Birkin Bag Smashes Auction Records at $10 Million
The original Hermès Birkin, once owned by Jane Birkin, sold for $10M at auction—setting a record as the most expensive handbag ever sold.
Watch the video and read the complete CNN article, Jane Birkin’s Original Hermès Bag Sells for $10 Million.
Note: Although the auctioneer speaks in French, this brief video depicts the auction environment and serves as an excellent foundation for understanding the law related to auction sales.
Discussion Questions
- What is an auction with reserve? What is an auction without reserve? Was the subject auction with reserve or without reserve? (You will need to conduct additional internet research to answer the last question).
In an auction with reserve, the owner of the property sets a reserve (i.e., minimum) price for the item to be sold. Once the bidding exceeds the reserve price, the item goes to the highest bidder. If the reserve price is not met, the item is not sold.
In an auction without reserve, the item goes to the highest bidder, whatever that bid might be. As the title suggests, there is no reserve (i.e., minimum) price.
Your author’s limited research indicates that no reserve price was set for the subject “Birkin bag.”
- In an auction sale, who is the offeror, and who is the offeree? What determines the existence of an agreement between the offeror and the offeree in an auction sale?
In an auction sale, the bidder is the offeror, and the owner (represented by the auctioneer) is the offeror. In an auction sale, the existence of an agreement between the offeror and the offeree is determined by the format of the auction (i.e., whether the auction is “with reserve” or “without reserve”), as well as any other terms the owner and auctioneer might specify before the auction begins. Ultimately, the agreement in an auction sale is formed with the fall of the auctioneer’s hammer, and the auctioneer’s proclamation “Sold!”
- If you owned the subject bag, would you have conducted the auction differently? Why or why not?
Judging from the results, it appears that both the bidder and the owner were satisfied with the results of the auction, with the bidder most likely viewing the Birkin bag as an investment (it would be difficult to extract $10 million in utility from the actual use of the bag!) and the owner receiving a record amount for the bag.
This is an opinion question, so student responses may vary. As owner of the bag, your author would have set a reserve price (more research would likely reveal the projected value of the bag prior to its auction); i.e., your author would have established an auction with reserve. However, one of the strategies of a “no reserve” auction for owners is that bidders might find themselves in the “collective conscience” of a “bidding frenzy,” thereby driving the final auction price of the item far above its projected value.
