Sothebys in $10m contract dispute over ‘counterfeit’ painting

Sotheby’s auction house has won a $10m contract dispute over the sale of a painting because experts could not agree if it were genuine.

The case involved a painting believed to be the work of Frans Hals, the Dutch Golden Age painter.

The owners arranged for it to be sold through Sotheby’s to a private foreign buyer. They entered into a contract in which Sotheby’s agreed to give an authenticity guarantee to the buyer.

The contract also provided that if Sotheby’s determined that the painting was counterfeit, the sellers agreed to rescind the sale and return to the buyer the purchase price and the buyer would return the painting.

Sotheby’s sold the painting for $10.75 million. The sale contract contained a similar authenticity guarantee allowing for rescission if the buyer provided written evidence raising doubts as to the painting’s authenticity.

However, a further proviso was attached, stating that the offer to rescind did not apply if, at the date of the sale agreement, the description of the painting accorded with generally accepted views of scholars and experts.

Several years later, Sotheby’s discovered facts which cast doubt on the painting’s authenticity and commissioned an expert to examine it. He concluded that the painting was counterfeit.

The purchaser rescinded the purchase and returned the painting, and Sotheby’s refunded the $10.75 million. Sotheby’s then brought proceedings to recover that sum from the sellers.

The three leading scholars on the work on Frans Hals disagreed as to the authenticity of the painting: one believed that it was fake, one believed that it was genuine and the third that it could be genuine. None of them had seen the painting in person.

The judge concluded that as there was no clear view among the experts, Sotheby’s had been entitled to determine that the painting was counterfeit and was therefore entitled to reimbursement.

The Court of Appeal upheld that decision. It said the judge’s decision was unassailable on the facts.

Please contact Sarah Liddiard if you would like more information about the issues raised in this article or any aspect of contract law.

[2020] EWCA Civ 1570

SOTHEBY’S (First Respondent/Claimant) v (1) MARK WEISS LTD (Second Respondent/First Defendant) (2) FAIRLIGHT ART VENTURES LLP (Appellant/Second Defendant) (3) MARK ADRIAN F WEISS (Third Defendant) (2020)

CA (Civ Div) (Henderson LJ, Peter Jackson LJ, Carr LJ) 23/11/2020