The Legal Canvas, Spring 2010Spring 2010
New Decade. New Market. New Issue.
On September 15, 2008, the same day that Lehman Brothers collapsed, Sotheby's commenced a two-day sale of new versions of classic works by Damien Hirst. The sale netted more than $200 million in proceeds.
It may be that when Hirst conceived the sale, he intended not only to sell art, but to have the sale itself act as a commentary on the seemingly insatiable appetite of the market for trophy art – the more expensive and high-profile, the better. It is unlikely that he anticipated that the sale would mark the end of an era in the way that it did.
The first half of 2009 saw sharp reductions in purchases as collectors waited to see just how bad the economy would get and just how much disposable income they might have going forward. The drop caused a number of important contemporary galleries to shut their doors, closing what had been significant showplaces for emerging artists. (To continue reading this article click the link to the PDF)
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In this issue...
Caveat Emptor: Why You should Protect Your Legal Rights, But Use Your Common Sense by Jo Laird
The art market has any number of idiosyncrasies. One is that it tends to operate in its own universe, with its own customs and rules of behavior. In that universe, people prefer not to formalize their relationships or transactions with legal documents. It is a community that has traditionally relied on trust and handshakes. It is considered bad form to doubt someone's word or to ask too many questions.
Remarkably, it is a universe that usually works. Transactions get done and relationships endure. Everything's ok. Until it's not.
Sadly, the downturn in the market has demonstrated any number of ways that things can go wrong. And when they do, the parties wind up in courtrooms where the judges are unfamiliar with the customs of the market and more focused on doctrines of law.
Caveat Emptor II: A Case of Misplaced Reliance by Jo Laird
The price of any given work of art will depend on a number of variables, only some of which are knowable or quantifiable.
- What prices have been paid for similar works by the same artist?
- Is there anything about the quality, provenance or conditions of the work that would make it worth more or less than the artist's other works?
- Where is the art market generally, and what is the market for this particular artist?
- How many other buyers may be competing for the same work?
- How badly does the buyer want to buy it, and why?
Authentication committees and authors of catalogues raisonné play a critical role in the art world. They are generally made up of people who have a special expertise in the work of an artist – art historical scholars, dealers who have represented the artist's work, family members, and/or representatives of the artist's estate. Without the imprimatur of an authentication committee or the creators of a catalogue raisonné, a work of art may be virtually unmarketable.
Collectors are often surprised to learn that when they purchase a work of art, they do not get the copyright in the work even if one still exists. As a general matter, the copyright stays with the artist, which limits what a collector may do with the image of the work.
Collectors of contemporary art may be even more surprised to learn that copyright isn't the only right that stays with the artist. In some cases, for example, an artist may limit the right of the collector to display the work, and may even disclaim authorship. In other words, an artist can declare that a work that he or she actually created is no longer authentic.
Beginning on August 1, 2010, federal law will require 100% of cargo shipped via commercial passenger aircraft to be security-screened. Specifically, every piece of such cargo – including those containing works of art – must be physically inspected,x-rayed, and/or subjected to explosives detection to ensure that the cargo is safe for transport.
When claims are made for the restitution of art lost during the Holocaust, they are often met with the defense that the statute of limitations on the claim has long since passed. Claimants argue that the limitations period is a technical defense that should not shield a defendant from a claim that is based in profound moral principle. Defendants argue that the adjudication of Holocaust claims involves events that occurred as much as 75 years ago and, in fairness, present exactly the sort of evidentiary issues that statutes of limitations were meant to address.
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