# Guarantees, Irrevocable Bids, and the Price You Read > A third-party guarantee turns an auction into a negotiated sale with a public number: the guarantor's fee sits inside the house's commission and never appears in the result. > The Study - 2026-08-02 > Canonical HTML: https://iconotheca.com/study/guarantees-and-irrevocable-bids/ ## Key points - A minimum price guarantee is a floor the house sells to the consignor; a third-party guarantee is that floor resold to an outside party who commits to an irrevocable written bid before the sale. - The guarantor's fee comes out of the house's own commission rather than out of the price, so it never appears in the published result. - ArtTactic figures reported by Apollo put 73 per cent of post-war and contemporary evening sale value under guarantee in the first half of 2025, against 36 per cent of New York evening sale value in 2016. - New York City repealed its auction disclosure rules in 2022, so guarantee disclosure in the largest saleroom market now rests on the houses' own conditions of sale rather than on statute. ## A guarantee is a floor, and the floor gets sold twice ## The guarantor's fee is real money and it is not in the price ## One record, read with the mechanism in view ## How much of the top of the market is now pre-sold ## What guaranteed lots do to the evidence The published result of a guaranteed lot is not false. It is simply the output of a transaction whose most important terms were agreed in private before the room opened, and the number carries none of them. A specialist pricing a comparable, a curator writing a provenance line, and an index compiling hammer records all inherit the same gap, and only the first of them is usually aware of it. The discipline is to treat every result at the top of the market as a compound of a price and a financing arrangement, to establish which symbols the lot carried on the day rather than at cataloguing, and to say plainly, in any note that will be read later, that the guarantee level and the guarantor's fee were not disclosed. ## Questions **If a guaranteed lot sells above the guarantee, who takes the upside?** It is shared, on terms agreed before the sale and never published. Christie's states that the third party's remuneration may be a fixed fee or an amount calculated against the final hammer price, and commentary on Sotheby's arrangements describes a share of the commission and of the overage above the guaranteed level, capped in some cases at the total buyer's premium. The consignor's share of the upside above the guarantee is a separate negotiation again. **Does the symbol tell me the level of the guarantee?** No. The symbols tell you that a minimum price guarantee exists and, with the second symbol, that the risk has been shared with a third party who has placed an irrevocable written bid. Neither the guaranteed figure nor the level of the irrevocable bid is published, and neither is the fee. You are told the structure, not the numbers. **Can the guarantor bid above its own irrevocable bid?** Yes. Christie's states expressly that the third party may bid for the lot above the irrevocable written bid, and that where it is the successful bidder it must pay the hammer price and buyer's premium in full. This is why the presence of a guarantor does not tell you that a competitive result was not competitive; it tells you that one participant entered the room with a floor already agreed. **Should a guaranteed result be used as a comparable?** It can be, provided the guarantee is carried through the analysis rather than dropped. A guaranteed hammer sets a lower bound on what one committed party would pay, which is genuine information. What it does not establish is the depth of demand at that level, and where the lot appears to have sold on or near the guarantee, the result should be read as a floor that was tested rather than a clearing price that was found. ## Sources - [1] Christie's Hong Kong Limited, 'Conditions of Sale', 8 February 2022; see paragraph E2 (authenticity warranty), 'Symbols used in Sale Particulars', and 'Important Notices' on minimum price guarantees, third party guarantees and other arrangements. Publisher's own terms, hosted by a third party. - [2] Sotheby's, 'Conditions of Business for Buyers, New York' (buyer's premium effective 17 February 2025), Condition 7(d) on bidding up to the reserve or the irrevocable bid. - [3] Jane Morris, 'Handle with care: the problem with auction guarantees', Apollo, 7 October 2025, reporting ArtTactic data. - [4] Anna Brady, 'New world record for Canaletto as view of Venice sells for GBP 31.9m', The Art Newspaper, 1 July 2025. - [5] Amber Lee, 'Secrecies, Guarantees, and Securities in the World of Auction Houses', Center for Art Law, 22 July 2020. - [6] Rachel Sundar, 'Unexpected Deregulation: New York City Shakes Up Art Market by Repealing Long-Standing Auction Industry Regulations', Center for Art Law, 11 April 2024. - [7] Orley Ashenfelter and Kathryn Graddy, 'Art Auctions: A Survey of Empirical Studies', NBER Working Paper 8997, June 2002.