Buying art? Buyer beware!

I teach Contracts.  One funny thing about the topic is that the “law” that applies to any given transaction is the contract itself.  In other words, if the words of the agreement (which can be written and/or oral) determine the outcome of a given situation, those words almost always control.  There are very few “immutable” contract rules — that is, rules that cannot be changed by agreement of the parties to the contract.

Thus, much of teaching contract law concerns the interpretation of contracts and “default” rules — that is, rules that apply to situations the parties have not agreed about.  Perhaps that is why I so often like using cases involving the sale of art in my classes — they so often require the understanding of the default rules.  As Joshua Kaufman, a lawyer in D.C., recently pointed out in a talk at the Smithsonian Museum, art transactions typically involve the least paperwork of any sort of commercial transaction:

“The art business is unique,” Kaufman said, “in terms of paperwork and due diligence. It has the least amount of paper of any commercial transaction.” That means you go into a gallery, buy what you like, and the dealer hands you a receipt for your purchase. Perhaps you even get a little paper describing the provenance. But buyer beware! The art market is filled with complexities, especially when it comes to auction houses.