The Court of Appeals in Arnhem recently, in an interim decision, ruled on the issue whether and to which extent a buyer of a work of art bears the risk of an incorrect attribution.
Whether the purchase agreement qualifies as an agreement of chance (the buyer bears the risk of an incorrect attribution), is a matter of contract interpretation according to the Court of Appeals. The decisive factor in that respect is whether the buyer, in view of the nature of the object, the price paid and the information supplied by the seller, in the given circumstances could reasonably expect that the sold objects were authentic. The Court of Appeals held that the buyer bears the burden of risk of its assertations and has allowed the buyer to supply that evidence in the subsequent phase of the proceedings.
The case centered on four bronze sculptures that were acquired in a Dutch gallery in March and June 2007. The sculptures bore the signature of an acclaimed sculptor and a mark of a foundry in Paris. The buyer paid (as was established in a later stage of the proceedings) approximately 180,000 euro in total for the four bronzes.
After the sale, the buyer took the works to an expert to have their authenticity examined. The expert concluded that the sculptures were mediocre copies of original sculptures of the artist and that the bronzes were worth no more than manufacturing cost (approximately € 2.000,- a piece).
The buyer subsequently rescinded the purchase agreement and demanded repayment of the purchase price. The seller objected against the rescission and refused to repay the purchase price. The buyer subsequently filed suit against the seller before the Utrecht District Court. In District Court dismissed the buyer's claims. The buyer subsequently filed an appeal before the Court of Appeals of Arnhem.
The seller argued that the buyer's claims had become time- barred for failing to file suit within the statutory two-year period after first notifying the seller of the alleged defects. The Court rejected the seller's arguments and held that the buyer did file the suit within the statutory deadlines.
The Court of Appeals went on to hold that it concurred with the findings of the District Court in first instance, that the buyer had adequately proven (through expert opinions) that the sculptures are not authentic. Subsequently, the Court of Appeals considered the issue whether the soled sculptures were in conformity with the agreement.
The seller in this respect argued that, before the sale, he had discussed with the buyer that the prices of the sculptures were considerably lower than the prices similar works reach at auction. The seller claimed that he had informed the buyer that he had started the gallery as a post-retirement hobby. Further, the seller asserted that - at the time of the sale - he had informed the buyer that he had no information about the sculptures' provenance, and that he was in no position to guarantee the authenticity (which explained the comparatively low prices). The seller also asserted that the buyers had an above average level of knowledge on art, apart from the fact that the seller doubted that the sculptures were not authentic.
In its interim judgment of 18 December 2012 (para 4.13), the Court of Appeals held that art sales by definition are to qualified as agreements of chance (in which the buyer bears all risk of incorrect attributions). Whether the given art sales agreements is in fact an agreement of chance, is a matter of contract interpretation. The decisive factor is whether the buyer, in view of the (i.) nature of the sold item, (ii.) price paid, and (iii.) the statements that the seller made in respect of the object, reasonably could expect that the bronzes were in fact authentic (article 7:17(2) of the Dutch Civil Code).
Before rendering a final judgment, the Court of Appeals permitted the buyer to prove its statements (for which the Court held he beards the burden of risk).
Prices: excessive or a mere pittance?
One of the interesting aspects to be determined in the next phase of the proceedings are the considerations of the price levels of the sold objects. The Court's findings suggest that if the buyer can prove that he paid an excessive price for sculptures (that later on proved to be non-authentic) compared to the price usually paid for non-authentic sculptures, the seller possibly (implicitly) warranted the works' authenticity. Note that the seller used the pricing issue as a means to argue the opposite, i.e. that no buyer could expect to buy authentic works for the price paid for the works.
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