Explain whether the Kohlers would be successful in a lawsuit against either Hindman, Inc., or Thune.

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Explain whether the Kohlers would be successful in a lawsuit against either Hindman, Inc., or Thune.

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An artist once produced a painting now called The Plains of Meudon. For a while, the parties in this case thought that the artist was Theodore Rousseau, a prominent member of the Barbizon school, and that the painting was quite valuable. With this idea in mind, the Kohlers consigned the painting to Leslie Hindman, Inc. (Hindman), an auction house. Among other things, the consignment agreement between the Kohlers and Hindman defined the scope of Hindman’s authority as agent. First, Hindman was obliged to sell the painting according to the conditions of sale spelled out in the auction catalog. Those conditions provided that neither the consignors nor Hindman made any warranties of authenticity. Second, the consignment agreement gave Hindman extensive and exclusive discretionary authority to rescind sales if in its “sole discretion” it determined that the sale subjected the company or the Kohlers to any liability under a warranty of authenticity. Despite having some doubts about its authenticity, Thune was still interested in the painting but wanted to have it authenticated before committing to its purchase. Unable to obtain an authoritative opinion about its authenticity before the auction, Leslie Hindman and Thune made a verbal agreement that Thune could return the painting within approximately thirty days of the auction if he was the successful bidder and if an expert then determined that Rousseau had not painted it. Neither Leslie Hindman nor anyone else at Hindman told the Kohlers about the questions concerning the painting or about the side agreement between Thune and Hindman. At the auction, Thune prevailed in the bidding with a high bid of $90,000, and he took possession of the painting without paying. He then sent it to an expert in Paris who decided that it was not a Rousseau. Thune returned the painting to Hindman within the agreed-upon period. Explain whether the Kohlers would be successful in a lawsuit against either Hindman, Inc., or Thune.

Explanation & AnswerSolution by a verified expert

Explanation

Organization H has made a verbal agreement with Individual T since Organization H has the power to rescind the sale or make a conditional promise on behalf of Individual K. Such an agreement with Individual T has increased the chances of profit at the auction, which is an act in good faith by Organization H. It proves that Organization H does not breach the consignment agreement. So, Individual K may not succeed in the lawsuit against Individual T or Organization H. The case would have been different if the agreement is made to cause harm to Individual K or for the sole benefit of Organization H or Individual T.

Verified Answer

Individual K is not going to be successful in a lawsuit against Organization H and Individual T since there is no breach in the consignment agreement between Individual K and Organization H. Organization H has acted in good faith making the actions legitimate. If Organization H did not act in good faith, a breach may have occurred. Individual K could then have filed a successful lawsuit, which is not the case here.

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