When does an art intermediary becomes a “seller”?
Published on 24/03/2017
The Court of Justice of the European Union recently delivered a particularly interesting judgment regarding the liability of sale intermediaries.(1)
The European Directive 1999/44 on certain aspects of the sale of consumer goods (the Directive) has been implemented into Belgian law in article 1649bis et seq. of the Civil code.
The Directive sets up a specific protection regime for consumers who buys consumer goods. A "consumer" is defined as any natural person who is acting for purposes which are not related to his trade, business or profession. Consumer goods mean any tangible movable items (with the exception of goods sold by way of execution or otherwise by authority of law). The scope of application of the Directive is therefore potentially extremely broad.
In its judgement of 9 November 2016, the Court has interpreted the notion of "seller" under the Directive.
The seller is defined as “any natural or legal person who, under a contract, sells consumer goods in the course of his trade, business or profession”.
This particular case was about a woman who had bought a second hand car from a garage. It turned out that the car was not the property of the garage but of a private person, the garage having acted solely as an intermediary in the sale. However, a private seller falls outside the scope of the Directive. The issue was to determine whether the garage owner, as a professional, could qualify as a seller pursuant to the Directive, despite the fact that he only acted as an intermediary.
The Court of Justice decided that an intermediary can be considered as a seller if he presents himself as such to the buyer. This could indeed create confusion in the mind of the consumer by giving him the impression that the Directive and the protection thereunder apply. The question whether the trader acting as an intermediary is remunerated or not by the owner was not deemed relevant by the Court.
Accordingly, in any individual situation, one should verify whether the intermediary did properly inform the consumer that he was not the owner of the good involved. To that effect, the following circumstances would be relevant :
- the degree of participation and the amount of efforts employed by the intermediary in the sale;
- the circumstances in which the goods were presented to the consumer;
- the behavior of the consumer in order to determine whether the consumer ought to have understood that the intermediary was acting on behalf of a private individual.
What is the impact for the art world ?
Dealers and galleries selling art objects, even when belonging to private owners, to persons acting in a private capacity (i.e. most collectors) are likely to be considered as sellers within the meaning of the Directive - and, accordingly, of articles 1649bis et seq. of the Civil code - if they do no inform the buyer sufficiently clearly of their capacity as intermediary.
In that case, the dealer or gallery would be liable for any lack of conformity of the artwork that would be discovered within two years of its delivery.(2) A good lacks conformity when it does not comply with the description given by the seller or does not possess the qualities of the goods which the seller has held out to the consumer. In this context one thinks especially of fakes or forgeries.
This means specifically that the buyer could sue the dealer or gallery in order to have the sale contract rescinded (total reimbursement) or obtain a reduction of the price (partial reimbursement), since a replacement or a repair is generally not possible in this type of situation. All these provisions are mandatory, meaning that dealers and galleries cannot exclude liability by contract or pursuant to its general terms and conditions.
In that case, the only remedy left to the dealer or gallery would be to compensate the buyer and pursue remedies against the true owner by way of recourse, which will not always be easy.
In conclusion, intermediaries involved in art sales with consumers should be really careful and inform properly the buyer of their intermediary capacity, but, above all, keep a record of this fact. This information could be given, for example, in the sale contract signed by the buyer or directly in the sales catalogue.
This newsflash is offered by way of general information ; its content does not constitute and may not be considered as legal advice. For more information on the subject please contact us at firstname.lastname@example.org.
(1) Judgement of the ECJ (Fifth chamber) of 9 November 2016 in the case C‑149/15 (Sabrina Wathelet v Garage Bietheres & Fils SPRL).
(2) Unless parties agreed to a term of less than two years (with a minimum of one year) – for example under the general conditions of sale, provided these are enforceable towards the buyer.