When sleepers awake: sellers’ regret and art-market intermediaries

Markets for works of visual art are distinctive in many ways. This paper, written as a chapter in a forthcoming book, focuses on implications of two: (1) the dominant presence of expert intermediaries in transactions in artworks; and (2) the importance of attribution—in particular, to a named author—to a work’s monetary value and general significance. These characteristics are highlighted by disputes that center on “sleepers.” These are works of art that were allegedly mis- or under-attributed at the time of sale, followed thereafter by re-attribution and the potential for resale at a higher value. In these disputes, sellers who consigned a work to an expert intermediary—an auction house or art dealer—argue that the consignor, acting as their agent, breached its duties of performance because it failed to detect the sleeper. Sellers’ claims in sleeper cases differ from purchasers’ claims alleging that a work they purchased was a fake or a forgery or otherwise misattributed, breaching the intermediary’s warranty of authenticity. Sleeper claims focus on whether an intermediary breached duties owed to the consignor and not (at least not primarily) on whether an object is, in fact, what it is/was claimed to be. This paper sketches the transactional context in which sleeper cases arise, followed by an analysis of cases resolving sleeper claims. Two principal implications follow. First, sleeper cases can test the extent to which customary practice in the trade should define and delimit the duties owed by expert intermediaries. Although market-defined expectations and norms inform what the law requires of such experts, the law claims ultimate control, the proverbial “last word,” which the market may, in fact, disregard. For some commentators, courts and legal institutions are ill-suited to resolve issues arising from art-market transactions, especially those involving questions of attribution. Sleeper cases are not unique as examples of these tensions and illustrate that the market’s claim to the “last word” may prove contingent. Second, sleeper cases can be examples of sellers’ regret, or transactions that a seller rues with insight gained in retrospect. In this respect they resemble cases from agency law in which a third party contests a transaction once it’s known that the party with whom the third party dealt acted as an agent for an undisclosed principal. Separately, some commentators question whether it’s fair that consignors (typically) lose sleeper cases, arguing that the standard for intermediaries’ liability should be recast to resemble the strict-liability regime applicable to a warranty that a work is a genuine instance of what it purports to be. The paper argues that this shift would, in practice, be unworkable and would ignore consignors’ incentives to identify potential sleepers to enhance the prices at which the works sell, thereby enhancing the consignee’s commission. And why ignore the fact that sleepers can operate to reward purchasers who have developed acute eyes and good instincts?