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<p>[QUOTE="Owle, post: 2248864, member: 22004"]Leading graders agree over 80% of the time on their grade assignments, and though there is an art of grading and room for argument, there is a pretty high statistical correlation between various coins and reasonable grades. And if a dealer prices coins say just below Greysheet based on their assignment of a grade, MS64 for example, and then putting a numerical grade on their holders it is pretty clear what the contract is on the transaction. When money changes hands in commercial transactions you are under the commercial code and state and federal laws.</p><p><br /></p><p>Here is another discussion of the issue.</p><p><br /></p><p>"There is a huge difference in the law between making a vague assertion about an item’s quality or its value and making a specific assertion about its condition. This goes for any object which can be moved, including coins (Article 2 of the UCC, which all 50 states have adopted in some form or another, and which governs the sale of such items, calls these “moveable goods,” as distinguished from the sale of services). For example, a seller who says that a car is in “great shape” or that a coin has “monster toning” is said to be “puffing,” that is, merely hyping his goods. If the car runs less than great, or the coin has only a little toning, the buyer cannot seek damages from the seller because the assertions were vague and not provable. The reason is obvious: everyone has their own conception of what it means for a car to be in “great shape” or for a coin to have “monster toning,” and there is and can be no uniform understanding of what these concepts mean. It would be unfair to hold someone responsible if another person didn't agree that the car was great or the coin had monster toning.</p><p><br /></p><p>"Contrast that situation with one in which the seller says that his car “has a rebuilt engine and a new muffler.” That’s a specific representation capable of empiric proof. If, in fact, the car does not have a rebuilt engine or a new muffler, the seller can be liable for the damages caused by his misrepresentation. That also is a fair result, provided that the buyer actually relied on what the seller said when deciding to buy. (The legal term for this is called "detrimental reliance".)</p><p><br /></p><p>"Now, there are certain fungible items in everday life that are bought and sold according to their condition or grade. Take beef, for example. Beef wholesalers sell their cuts to retailers according to a grading system set out by the USDA and known to all who are in the business. One type of beef has certain known characteristics and is priced accordingly. Another type of beef may be of a lesser quality, and therefore be of a lesser grade on the scale, and command a lesser price. Eggs are another example. grade A eggs have certain predetermined characteristics that distinguish them from other grades of eggs. If a seller of eggs says to a potentional buyer, “These twelve dozen eggs are all grade A,” and the eggs are a lesser grade, the seller is liable to the buyer. There is a whole body of law which addresses the sale and purchase of items that are valued according to a grading system, like beef and eggs.</p><p><br /></p><p>"And coins. Like beef and eggs, coins are commonly bought and sold according to their grade. Yes, clearly there is a subjective element to grading coins, but that is true with grading eggs or beef or any number of other items, and there is a definitive standard against which any particular coin can be measured to determine its grade. Indeed, the graysheet prices coins sight unseen by saying that, in a given case, a particular year and mint of mercury dime is worth so-and-so. It simply cannot be denied that the coin industry relies on coin grading to determine value, just as cattle and poultry producers rely on their own grading system.</p><p><br /></p><p>"Thus, a seller who says that a particular coin is in a particular grade has made a representation about that coin. The law calls what he said an “express warranty” that the coin is, in fact, the grade that the seller said it was. (UCC Article 2, § 2-313(1)(a) provides that “[a]ny affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis for the bargain creates an express warranty that the goods shall conform to the affirmation of promise.”) If the buyer buys the coin and finds that, in fact, it’s a lesser grade, and as long as the buyer relied on the seller’s representation regarding the grade in deciding to buy the coin, then the buyer has a legitimate claim for damages. (If the buyer did not rely on the seller’s misrepresentation, then the buyer has no claim, and rightly so.)</p><p><br /></p><p>"The UCC provides a variety of remedies for a frustrated buyer (and also for sellers when the buyers refuse to buy). The underlying principle is that when a contract is breached, the non-breaching party is entitled to the “benefit of the bargain” he struck. In the case of a seller being the breaching party, the buyer can demand the money back (plus any “reasonably foreseeable” consequential damages), the buyer can “cover” (that is, go out into the market, buy the product, and then charge the purchase price to the original seller), or, perhaps most commonly, recover the difference between the item as warranted and as actually received (Article 2, § 2-714(2) of the UCC says, “[t]he measure of damages for breach of warranty is the difference . . . between the value of the goods accepted and the value they would have had if they had been as warranted . . . .”)</p><p><br /></p><p>"Thus, if a seller tells a buyer that a coin is, say, MS 65, and in fact the coin grades at MS 62, and the difference between MS 65 and MS 62 is $100, the buyer would be entitled to the lower-valued MS 62 and--note that I said "and"!--the additional $100 in order to permit the buyer to receive everything he bargained for. (Or the buyer could buy a “real” MS 65 and send the bill to the original seller, or the buyer could just demand his money back. Buyer chooses the remedy he desires.)</p><p><br /></p><p>"As sellers, you might say that grading standards are too subjective and that PCGS or some other reputable grading service might grade a coin MS 65 one day and the same coin MS 64 or MS 66 the next. this is a fair argument, but against a properly-prepared plaintiff it won't carry the day. Yes, there is an element of subjectivity in grading, and yes, PCGS's and others' results might vary, even for the same coin, but how are you going to prove it? PCGS won’t submit an affidavit on your behalf that they sometimes grade the same coin differently. The best you’ll be able to do is to take the stand in your own defense (or hire another coin dealer to act as an expert) and try to explain why a definitive coin grading system can’t really be adhered to or followed accurately, all this after the court has heard from the disappointed buyer who has presented compelling evidence of his own about how the entire coin industry relies on the grading system. I contend that that's not a situation most sellers would like to be in.</p><p><br /></p><p>"When (if) you represent that a particular coin is a particular numerical grade, you have made an express warranty that the coin is, in fact, the grade you represented it to be, and if it isn’t, you can be held liable for damages. Beware, especially if you live within New York, Connecticut, or Vermont (the three states comprising the United States Court of Appeals for the Second Circuit).</p><p><br /></p><p>"(Note well, too, that may be just the beginning. If the plaintiff proves that it was more likely than not that you had a “bad” motive in making your representation, you can be found liable for multiple damages *and* costs and the plaintiffs’ attorneys fees! Not to mention criminal liability!)</p><p><br /></p><p>"But don’t despair. As sellers there are things you can do to limit your exposure. You can disclaim warranties in your sales receipt, for example (although this is a bit tricky to do legally–the UCC has several sections on exactly how it must be done to be valid), or you can assert that the grade is merely your opinion of the coin’s grade and that the seller should not rely on anything you say about the grade. You also could say that a coin was “probably” or “likely” a particular grade. Or you could just say that it’s “premium” or “gem” or “high quality” or use other “puffing” language. Just be careful, that’s all.</p><p><br /></p><p>"Again, take it or leave it, but ignore it at your peril."</p><p><a href="http://forums.collectors.com/messageview.cfm?catid=26&threadid=295472&highlight_key=y&keyword1=Another%20Court%20Case%20involving%20Grading" target="_blank" class="externalLink ProxyLink" data-proxy-href="http://forums.collectors.com/messageview.cfm?catid=26&threadid=295472&highlight_key=y&keyword1=Another%20Court%20Case%20involving%20Grading" rel="nofollow">http://forums.collectors.com/messageview.cfm?catid=26&threadid=295472&highlight_key=y&keyword1=Another Court Case involving Grading</a>[/QUOTE]</p><p><br /></p>
[QUOTE="Owle, post: 2248864, member: 22004"]Leading graders agree over 80% of the time on their grade assignments, and though there is an art of grading and room for argument, there is a pretty high statistical correlation between various coins and reasonable grades. And if a dealer prices coins say just below Greysheet based on their assignment of a grade, MS64 for example, and then putting a numerical grade on their holders it is pretty clear what the contract is on the transaction. When money changes hands in commercial transactions you are under the commercial code and state and federal laws. Here is another discussion of the issue. "There is a huge difference in the law between making a vague assertion about an item’s quality or its value and making a specific assertion about its condition. This goes for any object which can be moved, including coins (Article 2 of the UCC, which all 50 states have adopted in some form or another, and which governs the sale of such items, calls these “moveable goods,” as distinguished from the sale of services). For example, a seller who says that a car is in “great shape” or that a coin has “monster toning” is said to be “puffing,” that is, merely hyping his goods. If the car runs less than great, or the coin has only a little toning, the buyer cannot seek damages from the seller because the assertions were vague and not provable. The reason is obvious: everyone has their own conception of what it means for a car to be in “great shape” or for a coin to have “monster toning,” and there is and can be no uniform understanding of what these concepts mean. It would be unfair to hold someone responsible if another person didn't agree that the car was great or the coin had monster toning. "Contrast that situation with one in which the seller says that his car “has a rebuilt engine and a new muffler.” That’s a specific representation capable of empiric proof. If, in fact, the car does not have a rebuilt engine or a new muffler, the seller can be liable for the damages caused by his misrepresentation. That also is a fair result, provided that the buyer actually relied on what the seller said when deciding to buy. (The legal term for this is called "detrimental reliance".) "Now, there are certain fungible items in everday life that are bought and sold according to their condition or grade. Take beef, for example. Beef wholesalers sell their cuts to retailers according to a grading system set out by the USDA and known to all who are in the business. One type of beef has certain known characteristics and is priced accordingly. Another type of beef may be of a lesser quality, and therefore be of a lesser grade on the scale, and command a lesser price. Eggs are another example. grade A eggs have certain predetermined characteristics that distinguish them from other grades of eggs. If a seller of eggs says to a potentional buyer, “These twelve dozen eggs are all grade A,” and the eggs are a lesser grade, the seller is liable to the buyer. There is a whole body of law which addresses the sale and purchase of items that are valued according to a grading system, like beef and eggs. "And coins. Like beef and eggs, coins are commonly bought and sold according to their grade. Yes, clearly there is a subjective element to grading coins, but that is true with grading eggs or beef or any number of other items, and there is a definitive standard against which any particular coin can be measured to determine its grade. Indeed, the graysheet prices coins sight unseen by saying that, in a given case, a particular year and mint of mercury dime is worth so-and-so. It simply cannot be denied that the coin industry relies on coin grading to determine value, just as cattle and poultry producers rely on their own grading system. "Thus, a seller who says that a particular coin is in a particular grade has made a representation about that coin. The law calls what he said an “express warranty” that the coin is, in fact, the grade that the seller said it was. (UCC Article 2, § 2-313(1)(a) provides that “[a]ny affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis for the bargain creates an express warranty that the goods shall conform to the affirmation of promise.”) If the buyer buys the coin and finds that, in fact, it’s a lesser grade, and as long as the buyer relied on the seller’s representation regarding the grade in deciding to buy the coin, then the buyer has a legitimate claim for damages. (If the buyer did not rely on the seller’s misrepresentation, then the buyer has no claim, and rightly so.) "The UCC provides a variety of remedies for a frustrated buyer (and also for sellers when the buyers refuse to buy). The underlying principle is that when a contract is breached, the non-breaching party is entitled to the “benefit of the bargain” he struck. In the case of a seller being the breaching party, the buyer can demand the money back (plus any “reasonably foreseeable” consequential damages), the buyer can “cover” (that is, go out into the market, buy the product, and then charge the purchase price to the original seller), or, perhaps most commonly, recover the difference between the item as warranted and as actually received (Article 2, § 2-714(2) of the UCC says, “[t]he measure of damages for breach of warranty is the difference . . . between the value of the goods accepted and the value they would have had if they had been as warranted . . . .”) "Thus, if a seller tells a buyer that a coin is, say, MS 65, and in fact the coin grades at MS 62, and the difference between MS 65 and MS 62 is $100, the buyer would be entitled to the lower-valued MS 62 and--note that I said "and"!--the additional $100 in order to permit the buyer to receive everything he bargained for. (Or the buyer could buy a “real” MS 65 and send the bill to the original seller, or the buyer could just demand his money back. Buyer chooses the remedy he desires.) "As sellers, you might say that grading standards are too subjective and that PCGS or some other reputable grading service might grade a coin MS 65 one day and the same coin MS 64 or MS 66 the next. this is a fair argument, but against a properly-prepared plaintiff it won't carry the day. Yes, there is an element of subjectivity in grading, and yes, PCGS's and others' results might vary, even for the same coin, but how are you going to prove it? PCGS won’t submit an affidavit on your behalf that they sometimes grade the same coin differently. The best you’ll be able to do is to take the stand in your own defense (or hire another coin dealer to act as an expert) and try to explain why a definitive coin grading system can’t really be adhered to or followed accurately, all this after the court has heard from the disappointed buyer who has presented compelling evidence of his own about how the entire coin industry relies on the grading system. I contend that that's not a situation most sellers would like to be in. "When (if) you represent that a particular coin is a particular numerical grade, you have made an express warranty that the coin is, in fact, the grade you represented it to be, and if it isn’t, you can be held liable for damages. Beware, especially if you live within New York, Connecticut, or Vermont (the three states comprising the United States Court of Appeals for the Second Circuit). "(Note well, too, that may be just the beginning. If the plaintiff proves that it was more likely than not that you had a “bad” motive in making your representation, you can be found liable for multiple damages *and* costs and the plaintiffs’ attorneys fees! Not to mention criminal liability!) "But don’t despair. As sellers there are things you can do to limit your exposure. You can disclaim warranties in your sales receipt, for example (although this is a bit tricky to do legally–the UCC has several sections on exactly how it must be done to be valid), or you can assert that the grade is merely your opinion of the coin’s grade and that the seller should not rely on anything you say about the grade. You also could say that a coin was “probably” or “likely” a particular grade. Or you could just say that it’s “premium” or “gem” or “high quality” or use other “puffing” language. Just be careful, that’s all. "Again, take it or leave it, but ignore it at your peril." [URL='http://forums.collectors.com/messageview.cfm?catid=26&threadid=295472&highlight_key=y&keyword1=Another%20Court%20Case%20involving%20Grading']http://forums.collectors.com/messageview.cfm?catid=26&threadid=295472&highlight_key=y&keyword1=Another Court Case involving Grading[/URL][/QUOTE]
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"Cleaned" coins--how much of a loss?
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