Agency in Art Sales

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The Art Newspaper has a very interesting article from the British courts on agency and the responsibilities of those involved in the transaction, including the owner, the purchaser and the agent.  The case revolves around the sale of a Leonardo Da Vinci drawing and the selling price. The seller thought the sale price was $6 million, only to find out by chance a year later the actual purchase price was $7 million.

I know this sort misrepresentation happens more than we would like to hear, but it is alos a matter of ethics and working with trustworthy individuals. If you enjoy following art law and legal remedies, etc, this is a good article to read.

The Art Newspaper reports

The case reveals the casual approach to the legal concept of agency—but who acts for who is a fundamental question when it comes to transferring ownership, and also when deciding to whom duties are owed. Dickinson entered into a post-transaction form of agreement with Luxembourg Art in which Dickinson was incorrectly stated to be the agent for the buyer. At the same time, it then entered into a sale agreement with the buyer, wrongly claiming to be agent for the seller.

Anyone who claims to be an agent, or assumes the role of agent, should remember that an agent owes strict “fiduciary duties” to its principal. It has to act in the best interest of the principal and, subject to anything agreed to the contrary, it has to hand over all monies received.

The Art Newspaper article continued
So what should a seller do? Certainly ask to see the contract to be made on his or her behalf by the agent before it is signed. If the sale appears to be to another dealer acting for an unspecified buyer, then the seller should be wary that there could be a net return price arrangement in place, said by Dickinson to be a common practice in the art market.

In turn, dealers need to make sure that their arrangements are properly recorded and that the seller understands and authorises those arrangements, including those between dealers. In particular, the seller needs to know the ultimate sale price and who is to get what from the proceeds.

To read the full Art Newspaper article, click HERE.