Buying art and collectibles is a passion for Americans. Billions of dollars are spent every year searching for objects that are interesting or that will increase in value over time (hopefully, both). But these unique items create unique legal concerns when buying or selling art and collectibles.
Most legal problems in art and collectible transactions relate to whether items conform to the seller’s description regarding authenticity, type, quality, rarity, provenance, etc. While the Uniform Commercial Code (UCC) governs warranties of these transactions as it does the sale of any goods, the unique nature of art and collectibles holds many traps for unwary buyers. Warranties—assurances from the seller that the item is what it is represented to be—keep the risk of nonconformity on the seller so that buyers can demand a refund or other remedy if necessary.
Warranties are absolute: The seller is responsible regardless of whether the seller knew of such nonconformity at the time of sale or was in any way negligent in providing this information to the buyer.
Creation of Warranties
Express warranties are those made in writing or orally at or before the sale and which become part of the contract. They are the warranties the seller makes directly to the buyer, as opposed to warranties that are implied by the nature of the transaction or by indirect statements by the seller. If these representations become part of the basis for the bargain between buyer and seller, the seller is expressly warranting that the goods will conform.
What statements become warranties is sometimes tricky in the art and collectibles field. Judges look at whether a statement is the type on which purchasers in that particular market reasonably rely. If a dealer says a painting is “the best example I’ve ever seen from Pablo Picasso’s ‘blue period,’” purchasers could conclude that the painting is by Picasso and perhaps that it dates from Picasso’s “blue period,” but not that it is “the best” from that period. However, with rare coins, a dealer’s statement that a particular coin is the “finest known” of a particular date would probably be a warranty because that is an industry term with a generally understood meaning.
Careful buyers will demand that a seller put in writing any of its representations about the item on which the buyer is relying in deciding to purchase the item. For example, all buyers should demand express, written, and detailed representations relating to provenance. Stolen items may be seized and returned to their rightful owners, and items of cultural significance may be seized at customs and returned to their country of origin. Express warranties as to provenance ensure that if the item is seized, the seller shall bear that loss and refund the buyer.
In some states, such as New York and California, special state laws were passed in reaction to chronic abuses in collectibles. For example, in the sale of autographed sports collectibles, a written certificate of authenticity is required, including identifying information about the dealer as well as an express warranty relating specifically to the authenticity of the autograph, and these express warranties cannot be negated or limited even if they are, purport to be, or are capable of being merely the dealer’s or the supplier’s opinion.
The UCC also recognizes that what a seller doesn’t say is sometimes more important than what he or she says in inducing the buyer to make a purchase. The most important implied warranty is the warranty of merchantability. Merchantability includes conforming to the contract description (as that would be interpreted within the relevant industry), fitness for a particular use, and promises or affirmations of facts made on any container or label associated with the goods.
Some years ago, one of the authors attended a collectibles convention and saw a Matisse print being offered for sale. But the dealer did not actually say it was a Matisse. It was in Matisse’s style and bore Matisse’s signature, but the print was marked only with a price and no other description. In other words, even where a dealer has made no express warranties regarding authenticity, attribution, or quality, those types of warranties might be implied into the sale by virtue of the catchall category of “merchantability.”