As collectors, we often get excited when we come across a rare find. Our bidding paddles go up, our wallets come out, and we go as far as we can to obtain the item. But there are times when even when we make the winning bid, or cough-up the asked amount, and leave with an item, we really cannot keep it.
Here at Collectors Quest, we’ve already discussed how countries are now legally pursuing artifacts that belong to their nation’s history, often winning their court cases even when the objects sat in museums. And hubby and I have shared our story of vintage 20th Century Fox Film Studio ephemera, regaling how our legal purchase garnered us an item which was once stolen. (It turned out well for us; but it doesn’t always work out that way.) But there’s another category of troublesome collecting surrounding those items with legal contractual right issues.
These contractual rights, if ignored, differ from outright theft; but it still means that the new owner has obtained the object illegally. The result is that a collector will likely be court ordered to return the item — often with no compensation (other than, if they can afford it, the option of suing the person or party they purchased the forbidden item from). So this legalese is important to know.
The contractual rights collectors ought to know about are the Right of First Refusal (ROFR or RFR) and the Right of First Offer (ROFO, also known as a Right of First Negotiation). What these basically mean is that at the time these object were originally sold, awarded, or given away, they were done so with specific rights attached to them allowing the original creator, organization, or owner the first chance to obtain them. In the case of the Right of First Refusal, the item for sale must first be offered to the original owner or creator — sometimes at a price stated in the original contract. In the Right of First Offer or First Negotiation, the original owner or creator must be given the first chance to negotiate for the item before it is offered for sale to another.
Typically, these contractual rights are in the world of art, most often with artists but sometimes with galleries as well; but one area that collectors may be completely unaware of these issues is in the area of memorabilia.
There may be no honors higher for a performing artist than winning a major acting award; and for collectors, no higher a piece of memorabilia from their favorite performer. But buyer beware: Here be contractual rights.
The Oscar statue, for example, is only given away with a Right of First Refusal:
In consideration of your delivering said replica to me, I agree to comply with your rules and regulations respecting its use and not to sell or otherwise dispose of it or any other “Oscar” replica I have been awarded or have received, nor permit it or any other “Oscar” replica I have been awarded or have received to be sold or disposed of by operation of law, without first offering to sell it to you for the sum of $1.00.
This not only means that the winner of the Oscar, or their estate, may have to part with the award for a paltry dollar, but that any collector who purchased the Oscar is likely to only be given a dollar for it — no matter how much they paid for it in the first place.
This rule began after 1950; but note the “or any other I have been awarded” line as well. Which means Merian C. Cooper’s Academy Award win in 1952 may have forfeited the producer’s right to sell his earlier Oscar won in 1932-1933.
And, yes, I did say that these contractual rights are applied to the estate and heirs in perpetuity. A recent case of this involves Mary Pickford’s Oscar; when her heirs wanted to sell it, they had to offer it to academy officials for $10. (No details why the court ordered the $10 on the stated $1; inflation, perhaps?) And Pickford’s Oscar was won in 1929, which proves my point about the rights post -1950 Oscar winners signed away.
The Academy of Television Arts & Sciences’ Emmy Award also has such protections. (Actually, the Emmy protections are even more severe. Little screen; bigger rules.) In 2009, the sale of Estelle Getty’s 1988 Best Supporting Actress in a Comedy Emmy for her work in Golden Girls was halted by the academy:
“It’s a situation in which the award is not meant to be monetized,” says John Leverence, senior VP of Awards for the Academy of Television Arts & Sciences.
“The value of the award is in the recognition by your peers,” he says. “That intangible value is priceless; to monetize the award by selling it . . . is just not something the academy wants to see happen.”
Interestingly, one of America’s other greatest pop culture icons of achievement, the Super Bowl and it’s resulting rings, are not so protected. The difference here is that Super Bowl rings are not the award itself; while the rings are part of the player compensation for a win, the team gives them out at their own discretion and they are not so protected.
In any case, a collector ought to know the rules surrounding the memorabilia and objects they want to collect. These contractual rights are some of the biggest condition issues a collector can face.