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Commercial Transaction
Sales
Consignments
Uniform Commercial Code
State Statutesby
Ralph E. LernerRalphELerner.com
[email protected] Madison Ave, New York, NY, 10022
(212) 521-4437
http://www.RalphELerner.com/
EXPRESS WARRANTIES§ 2-313
1 - Any affirmation of fact or promise by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain
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1 - Any affirmation of fact or promise by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain
2 - Any description of the goods which is part of the basis of the bargain
EXPRESS WARRANTIES§ 2-313
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WEBER v. PECK
Bill of Sale
Artist: Jacob Van Ruisdael (1628-1682)
Description: Painting entitled “A wooded river landscape with a waterfall, and travelers on a bridge” signed, being an oil on canvas; stretcher size 26” X 21”
Condition: Excellent
Provenance: “See Attached exhibit A”
Seller warrants that the above described painting is authentic and as described above.
A wooded River Landscape
Jacob van Ruisdael
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IMPLIED WARRANTIES§ 2-314; 315
1 - Merchantable
2 - Fitness for particular purpose
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EXCLUSION OF WARRANTIES§ 2-316
v. Other than as specifically represented and warranted by the Seller as set forth in this Agreement, the Buyer shall purchase the Work in “as is” condition, without any representations or warranties by the Seller of any kind whatsoever, express or implied, including without limitation, representations or warranties as to value, condition, provenance, merchantability or fitness for a particular purpose.
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WARRANTY OF TITLE§ 2-312
1 - In every contract the seller warrants that the title conveyed shall be good and its transfer rightful, and
2 - The goods shall be delivered free from any security interest or other lien or encumbrance
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DAMAGES - BREACH WARRANTY TITLEMenzel v. List
1932 - Menzel Purchases for $150
1941 - Painting taken by Nazis
1941-1955 - Location not known
1955 - Perls purchases from dealer in Paris for $2,800
1955 - Perls sells to List for $4,000
1962 - Menzel say “Give it back”
1966 - Jury for Menzel - value now $22,500
Jacob’s Ladder
Marc Chagall
Measure of damages $22,500 http://www.RalphELerner.com/
DAMAGES - FRAUDNacht v. Sotheby’s
1981 - Nacht purchases for $23,815
1996 - Nacht discovers it is not authentic - if it was authentic value $225,000
Measure of damages $23,815
Francis Picabia
Josias
1930
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PASSAGE OF TITLE§ 2-401
Title to goods passes from the seller to the buyer on physical delivery of the goods, irrespective of when or even whether payment has been made
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VOIDABLE TITLE - § 2-403(1)ENTRUSTMENT - § 2-403(2)
Graffman v. Espel, et al.
Graffman - owner - Sweden
Espel - art merchant - Spain
Delecea - brother-in-law of Espel art merchant - New York
Avanti Gallery - art gallery - New York
Does - buyers of painting from Avanti Gallery
Pablo Picasso
Le Peintre et Son Modele
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VOIDABLE TITLE - A person with voidable title has power to transfer good title to a good faith purchaser for value.
ENTRUSTMENT - Any entrusting of possession of goods to a merchant who deals in goods of that kind gives him power to transfer all rights of the entrusted to a buyer in the ordinary course of business.
VOIDABLE TITLE - § 2-403(1)ENTRUSTMENT - § 2-403(2)
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Graffman - owner - Sweden
Espel - art merchant - Spain
Delecea - brother-in-law of Espel art merchant - New York
Avanti Gallery - art gallery - New York
Does - buyers of painting from Avanti Gallery
VOIDABLE TITLE - § 2-403(1)ENTRUSTMENT - § 2-403(2)
Graffman v. Espel, et al.
Pablo Picasso
Le Peintre et Son Modele
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ENTRUSTMENT (Avanti defense)
1 - entrusting
2 - merchant
3 - deals in goods of that kind
4 - ordinary course of business
A. good faith without knowledge of violation
B. good faith - honesty in fact
C. reasonable commercial standards of fair dealing
Merchants are held to a higher standard of good faith than other purchasers
Duty of Avanti to investigate
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1 - intention to sell
2 - merchant
3 - good faith purchaser
A. good faith means honesty in fact
B. no knowledge of other arrangements
Non-merchants held to lesser standard than merchants
VOIDABLE TITLE (Does defense)
Duty of Does to investigate“As a matter of law, the Does had no obligation to
investigate the provenance of the Painting.”
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1 - Sign posting law
2 - files a financing statement (UCC-1)
3 - can show that dealer is “generally known by his creditors to be substantially engaged in selling the goods of others”
SALE ON APPROVAL - § 2-326CONSIGNMENTS
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EXPRESS WARRANTIES - § 2-313 AUTHENTICITYRogath v. Siebman
In order to induce Buyer to purchase, Seller warrants to Buyer:
1. Title
2. Authenticity
3. That the Seller has no knowledge of any challenge to the Seller’s title and authenticity of the Painting
Self portrait
Francis Baconhttp://www.RalphELerner.com/
iv. Dealer has informed Buyer of all facts within its knowledge about the Work, including, without limitation, facts pertaining to the condition, authenticity, provenance and title to the Work, and Dealer is not aware of any claims, challenges or disputes (past, pending or threatened) relating to the Work’s condition, authenticity, provenance or title.
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STATUTE OF LIMITATIONS - TITLE§ 2-275
1 - prompt filing of suits
2 - protection for a defendant after period of repose - evidence can be lost or destroyed with passage of time
3 - promotion of free trade
An action for breach of any contract for sale must be commenced within four years after the cause of action has accrued.
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DISCOVERY RULEGregory Erisoty v. Jacqueline Rizik
An owner’s cause of action does not accrue until he discovers or by exercise of reasonable diligence and intelligence should have discovered, facts which form the basis of a cause of action
Corrado Giaquinto
Winter
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DEMAND REFUSAL RULEDeWeerth v. Baldinger
An owner’s obligation to make a demand without unreasonable delay includes an obligation to use due diligence to locate the stolen property
Claude Monet
Champs de Ble a Vetheuil
1879
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Guggenheim v. Lubell
An owner has no obligation to use due diligence to locate his stolen property - whether it was unreasonable not to do more is an issue of fact relevant to the defense of laches
The Cattle Dealer(Le Marchand de
Bestiaux)
Marc Chagall
1912
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Patriarchate of Jerusalem v. Christie’s
An owner’s reasonable diligence in locating his lost property is highly relevant to a laches defense
Doing nothing for 70 years is not reasonable
Archimedes Palimpsest 10th century manuscript contains writing of
Archimedes
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STATUTE OF LIMITATIONS - AUTHENTICITYRosen v. Spanierman
Four year statute of limitations applies.
A warranty of authenticity does not extend to future performance of the goods.
Lack of knowledge of the breach is not a defense.
The Misses Wertheimer
John Singer Sargeanthttp://www.RalphELerner.com/
BALOG v. CENTER ART GALLERYHawaii
In the case of artwork which is certified authentic by an expert in the field or a merchant dealing in goods of that type, such a certification of authenticity constitutes an explicit Warranty of future performance sufficient to toll the U.C.C.’s statute of limitations - but only in Hawaii http://www.RalphELerner.com/
Ravenna v. Christie’s
Ludovico Carracci - PietaCir. 1600
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