This article is taken from Paul Howcroft’s blog Art Law London
I am often contacted by new or existing clients who are putting together a deal for the sale of some work of art, usually for an eye-watering amount.
These people are not the current owners, nor the proposed purchasers, but something in between: agents, advisors, introducers, dealers, and often not quite sure themselves. They are sole traders whose only capital is their art market connections. They usually see themselves as being on the side of the buyer or seller, but sometimes both or neither. They might be part of a chain of such people that will link the buyer and seller, or they are to one side of the chain. Rarely will the work of art pass through their hands, either physically or by ownership. Their interest is in some percentage or lump sum, but from whom, under what obligation and in what circumstances can be unclear.
No one knows the identity of everyone involved. Parties prefer to be confidential, and for a link in the chain to introduce the links on either side to each other would risk the in-between link being bypassed. The work of art is usually known, and so there is probably an owner ready to sell, but no one is sure if the ultimate buyer is in place, or still being sought. If in place, unknown alternative chains might already be forming between the buyer and seller.
I can be asked to help to get the deal off the ground. A lawyer’s ‘letter of intent’ seems to make an impression, because I am often asked to do one. However, the letter will be carefully drafted to avoid any commitment, and all it really shows is that a lawyer has been brought in, which I suppose indicates some level of intent.
More often, I am brought in at a later stage when the concern is that the proposed deal is falling apart, or an actual deal is being breached. Given all the vagueness and obscurity, the work required can be quite a challenge.
What I wonder, and no one will ever know, is how many of these deals ever come to fruition. A few per cent of tens of millions is serious money, particularly for people with no business overheads, and so I suppose one deal every few years keeps the wolf from the door.
Paul Howcroft, Partner, Fladgate LLP (firstname.lastname@example.org)