An auction house provides a minimum price guarantee to the seller which is payable if the guaranteed price is not achieved at the auction. So if the auction price is higher than the guaranteed amount, the AH will receive a share of the profit. If the price is lower than the guarantee, AH has to pay the difference to the seller. In some cases this is undersigned by getting a third party bid in advance of the auction, at a value lower than the guarantee. If the third party bid is achieved (its the highest at the auction) then the AH will pay the difference to the seller.
As the AH does the arrangements for the sale including marketing, selecting the auction venue and arrangements, accepting/rejecting bidders etc., there are non-financial variables which can impact the auction price achieved. Does this means that it can't be classified as a derivative under the first condition?
Similarly, I am unsure if this can be classified as a financial guarantee as there is no debt arrangement involved. Will this be considered a performance guarantee, financial instrument or an insurance contract? Is it correct to exclude this from derivatives?