Wednesday, October 15, 2008
Interesting rescission decision [$] in today's NY Law Journal in a state court case involving Christie's. In 2002 a company called SWCA signed an agreement with Christie's authorizing them to sell a Picasso sculpture for $5 million. The agreement granted Christie's the right to rescind the sale if it "reasonably determines that the sale may expose Christie's" to any liability, "including liability resulting from claims relating to ... authenticity." A few days later Christie's sold the work, and the agreement with the buyer allowed him to rescind the sale if the work was found to be inauthentic. A couple years later, Christie's "developed concerns about the authenticity" of the work, believing now that it is "a surmoulage, a bronze cast of a second or third generation bronze, rather than ... a bronze cast from the original clay master created by Picasso." According to the court, "most dealers consider surmoulages to be unauthentic." So in 2005 Christie's rescinded its sale to the buyer; it also sought a refund of the portion of the purchase price it had paid to SWCA. SWCA, which had a certificate of authenticity from the author of the catalogue raisonne of Picasso's sculpture and another from Picasso's son Claude, refused, and the lawsuit followed. Though the court expressed a fair degree of skepticism about the reasonableness of Christie's belief that it was exposed to liability (it said the decision "appears to have motivated more by rumor and speculation"), it held that "ultimately, whether Christie's belief was reasonable is a question of fact for the fact-finder," and so denied summary judgment. So, barring a settlement, it's on to trial.