that is effectively more than triple the rate under any existing law.

 

[comix4fun]

It would be a race as to whether we laughed them out of the courtroom over that point, or if they laughed us out of the courtroom over the "lack of privity".

 

I wouldn't want to work on this case on a contingent fee, I'll tell you that much.

 

Jay/Chris: "This TAR isn't worth the paper it's printed on! None of these terms are adequately defined! Reasonable people can interpret this language in any number of different ways!"

 

BWS: "Hey guys - here's a $100K retainer and all the missing pages from "Red Nails". Congrats, you're both my new lawyers."

 

Jay/Chris: "Why, this language couldn't be any clearer if it was written in stone with the Ten Commandments! A five-year old couldn't not understand this crystal-clear definition of these terms!"

 

 

As long as he doesn't say "Here's $100k and the missing pages from Red Nails AS LONG AS YOU WIN." then we're in business.

[Claudio]

The agreement actually has a place for them to put the price of the art, right? That would seem to make it an open and shut cas. No way would the buyer put less of a price on the piece than the price he paid. Ultimately, it is the buyer who has the most control. And, if the auction house is involved, I'm sure they would put the full purchase price since that is what was paid for the piece.

[comix4fun]

The agreement actually has a place for them to put the price of the art, right? That would seem to make it an open and shut cas. No way would the buyer put less of a price on the piece than the price he paid. Ultimately, it is the buyer who has the most control. And, if the auction house is involved, I'm sure they would put the full purchase price since that is what was paid for the piece.

 

 

Well the auction house isn't a party to the contract and not bound to be the one filling out the paperwork. It's the person who originally agreed to the TAR, and anyone who subsequently agreed to the TAR. The auction house is a means of transfer, and not a real party (legally) to the agreement.