9th April 2020

Gregor Kleinknecht and Petra Warrington discuss terms and conditions of art sales during the Covid-19 lockdown

Art sales during the lockdown – are your terms and conditions Coronavirus proof?

As we explained in our last news blog, the lockdown and social distancing measures imposed by the government to fight the Coronavirus pandemic have changed the way auction houses and art galleries do business. Auction houses are moving sales online and are rediscovering the attraction of private treaty sales; and art dealers are moving online to exhibit art works on Instagram and Twitter, offer virtual gallery tours, and are selling online. But are your terms and conditions of business fit for purpose to deal with those changed circumstances and new ways of doing business?

We have provided a number of clients with “Covid-19 Notices” to be posted on their websites and to add to their sales documentation, which set out temporary changes to the way they do business. Here are some typical examples of issues that need addressing:

Inspection of artworks before bidding or buying – you will want to draw the fact that inspection of artworks is not currently possible to your client’s attention and temporarily suspend any provisions in your terms and conditions that say that all artworks are available for inspection and that potential buyers should inspect an artwork before bidding and/or buying.
Condition reports as inspection is not possible, be aware that clients may put greater reliance on your condition reports and consider providing more in-depth condition reports and photographs of artworks; in the circumstances, what you say in these condition reports may well be construed as a representation if any of the information provided should turn out to be (expressly or by omission) incorrect.
Collection while social distancing and travel restrictions are in place, buyers will be unable to collect the artworks that they have purchased, so you should bring to their attention the fact that collection will be delayed indefinitely until the government advice changes and social distancing rules are relaxed. State whether, in the meantime, you will be delivering or storing and insuring artworks and whether the service is free of charge.
Delivery unless you have worked out a way to provide a contactless delivery service, inform clients that your delivery service has been suspended until it is safe to resume delivery. Note that, under the Consumer Rights Act, the default period for delivery if no time frame is agreed is 30 days so consumer clients may complain that their consumer rights have been breached and seek to cancel their purchase if the delay is longer. In the circumstances, the fact that the suspension of delivery, or possible delays, are brought to their attention before bidding or buying, will assist you in handling such complaints.
Authenticity guarantee if you offer an authenticity guarantee, it will generally be subject to various terms, including as to the date by which a claim under the guarantee needs to be notified to you by the buyer. If the current lockdown means that a buyer does not receive an artwork for several weeks (or possibly even months) from the date of purchase, consider extending the time in which a claim may be made.
Distance sales and returns if a consumer buying an artwork via a means of distance communication exercises his right to cancel the contract on receipt of the artwork, consider what the procedure should be for returning the artwork. Remember that the 14-day period in which a consumer is entitled to cancel a contract runs from the date of receipt of the artwork, not the date that the contract is made. The fact that collection and delivery may be suspended will extend the period in which the contract can be cancelled.

Every business uses different terms and conditions of business and there is therefore no “one size fits all” advice that can be given. Please get in touch if you would like us to help you with reviewing and adapting the contractual basis on which you do business during this period of change and uncertainty.