ABSTRACT
This chapter covers three basic models of auction guarantees: in-house auction guarantee, third-party guarantee and stand-by auction guarantee (irrevocable bid). The first section analyses the basic models and defines the perplexing legal nature thereof. It argues that auction guarantee is a combination of sale under a deferring condition and the financial insurance contract. This section also aims to check whether auction guarantee has affected the auctioneer’s fiduciary position towards the consignor. It argues that auction guarantee is a supplementary arrangement to the consignment agreement and does not affect the auctioneer’s fiduciary position. The second section aims to define the reasons for the absence of auction guarantees from the continental auctions. It argues that the lack of auction guarantees results from the structure of the European art market and unfavourable legal environment. The third section discusses the negative impact of auction guarantees on the integrity of the art market, most notably, on the price levels and sound competition. It aims to show advantages and disadvantages of the auction guarantees and find out possible means of reform thereof. It argues that disadvantages of the auction guarantees can be solved by switching to collective art funding schemes. The conclusion summarises the main findings of the chapter.
