Milton Silverman.

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Over the last 12 months I have dealt with two examples of a set of circumstances relevant to art dealers and those in the trade generally.

A potential client has a valuable work of art to sell. It may have been inherited or received many years ago and placed in storage. In any event, whatever the particular circumstances the time has come to realise some cash.

The client does some investigation and approaches a specialist in the field for some input on what to do and how to take it all further.

Discussions are constructive. Eventually the specialist offers to buy the work from the client and a price is agreed.

Sometime later, and it may be years, the client discovers that the work in question has been sold at auction, or is for example advertised for sale, at a rather large multiple of the price that the client received.

Aggrieved, he/she turns up at my door. What is the position?

Relationship issues

The question is whether on the facts arising, the specialist owed the client a duty of care/duty to advise the client, and whether this duty has in some way been breached.

The issue is defining the relationship that has arisen between the two parties from all the documentation that may be available, the input received from the client and the surrounding circumstances.

In both cases that came my way, there was a substantial accumulation of evidence sufficient to put to the specialist concerned that this specialist was engaged as an adviser to the client ie to act in that client’s best interests.

This evidence was collated and the inevitable exchange of solicitors’ letters ensued.

In one of the cases concerned, we had no idea as to whether the specialist had in fact been the seller, we knew only from investigation the ultimate high sale price achieved, and just chose to presume in correspondence that the specialist had indeed been the successful vendor. This, to the client’s delight, was confirmed in the correspondence from the other side.

Predictably, in each case, the specialists’ lawyers took the view that no duty was owed to the aggrieved client, and that the position was very different to that set out in the initial correspondence sent on behalf of the client. However, in both cases we managed to achieve substantial settlement figures on behalf of each of the clients.

One fundamental lesson from all this is that a potential ‘specialist’, when approached, needs to make crystal clear their position: if they are going to be an ‘arm’s length purchaser’ then, right from the beginning they need to make clear that they are emphatically not ‘advising’, but that they are an independent third party with no such duties. They are just a possible purchaser.

They can’t have it both ways.

If the specialist/dealer decides they are in the ‘arm’s length purchaser’ category they should record that in writing early on, to the client, and, equally important, state, again in writing, that if the client wants advice on their position, or the value of the work concerned, then the client should take separate and independent advice elsewhere.

The important thing is for the specialist to make clear that they are not an adviser to the client if it seems there is a danger of the client thinking that they are. In the more recent case we made headway only because the correspondence exchanged showed the opposite to be true.

Milton Silverman is senior commercial dispute resolution partner at Streathers Solicitors LLP, London.