Need Perspective on an Awkward Consignment Agreement

[kgizo]

I would not pay it. It feels like a bait and switch from a consignment deal to a purchase agreement. Were they willing to negotiate on it at all? If they were open to different terms (similar to other consignment agreements - ie giving them a certain amount of time for it to sell, perhaps a fee for things that don’t sell, etc) then I would be willing to pay something. But as worded, they had the right to terminate the consignment deal and purchase everything at the minimum on day 1 would be a no go for me.

 

[nala]

I think shipping is a non negotiable and that it is your responsibility to pay it. It was insured, protected, is a cost that does not benefit the seller. Although there was no contract in place, precisely bc there was no contract in place, you knew that you were taking a risk by sending your pieces in. I think it is generous that they are splitting half with you and have not benefited from the sale in any which way. I would bill you the full amount. But also, as a dealer, I would have notified you of this shipping cost upfront.

Think in terms of shipping to GIA for a report. They profit from you but still do not pay your shipping and insurance.

It was your responsibility to deliver these items. Perhaps you could have delivered them in person. It occurs to me that this vendor does not perceive this shipping cost as a burden to you given the net worth of your collection. Perhaps high end dealers are not accustomed to squabbling over what they consider negligible amount for their customers and hence why they did not spell out the shipping costs beforehand.

 

[Mreader]

I think shipping is a non negotiable and that it is your responsibility to pay it. It was insured, protected, is a cost that does not benefit the seller. Although there was no contract in place, precisely bc there was no contract in place, you knew that you were taking a risk by sending your pieces in. I think it is generous that they are splitting half with you and have not benefited from the sale in any which way. I would bill you the full amount. But also, as a dealer, I would have notified you of this shipping cost upfront.

Think in terms of shipping to GIA for a report. They profit from you but still do not pay your shipping and insurance.

It was your responsibility to deliver these items. Perhaps you could have delivered them in person. It occurs to me that this vendor does not perceive this shipping cost as a burden to you given the net worth of your collection. Perhaps high end dealers are not accustomed to squabbling over what they consider negligible amount for their customers and hence why they did not spell out the shipping costs beforehand.

That's a lot of speculation (vendor thinking buyer would think shipping is chump change since pieces are of value, vendor isn't accustomed to conflict, etc.) Bottom line, vendor didn't tell the OP that she was responsible for those charges until after the fact. OP isn't on the hook. I like @LilAlex 's analogy regarding the tires. Cost of doing business.

 

[nala]

That's a lot of speculation (vendor thinking buyer would think shipping is chump change since pieces are of value, vendor isn't accustomed to conflict, etc.) Bottom line, vendor didn't tell the OP that she was responsible for those charges until after the fact. OP isn't on the hook. I like @LilAlex 's analogy regarding the tires. Cost of doing business.

It is speculation. It is mine. Everyone else replying here is speculating as well. I don’t know how high-end businesses operate, but I am sure they don’t operate like anyone selling tires off their neighborhood or offer up app.

Anywho, I stand by my opinion, doesn’t mean anyone else has to. Everyone posting here is offering their insight as per OP’s request. Not sure why my post stood out to you as anything other than my perspective.

 

[tyty333]

I think people are answering two different questions here...

What are you obligated to pay, legally, and what may be fair to both parties to pay?

I answered the "legal" question...which of course is my opinion because I'm not a lawyer and don't know the states involved.

I did not step into the "what is fair" question because IMO, that's harder to answer.

I was wondering...
Did you gain anything of value from what they provided? (appraisals, etc or do you think they were underestimated and really of
no value to you?) You dont have to answer this...just something to think about.

 

[Rockdiamond]

$2700 for shipping and insurance????!
Wow that’s a huge number unless we’re talking value well into the millions of dollars.

 

[lulu_ma]

$2700 for shipping and insurance????!
Wow that’s a huge number unless we’re talking value well into the millions of dollars.

Great to get a trade perspective!

 

[Rockdiamond]

As a general rule- we always discuss shipping costs before doing any sort of shipping.
My advice to members is always to get that up front.
WIthout a doubt, shipping costs have risen......but $2700?????

 

[Rfisher]

That 2700 is going both ways or one way on the vendors shipping/insurance account?

 

[Avondale]

$2700 for shipping and insurance????!
Wow that’s a huge number unless we’re talking value well into the millions of dollars.

Not even close. The value was high, hence why it was edited out, but it was very much not "into the millions of dollars".

But you raise a good point, if 2700 is even realistic for shipping.

<Nov 6 2023>

 

[Rfisher]

Separate question

and that only the IRS cared what I paid, since if I made a profit, they would want their cut.

Has anyone successfully only paid taxes on a 1099 amount you received from a gem/jewelry sale minus what you paid for the item originally.
I was under the impression what I paid years ago didn’t matter. Maybe I need a new CPA?

 

[Rockdiamond]

That 2700 is going both ways or one way on the vendors shipping/insurance account?

Holy cow if that was for ONE way???????
Our cost to ship and insure $100k is about $300+-

 

[Lookinagain]

Separate question


Has anyone successfully only paid taxes on a 1099 amount you received from a gem/jewelry sale minus what you paid for the item originally.
I was under the impression what I paid years ago didn’t matter. Maybe I need a new CPA?

That's a great question. I assume you are talking about Federal and not state income tax?

 

[Rfisher]

But you raise a good point, if 2700 is even realistic for shipping.

<Nov 6 2023>

quoting you but not necessarily pointing this towards you

Shipping, insurance and ‘handling’ I bet.
Even if OP didnt receive a written vaulation/assessment on their items - the vendor still put time in and performed a service of sorts.

how many business people here/ vendors here would pay a potential but eventually declined customers freight and NOT ask for something in return for services/labor/time that were actually performed, somehow?

what would any of the appraisers ( hope they willingly answer - don’t want to force it by tagging) that participate here do? Charge nothing for their time invested? Absorb freight?


this is totally separate from the vendor changing terms on OP at the last minute like a sneaky sneak shyster.

the vendor wasn’t set up for this scenario period.
sounds like a lot of ‘going off the cuff’.

did they change a separate fee for the inspection? @Mrsz1ppy

 

[Mrsz1ppy]

quoting you but not necessarily pointing this towards you

Shipping, insurance and ‘handling’ I bet.
Even if OP didnt receive a written vaulation/assessment on their items - the vendor still put time in and performed a service of sorts.

how many business people here/ vendors here would pay a potential but eventually declined customers freight and NOT ask for something in return for services/labor/time that were actually performed, somehow?

what would any of the appraisers ( hope they willingly answer - don’t want to force it by tagging) that participate here do? Charge nothing for their time invested? Absorb freight?


this is totally separate from the vendor changing terms on OP at the last minute like a sneaky sneak shyster.

the vendor wasn’t set up for this scenario period.
sounds like a lot of ‘going off the cuff’.

did they change a separate fee for the inspection? @Mrsz1ppy

No. The inspection was to determine listing, retail prices, I thought. I got minimum prices, which were about 10% above my cost, or less if i had overpaid. I wanted market prices, which is what I am used to from other consignees. I was told I should be thrilled to recoup most of what I paid, but that the vendor would certainly buy my 4 Kashmirs if they didn’t sell in a reasonable timeframe.

 

[Mrsz1ppy]

That's a great question. I assume you are talking about Federal and not state income tax?

Of course, if you have a receipt. Long term or short term gain has to be proven, and cost basis too.

 

[Mrsz1ppy]

Holy cow if that was for ONE way???????
Our cost to ship and insure $100k is about $300+-

No, 2 ways.

 

[Mrsz1ppy]

I think people are answering two different questions here...

What are you obligated to pay, legally, and what may be fair to both parties to pay?

I answered the "legal" question...which of course is my opinion because I'm not a lawyer and don't know the states involved.

I did not step into the "what is fair" question because IMO, that's harder to answer.

I was wondering...
Did you gain anything of value from what they provided? (appraisals, etc or do you think they were underestimated and really of
no value to you?) You dont have to answer this...just something to think about.

I wish I had gotten market value. That would have been worth something. I even provided retail comps on two items which was 2 times as much on a Kashmir and 8 times as much on a bracelet. No response to the comparable; only the termination: I just I don’t think this is going to work out.

 

[Mrsz1ppy]

That 2700 is going both ways or one way on the vendors shipping/insurance account?

Both ways. Would have cost me @$800 one way USPS Registered. I know some PSers have had problems with it, but I have used it to send things to AGL for years and not had a problem besides it being slow.

 

[lulu_ma]

I wish I had gotten market value. That would have been worth something. I even provided retail comps on two items which was 2 times as much on a Kashmir and 8 times as much on a bracelet. No response to the comparable; only the termination: I just I don’t think this is going to work out.

Oh so I missed this part of the story. The vendor terminated the negotiation/ discussion? This is yet another tick in the ‘you don’t owe them a cent’ column.

To cover their cost and to win your consignment of 40+ items, they could have stricken or modified the problem clause…

 

[LightBright]

I’m not in any profession that could legitimately weigh in, but I generally try to meet people halfway.

Hence, I would offer to pay half the shipping. I’d look at it as not burning bridges, $800 which is what you would have paid, plus a handling and professional fee. (But wow, that’s high for shipping plus professional fees.)

These are not every day pieces. I wonder if you should be speaking to a jeweler that deals in finer gems (Enhoerning, Jogani type dealers). Or maybe talk to an auction house. Maybe someone (one of the appraisers) here can speak in private about how best to sell. I’d try to do this as securely as possible, trusted vendors only. Kashmir sapphires seem to be going for a premium now and vendors who don’t normally deal in fine stones might not be the best way to generate interest to get current market value. Also, certain markets might be stronger than others etc. etc.

Good luck, I hope you have a smoother transaction with Lang’s.

 

[Rockdiamond]

100% for sure, I'm jaded.....
In my experience- consumers selling high value items have so much less ability to offer value, that they are forced to sell at prices well below wholesale if we're talking selling quickly for cash.
If an item is $25k in a high end store, maybe $18k online. If you were buying this item, would you feel comfortable sending that much money to an individual you did not know? You'd think the private seller would need to be at least a couple thousand cheaper. If not more.
Then we have consignment. I never wanted to get into that part of the business because I feel it's a big risk for us as a company.
To easy to mess up or not meet expectations, leading to client dissatisfaction.
However, I know some have had good luck, and there are definitely companies that are set up for it.

Maybe auctions are better.....but generally, fees are way up there too...

Super rare items- Kashmir Sapphires, for example- definitely present challenges in terms of a consumer getting anywhere near retail.

 

[Mrsz1ppy]

I’m not in any profession that could legitimately weigh in, but I generally try to meet people halfway.

Hence, I would offer to pay half the shipping. I’d look at it as not burning bridges, $800 which is what you would have paid, plus a handling and professional fee. (But wow, that’s high for shipping plus professional fees.)

These are not every day pieces. I wonder if you should be speaking to a jeweler that deals in finer gems (Enhoerning, Jogani type dealers). Or maybe talk to an auction house. Maybe someone (one of the appraisers) here can speak in private about how best to sell. I’d try to do this as securely as possible, trusted vendors only. Kashmir sapphires seem to be going for a premium now and vendors who don’t normally deal in fine stones might not be the best way to generate interest to get current market value. Also, certain markets might be stronger than others etc. etc.

Good luck, I hope you have a smoother transaction with Lang’s.

This was a specialty vendor, that only deals in unheated gemstones. “Trusted” here on PS

 

[Mrsz1ppy]

100% for sure, I'm jaded.....
In my experience- consumers selling high value items have so much less ability to offer value, that they are forced to sell at prices well below wholesale if we're talking selling quickly for cash.
If an item is $25k in a high end store, maybe $18k online. If you were buying this item, would you feel comfortable sending that much money to an individual you did not know? You'd think the private seller would need to be at least a couple thousand cheaper. If not more.
Then we have consignment. I never wanted to get into that part of the business because I feel it's a big risk for us as a company.
To easy to mess up or not meet expectations, leading to client dissatisfaction.
However, I know some have had good luck, and there are definitely companies that are set up for it.

Maybe auctions are better.....but generally, fees are way up there too...

Super rare items- Kashmir Sapphires, for example- definitely present challenges in terms of a consumer getting anywhere near retail.

All good feedback. I consulted one of the appraisers on PS who suggested Heritage Auctions. His feeling was that consignment is tricky, and he’s in the business!

I don’t think I could get retail—know I can’t because of the trust factor. That’s why I’m willing to pay 35-40% commission off of retail pricing. I think that’s the best I can do.

 

[Mrsz1ppy]

Oh so I missed this part of the story. The vendor terminated the negotiation/ discussion? This is yet another tick in the ‘you don’t owe them a cent’ column.

To cover their cost and to win your consignment of 40+ items, they could have stricken or modified the problem clause…

Yes. That was all I wanted.

 

[Rfisher]

The gemstone jewelry world is both large and small at the same time. And I don’t mean just on PS, although I think chances are good if someone alerts them, they’ll come on here to chime in.

I’d hate to ever have $800- 1350 of choosing not to split shipping/insurance/handling come back to bite me in the buttocks when trying to ever sell or buy something else again - because the gem/ jewelry world is both large and small and there’s always two/three sides of perception to every story. whatever version the vendor might decide to tell their trade peers.

it does sound like you have every right to feel miffed and misled. I still think expecting them to provide a free service and cover all shipping/insurance both ways completely is a bit much, even with the miscommunication/misrepresentation/disagreement.

im really glad you have your items back and they are safe and unmolested.
I’m glad the vendor didn’t try to talk to you about a partial share in shipping payment before shipping your items. Holding them hostage.

I truly wish you the best in your sale(s) and in health.

 

[Mrsz1ppy]

The gemstone jewelry world is both large and small at the same time. And I don’t mean just on PS, although I think chances are good if someone alerts them, they’ll come on here to chime in.

I’d hate to ever have $800- 1350 of choosing not to split shipping/insurance/handling come back to bite me in the buttocks when trying to ever sell or buy something else again - because the gem/ jewelry world is both large and small and there’s always two/three sides of perception to every story. whatever version the vendor might decide to tell their trade peers.

it does sound like you have every right to feel miffed and misled. I still think expecting them to provide a free service and cover all shipping/insurance both ways completely is a bit much, even with the miscommunication/misrepresentation/disagreement.

im really glad you have your items back and they are safe and unmolested.
I’m glad the vendor didn’t try to talk to you about a partial share in shipping payment before shipping your items. Holding them hostage.

I truly wish you the best in your sale(s) and in health.

Good thoughts.

Although I doubt the vendor will, because I have tried to not out them.

 

[lulu_ma]

All good feedback. I consulted one of the appraisers on PS who suggested Heritage Auctions. His feeling was that consignment is tricky, and he’s in the business!

I don’t think I could get retail—know I can’t because of the trust factor. That’s why I’m willing to pay 35-40% commission off of retail pricing. I think that’s the best I can do.

There are some Boston based auction houses that have been getting high prices for Kashmir sapphs. Bostonians love blue. You might want to talk to Grogan or Skinner.

 

[Mrsz1ppy]

Thank you to everyone who chimed in with their perspective. After considering all the different points of view, I offered to pay $300/$100,000 of value, because it is fair that we each pay our way. I initiated sending, and the vendor initiated returning.

The vendor has not responded to my offer.

 

[Mrsz1ppy]

Update. The vendor sent me a PayPal invoice for the $900 I offered, and the $1,367.50 they wanted. The vendor expressed a lack of understanding about why another vendor‘s shipping costs had any relationship to theirs. I decided not to explain, because in my experience my point of view is not important to them.

So this is the end of the story. Thank you again to all who offered their take on the situation. I try to put myself in the other parties shoes in these situations, and try to treat them as I would want to be treated. I did not succeed in making the vendor satisfied, but I did what I thought was warrante, taking everything thing into consideration.