Thursday, August 11, 2022

When does a collector become an art dealer?

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By Reinier W.L. Russell, LL.M.

A collector will sometimes sell artworks in order to be able to buy new objects. If this happens a lot, he can be regarded as a an art dealer rather than a consumer. When is that the case? And what are the consequences?

To assess whether a person sells an object as an art dealer rather than a private collector, the following, among other things, will be taken into account:

  • Does a person act on behalf of others or for himself?
  • How often does a person sell works of art? Incidentally or structurally?
  • Is profit made and is that the objective?
  • How does a person present himself during sale/purchase?

If an art collector is regarded as an art dealer, he loses the protection he has a consumer. It also means that if he sells art to a consumer, the buyer, on the contrary, can rely on this protection.
If a collector is an art dealer consumer protection will no longer apply

Two polo players

This is clear from a recent judgement of the Mid-Netherlands District Court. What was the case about? The parties had concluded an oral agreement for the sale of two statuettes of polo players from the Tang Dynasty for the amount of € 250,000. 16 days later, the buyer announced that he wanted to refrain from the purchase. The seller did not agree. Among other things, he had already made commitments with an intermediary in Hongkong who tried to sell the statues on behalf of the owner. Therefore, he could not reverse the sale. Since he needed the money badly, he was not able to advance the amount and to look for a different buyer. However, the buyer refused to pay the purchase price and to take the statues.

Consumer or dealer?

The seller took the case to court and demanded that the contract of sale would still be executed. The buyer defended himself with the statement that he had dissolved the contract in accordance with consumer law. The first question the court had to answer was therefore: Is consumer law applicable? Is the seller a professional art dealer?

The seller claimed that he was a collector who incidentally sold a work of art. He did so as a private individual, clearly separated from his company accounts. The Court disagreed with him. In this case, he had sold two works of art that did not belong to him. He himself had written to have consignment of the statues. In addition, it turned out that he regularly sold works of art. He made money out of it, too. And though it was not his main profession, it was clearly more than a hobby. A side activity can also be exercised professionally. After all, the seller had presented himself as a person with long-standing connections in the art trade.

Reflection period for consumer

Consumer law was applicable and thus the statutory reflection period of 14 days upon concluding the sales agreement. As the collector had not considered himself to be a dealer, the consumer buyer had not been made aware of the reflection period, which was consequently automatically extended by one year. Therefore, the purchase had been validly dissolved after 16 days.

More information

Do you sometimes sell a work of art from your collection or do you buy art from a collector and would you like to know what your rights are? Or do you have any other questions concerning art sale and purchase? Please contact us.

About the author: 

Reinier W.L. Russell, LL.M.: Reinier Russell advises national and international businesses on all facets of their day-to-day business operations. He has a broad range of specializations in questions regarding businesses, personnel, real estate, and government. He has been a lawyer since 1990. In addition, Reinier is certified as a mediator.@:
t: +31 20 301 55 55

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