NEW YORK - At Sotheby’s Institute of Art, we challenge students to grapple with complicated issues affecting the global art marketplace – including legal questions about provenance, authenticity, copyright, resale rights, stolen art and more. Art Business faculty member in New York, Judith B. Prowda, is an attorney, mediator and arbitrator and author of Visual Arts and the Law: A Handbook for Professionals (Lund Humphries 2013). Here she shares three quick lessons to shed some light on salient legal issues affecting the art world today.
Art Law professor and author Judith B. Prowda.
1. Don’t just shake on it.
Since the art world’s culture is based on trust, agreements between artists and dealers are often sealed with a handshake. But without the benefit of a written document, there is no record of the arrangement, and even a minor problem can sometimes escalate to a major dispute.
Oral contracts work well until they don’t. An example of an oral contract that went awry concerned an agreement between the legendary American artist Georgia O’Keeffe and her long-time sales agent Doris Bry, for the return of artworks and photographs by her late husband, photographer Alfred Stieglitz, as well as an accounting of any monies due on sales. Bry counterclaimed that O’Keeffe had made a number of oral promises, including the promise to make Bry the exclusive sales agent during O’Keeffe’s lifetime and after her death and to appoint Bry as executor of O’Keeffe’s estate. O’Keeffe sought dismissal of Bry’s counterclaims, alleging they were barred by the statute of frauds. The court agreed with O’Keeffe, holding that the alleged promises were unenforceable absent a written agreement. O’Keeffe v. Bry, 456 F. Supp. 822 (S.D.N.Y. 1978).
2. Be authentic.
When a purchaser of an artwork later discovers that the work is not authentic, the statute of limitations for a suit against the seller is four years after the breach of authenticity occurs. (Major auction houses warrant authorship for five years from the date of sale). In the majority of states in the U.S., the breach of warranty begins to run when the seller delivers the work to the purchaser, unless the warranty explicitly extends to “future performance.”
One of the leading cases on warranty of authenticity involving the statute of limitations is Rosen v. Spanierman, 894 F.2d 28 (1990). Here, the plaintiffs purchased a painting entitled The Misses Wertheimer from the Spanierman Gallery in New York for $15,000 in 1968. The gallery provided them with a full warranty on the painting as an original Jean Singer Sargent, and mailed certificates of appraisal for insurance purposes on five occasions between 1975 and 1986. In 1987, the plaintiffs decided to sell the painting, then valued between $175,000 and $250,000. Upon consigning the painting to a well-known auction house, the plaintiffs were informed that it was a fake. The plaintiffs sued Spanierman in 1987 for breach of warranty arguing, among other claims, that the repeatedly issued certificates extended the warranty to future performance. The court rigorously applied the four-year statute of limitations, holding that the warranty did not extend to future performance, and noted that the plaintiffs could have discovered the defect just as easily immediately after the sale as later.
Therefore, buyers of works of art in the U.S. should assume they must bring any authenticity claim within the four-year limitations period.
Visual Arts and the Law: A Handbook for Professionals (Lund Humphries 2013) by Judith B. Prowda.
3. Check your art.
In an increasingly global art market, one of the most problematic areas of concern is whether a collector has unwittingly acquired a work that was previously stolen. Courts have vastly different approaches to disputes over ownership to stolen property, and cases may (and often do) depend on technical defenses available in different jurisdictions.
As art owners and their heirs (including claimants of art looted during the Nazi era) come forward, sometimes after many decades, to claim property from good faith purchasers, courts are confronted with difficult questions that are complicated by choice of law and statutes of limitation, and must decide legal title to the work as between the original owner and heir on one hand, and a good faith purchaser on the other.
Because there is no central registry to record title to art, independently verifying the provenance and including strong representations and warranties from the seller with regard to ownership are imperative. Art Loss Register is one prominent database. Others include the FBI and Interpol. To be sure that a work was not stolen during the Nazi era, buyers can check databases such as Lost Art, Looted Art, and Art Recovery International. Another database, ICOM, provides links to databases of individual countries for the identification and return of looted or stolen Jewish property. Another way for collectors to reduce risk is to obtain title insurance, which is now available for fine art and other important collectibles.
Disclaimer: This post is for general informational purposes only and should not be construed as legal advice. If legal advice or other expert assistance is required, the services of a competent professional should be sought.