July 2022 – by Lavanya Nayar & Laurens Kasteleijn for Art Law Services
Along with its provenance, the authenticity of an artwork is a key factor determining its value in the commercial art industry, hence the far-reaching and enduring existence of shadow markets for fakes, forgeries and counterfeits. Fakes are produced and distributed with the fraudulent intention of deceiving as to the authorship, date, period, or school of the artwork to increase its financial worth [1].
Rijksmuseum, Amsterdam
The market established its own system and set of rules to execute and ratify the authentication of artworks, most notably through the institution of authentication boards and the wide use of certificates of authenticity. Traditionally, an artist’s signature would be viewed as an affidavit of the authenticity of an artwork. However, nowadays, especially with the soar of NFTs, original artworks can also take the form of limited-edition multiples rather than unique single artworks, and it has therefore become crucial to be able to differentiate them from copies through additional documentation [2]. The certificate is signed by the artist and issued to accompany the artwork, whether it consists of an object, various material elements, or a set of instructions. Certificates usually describe the artwork in terms of author, medium, date, and whether it is unique or one of limited editions.
However, whereas authenticity predominantly rhymes with financial worth and reputation for artists, dealers and collectors, a representation of authenticity also bears legal consequences.
1. Overview of the law on authenticity
The questions of attribution, provenance and authenticity are central to the validity of a contract in an art transaction. A representation, guarantee or warranty of authenticity will determine the nature of the goods and thus a finding that an artwork is a fake, forgery or counterfeit will mean that the contract cannot and has not been performed, thus granting the buyer a cause for action. The role of courts will be to impute the loss to a party, if the terms of the contract do not allocate the risk of forgery or mistaken attribution within a party or are unenforceable. This is essentially an exercise of interpretation of the contract and there will be no rescission when the contract itself (or circumstances at the time of contracting) indicates the parties acknowledged and allocated the risk of the artwork being inauthentic. However, because of the number of players involved in the transaction, from the seller to the buyer, though previous owners and authentication experts, ascribing responsibility for a mistake or misrepresentation can prove to be toilsome, even impossible. The Dutch Civil Code (DCC) nevertheless administers broad rules to deal with such a situation.
In the context of an agreement for sale, if a buyer finds out that the purchased object is not in conformity with the agreement, i.e., the artwork is a fake, a forgery or a counterfeit, while the sale agreement implies or guarantees that the good is authentic, the buyer has to give notice thereof to the seller within an appropriate time period - 2 months, according to the jurisprudence - after he discovered or ought to have discovered the lack of conformity (Article 7:23 DCC). Non-performance of the obligations of a party to a contract, i.e., providing the other party with goods in conformity with the agreement, will allow the other party to rescind the contract on the basis of non-compliance (article 6:265 DCC) or on the ground that it has been entered into under the influence of an error (article 6:228 DCC). The party may then seek damages or specific performance, unless such a remedy is regarded as inappropriate given the special nature or limited extent of breach of contract (Art 6:265(1) DCC). In the context of fakes, it is usually impossible to demand specific performance and damages, often amounting to a repayment of the purchase price, will usually be granted if the action is successful [3]. Similarly, If the seller has himself acted fraudulently by wilfully selling the forgery, the buyer can claim for a revocation of the contract (article 3:44 DCC) and a repayment of the purchase price [4]. The burden of proof rests on the buyer, who may use, or be required to present, expert’s reports. They must present high evidence to overcome the usual presumption that the contract evidences the intent of the parties.
However, whether a buyer can dissolve or revoke the sales contract on these grounds depends to a large extent on the statements made by the seller with regard to authenticity and the circumstances of the sales. The court will not only investigate the written contract but will also observe any statements made and circumstances pending the sale and transfer [5]. It will also depend on applicable terms and conditions, which may exclude the possibility to rely on these grounds. Moreover, courts have often interpreted contracts for the sales of art as contracts in which the parties willingly take a chance that the artwork will not be authentic, considering the difficulties and uncertainties surrounding authentication (see, the Dutch Supreme Court decision of 3 April 1959, Hercules Seghers).
Crucially, the buyer cannot rely on a lack of conformity if, at the time of the conclusion of the contract, he was, or reasonably should have been, aware of lack of conformity. The court will not allow a party to rescind the contract to avoid the consequences of their own negligence, and failure to investigate or pursuance of the contract despite being aware of one’s own limited knowledge may amount to sufficient negligence. If the buyer is a professional party, the seller may expect him or her to possess certain knowledge and expertise, and the court will place less reliance on statements regarding authenticity [6]. Moreover, if the seller is a private person without any art industry expertise, it may be unreasonable for a buyer to rely on the seller’s skill and judgement to ensure that all relevant information is disclosed [7].
Finally, overriding principles of reasonableness, fairness and due diligence continue to apply. With regard to due diligence in particular, general rules of Dutch law are applicable. The seller needs to give sufficient and correct information, and the court will also consider what he was aware or ought to have been aware of at the time of the conclusion of the contract.
2. Disconnect between the courts and the market
Unlike the art market, courts do not consider authenticity as a black and white term but rather a matter of degree [8]. Judges with no background in art will be asked to arbitrate among experts, and their ruling may ultimately rely more on the intricacies of contract law and a preponderance of the evidence than on determinations of authenticity [9]. However, in the art world, a statement from an art expert or an institution such as an artist’s estate or authentication committee that an artwork is not authentic, or a simple refusal to examine its authenticity, will often render it unsellable. As such, because of the authority assumed by these institutions, and their incentivising or dissuasive power, the remedies available in court will often be inappropriate to repair the damage caused by a finding of inauthenticity. Furthermore, most countries in Europe grant them a moral right to oversee an artist’s legacy — including guarding against the circulation of fakes and forgeries in the marketplace.
Do you need help issuing a certificate of authenticity for your artwork? Do you have concerns about the authenticity of an artwork you want to buy or hire? We at Art Law Services can assist you in the negotiation, drafting or rescission of legally enforceable contracts including representations of authenticity.
Contacts us at: info@artlawservices.com
Notes:
[2] Ibid.
[3] Bruno Boesch and Massimo Sterpi, The Art Collecting Legal Handbook (2016) Sweet & Maxwell.
[5] Bruno Boesch and Massimo Sterpi, The Art Collecting Legal Handbook (2016) Sweet & Maxwell.
[7] Ibid.
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