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THE LAW OF THE ART MARKET

Contract Law I Syllabus


Winter Term 2017
Art, Law, and Business
Lecturer: Lauren Crais

Introduction
Contract law forms the basis of much of the law you will be studying over the next two
terms. This module will enable you to understand the basics of the laws of contract and agency.
You should be able to identify the elements of a contract and the rights and obligations arising
therein. You should be able to recognize and discuss standard terms and conditions of typical
contracts in the art world, as well as how and when such terms may be modified. You should be
able to identify situations in which one or both parties are open to liability under a contract, as
well as the remedies to which an injured party is entitled. Additionally, you should be able to
understand key legal elements of the auction process.
In Contract I, you will begin to learn how a contract is formed from a legal perspective.
You will explore consumer protection law and standard terms and conditions for buyers and
sellers both at auction and in private sales. In Contract II, you will look at agency law and its role
in the art world. You will also learn how contracts may be modified or ended, and what happens
when a contract is breached. Please see the Student Handbook for more details.
As we will discuss in class, this module is designed primarily to focus upon contract law
in England and Wales. However, you will be assigned American and other international cases to
read from time to time. This will allow you to assess relevant differences between the legal
jurisdictions, as well as to gain a greater understanding of the sorts of legal issues that arise in
the art world.
Your Contract Law class time will be primarily seminar format. For most classes, you
will be assigned a set of readings, as well as questions to prepare and a fact pattern to discuss.
All students are expected to actively participate in all seminars. In order to do so, you must have
done the assigned reading. You will also hear from a variety of guest lecturers speaking on
relevant topics, such as auction house lending or litigation practices. From time to time, the
lawyers who worked on various relevant cases you will read will come in to discuss the cases
with you in greater detail.
At the start of Winter Term, you will receive your own long-term loan copy of Lee Roach,
Card & James’ Business Law (4th edition, Oxford University Press, 2016). This will be the only
mandatory textbook for the law courses; however, you may have reading assigned from books
in the LRC. Wherever possible, I will have those readings scanned and available to you on
Canvas, but there may be occasions where you must track down the readings yourselves. In
particular, you will have readings from John H. Merryman, Albert E. Elsen, and Stephen K. Urice
(eds.), Law, Ethics, and the Visual Arts (5th edition, Kluwer Law International, 2007). There are
quite a few copies of this book on reserve in the library, and so they are not scanned; please ask
Lizzy or Nick if you cannot locate one.
Roach is only one of many textbooks available on the law of contract, and deals only
with the law of England and Wales. It has been selected for its clear and accessible format,
especially for those new to studying law. Please also see the general module bibliography below.
These are additional articles and books that may be of interest or assistance to those who wish

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to do reading beyond what is assigned for class. I have included information on where to find
the various materials. Many are available in the LRC; others are available in the Law Library at
UCL, to which you have reference-only access.
For each class, you may have reading assigned from a variety of sources, primarily
textbooks (from the book you have been provided or from books available in the LRC), law
reports, and legislation.

Where to Find Cases and Legislation


Official law reports for the UK can be searched for in several locations. The primary legal
databases are Westlaw and Lexis, to which you have access through your GUID, so long as you
link through the Glasgow library website. Go to
http://www.gla.ac.uk/services/library/searchfor/databasesbyname/, enter the relevant
database, and then enter your GUID and password where prompted. You will also be able to find
most official law reports for the UK at www.bailii.org. This is a free resource that gives access to
the majority of cases heard by the appeal courts in the UK, as well as other cases of interest.
The contract law modules are not intended as comparative law in focus, but you will be
referred to international cases and provisions from time to time. In these cases, a Google search
will generally suffice. US and other international cases are frequently available through Google
Scholar (simply narrow the scope of the search to “case law”).
Legislation can generally be found online through a standard Google search.
If you have difficulty finding material I have assigned, please let me know immediately.

Citation
I expect correct legal citation of sources in your written work. You will be provided with
a quick reference guide for OSCOLA, the preferred citation format in this jurisdiction (also
available at http://www.law.ox.ac.uk/publications/oscola.php). We will cover the basics of legal
citation in class, as legal citation – as well as acceptable sources to cite - differs from standard
citation. If you are already familiar with legal citation formatting from another jurisdiction (such
as Bluebooking or McGill), this will be acceptable as well.

Assessment
Your assessment will be in the form of a summative examination covering information
learned in both Contract I and Contract II. This will likely take the form of a scenario (“fact
pattern”) in which a client comes to you for assistance. You will then be asked to provide
thorough and appropriate legal advice to that client. This will be a take home examination.
Consult the Student Handbook for details; further information will be provided at the relevant
time.
You will also have a series of unmarked in-class and/or take home exercises designed to
assist you in your legal thinking and writing. While these exercises will not impact your final
mark in this module, completing them will go a long way towards preparing you for the
summative examination.

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General Bibliography
Georgina Adam, Secrets of the Auction Room, THE FINANCIAL TIMES, Jan. 3 2009
Al Abrahim, Ababneh, & Tahart, The Postal Acceptance Rule in the Digital Age, 2 JOURNAL OF
INTERNATIONAL LAW & TECHNOLOGY 47 (2007) (HeinOnline)
Leslie Kaufman Akst, Regulation of the New York Art Market: Has the Legislature Painted Dealers
Into a Corner? 46 FORDHAM LAW REVIEW 939 (1978) (HeinOnline)
ANSON’S LAW OF CONTRACT (Jack Beatson & Andrew Burrows eds., Oxford University Press 29th
ed. 2010) (LRC)
Dame Mary Arden, Time for an English Commercial Code?, 56 CAMBRIDGE LAW JOURNAL 516
(1997) (JSTOR)
Orley Ashenfelter & Kathryn Graddy, Auctions and the Price of Art, 41 JOURNAL OF ECONOMIC
LITERATURE 763 (2003) (JSTOR)
AUCTIONS LAW AND PRACTICE (Brian Harvey & Franklin Meisel eds., Oxford University Press 3d ed.
2006) (LRC)
Graham Bowley, Sotheby’s and Christie’s Return to Guaranteeing Art Prices, N.Y. TIMES, Jan. 7,
2015
BOWSTEAD & REYNOLDS ON AGENCY (Peter Watts ed., Sweet & Maxwell Ltd 20th ed 2014) (UCL –
Law stacks)
Susan Bright, Winning the Battle Against Unfair Terms, 20 LEGAL STUDIES 331, 333-338 (2000)
(HeinOnline)
ANDREW BURROWS & EDWIN PEEL, CONTRACT FORMATION AND PARTIES (Oxford-Norton Rose Law
Colloquium, 2010) (UCL – Law stacks)
See in particular D. Nolan, Offer and Acceptance in the Electronic Age
JOHN CARTWRIGHT, CONTRACT LAW: AN INTRODUCTION TO THE ENGLISH LAW OF CONTRACT FOR THE CIVIL
LAWYER (Hart Publishing 2d edition, 2013) (LRC)
CHITTY ON CONTRACTS (Hugh Beale ed., Sweet & Maxwell Ltd 31st ed. 2012) (UCL – Law stacks)
Brian Coote, Contract Damages, Ruxley, and the Performance Interest, 56 CAMBRIDGE LAW JOURNAL
537 (1997) (JSTOR)
ENGLISH PRIVATE LAW (Andrew Burrows ed., Oxford University Press 3d ed 2013) (UCL – Law
stacks)
L.L. Fuller & William R. Perdue, The Reliance Interest in Contract Damages, 46 YALE LAW JOURNAL
52 (1936) (JSTOR)
ADAM GEAREY, WAYNE MORRISON, & ROBERT JAGO, THE POLITICS OF THE COMMON LAW: PERSPECTIVES,
RIGHTS, PROCESSES, INSTITUTIONS (Routledge-Cavendish 2d ed 2013) (OCL – Law stacks)
Thomas J. Hall & Chet Kronenberg, AB Recur Finans v. Andersson – Artwork is Just Another
‘Good’ Under the UCC, 13 ENTERTAINMENT AND SPORTS LAWYER 15 (1996) (HeinOnline)
Gustave Harrow, Reflections on the Estate of Rothko: The Role of the Legal Advisor in Relation to
the Artist, 26 CLEVELAND STATE LAW REVIEW 572 (1977) (HeinOnline)
Patti Gerstenblith, Picture Imperfect: Attempted Regulation of the Art Market, 29 WILLIAM & MARY
LAW REVIEW 501 (1988) (HeinOnline)

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Nils Jansen & Reinhard Zimmerman, A European Civil Code in All But Name: Discussing the
Nature and Purposes of the Draft Common Frame of Reference, 69 Cambridge Law Journal 98
(2010) (JSTOR)
Catharine MacMillan, A Birthday Present for Lord Denning: The Contracts (Rights of Third Parties)
Act 1999, 63 THE MODERN LAW REVIEW 721 (2000) (JSTOR)
DANIEL MCCLEAN, THE TRIALS OF ART (Ridinghouse 2007) (LRC)
JOHN H. MERRYMAN, ALBERT E. ELSEN, & STEPHEN K. URICE, LAW, ETHICS AND THE VISUAL ARTS (Kluwer
Law International 2d ed 2007) (LRC)
JANET O’SULLIVAN & JONATHAN HILLIARD, THE LAW OF CONTRACT (Oxford University Press 7th ed
2016) (LRC)
OXFORD DICTIONARY OF LAW (Jonathan Law & Elizabeth Martin eds., Oxford University Press 7th
ed 2013) (LRC)
OXFORD PRINCIPLES OF ENGLISH LAW – ENGLISH PRIVATE LAW (Andrew Burrows ed., Oxford
University Press 3d ed. 2013) (UCL – Law stacks)
Nick Paumgarten, Dealer’s Hand, THE NEW YORKER, Dec. 2 2013
Robin Pogrebin & Kevin Flynn, As Art Values Rise, So Do Concerns About Market’s Oversight, N.Y.
TIMES, Jan. 27 2013
Principles of European Contract Law (PECL)
(http://www.transnational.deusto.es/emttl/documentos/Principles%20of%20European%20C
ontract%20Law.pdf)
TREITEL: THE LAW OF CONTRACT (Edwin Peel ed., Sweet & Maxwell Ltd 13th ed 2011) (LRC)
UNIDROIT Principles of International Commercial Contracts 2010
(http://www.unidroit.org/instruments/commercial-contracts/unidroit-principles-2010)
Rick Rawlings, The Battle of Forms, 42 MODERN LAW REVIEW at 715 (1979) (JSTOR)
LEE ROACH, CARD & JAMES’ BUSINESS LAW (Oxford University Press 4th ed 2016) (provided; LRC)

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Contract I
1. Contract I: Introductory Lecture
Housekeeping matters
Introduction to law
No preparation required.

2. Contract I: Buying and Selling Art: Basics


Contract formation, intention to create legal relations, and consideration

Reading:

Required Supplemental
Texts:
Roach (provided) Chapter 5 Merryman The Artist and the
(LRC/Canvas) Lawyer: 844-859
Chapter 6 Dealing with Dealers:
971-979
216-220 The Collector and the
Artist: 1000-1003
O’Sullivan & 1.1-1.19
Hilliard (LRC)
1.22-1.25
Chapter 2
3.1-3.18
Chapter 4
6.1-6.65
Cases:
(1) Gibson v. Manchester City Council Phoenix Ancient Art, SA v. Kimbell Art
[1978] 1 WLR 520 (Court of Appeal): pay Foundation, 2003 U.S. Dist. LEXIS 20560
particular attention to Lord Denning MR’s (SDNY 2003) (practices of acquiring art)
judgment and contrast with
Feingold v. Chrismas, 818 F.Supp.2d 763
(2) Gibson v. Manchester City Council (SDNY 2011) (artist representation)
[1979] 1 WLR 294 (House of Lords): Lord
Diplock’s judgment
(3) Tekdata Interconnections Ltd v.
Amphenol Ltd [2009] EWCA Civ 1209
(4) In the Matter of Estate of Mark Rothko,
43 N.Y.2d 305 (1977)

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For those with a civil law background
Cartwright (LRC/Canvas) Judge-made law: 33-42
On the role (or lack of) good faith: 61-64
English contract law in a European context:
68-70; 91-137

Class Preparation:
1. What is a contract?
2. Must a contract be in writing?
3. What are the benefits of putting a contract in writing?
4. What are the ‘elements’ of a contract?
5. Does the doctrine of ‘offer and acceptance’ present any practical difficulties? If so, what?
6. Can an offer be terminated?
7. What are the pros and cons of the two approaches taken by the House of Lords and the
Court of Appeal in Gibson v. Manchester City Council?
8. What is the difference between a bilateral and a unilateral contract?
9. What is the difference between an ‘offer’ and an ‘invitation to treat’?
10. How do you think an auction might fit into the idea of ‘offer’ and ‘invitation to treat’?
11. Define ‘acceptance’ as a legal concept.
12. In what circumstances would the traditional analysis of offer and acceptance be
displaced according to the court in Tekdata Interconnections v. Amphenol? Cite the
relevant paragraph in the judgment.
13. When is ‘consideration’ required? Give an example.
14. What is the Statute of Frauds?
15. What types of contract or agreement are most often encountered in a gallery setting?

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3. Contract I: Writing about Law
General legal analytical writing
Legal referencing

No preparation required

4. Contract I: Buying and Selling Art: Terms


Terms
Reading:

Required Supplemental
Texts:
Roach (provided) Chapter 7 Merryman ‘An Appalling Contract’
(LRC/Canvas) et seq.: 844-859
Commissioned Works
of Art: 878-895
The Collector and the
Artist: 1000-1003
O’Sullivan & Chapter 8
Hilliard (LRC)

Cases:
(1) Thornton v. Shoe Lane Parking [1970] Robins v. Zwirner, 713 F.Supp.2d 367 (SDNY
EWCA Civ 2 2010)
(2) Interfoto Picture Library v. Stiletto AB Recur Finans v. Nordstern Insurance
Visual Programmes Ltd [1987] EWCA Civ Company of North America, 130 F.Supp.2d
6 596 (SDNY 2001)
(3) Cowles v. Gagosian, 2012 NY Slip Op
33156(U)
(4) MAFG Art Fund, LLC v. Gagosian, 123
A.D.3d 458 (2014)

Legislation:
Sale of Goods Act 1979 (United Kingdom) Uniform Commercial Code (UCC) Article 2
“Sales” (ok to skim; pay more attention to
New York Arts and Cultural Affairs Law parts 1-3; shown as §2-101, etc.) (USA)
1996 (USA)

Class Preparation:
1. What is a term? How are terms incorporated into a contract?
2. What is the difference between a term and a representation?

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3. Why is it important to understand whether a statement is a term or a representation?
4. What elements do a court look at to decide if a statement is a term or a representation?
5. What is the difference between an express term and an implied term? Can you think of
examples from the art world?
6. What practical steps do you think should be taken to incorporate ‘onerous’ or ‘unusual’
terms in a contract?
7. What are the justifications for the courts implying terms in to a contract?
8. What is the Parol Evidence Rule? Does it exist in both the Sale of Goods Act and the UCC?
9. To whom does the UCC apply?
Think about the following questions:
Problem 1:
[1] Rob saw a sword advertised in an antiques magazine which was described as “Sword ‘Game
of Thrones/Song of Ice and Fire’: Ice – Valyrian Steel Blade.”
[2] He does not watch Game of Thrones but knows his father Ned is a big fan and thought he
would buy Ned a present.
[3] Rob contacted the seller company, ‘The Wall Ltd,’ explaining that he had seen the
advertisement and wished to buy the sword. He paid £2,500 (including delivery) and was sent
the sword. He gave it to Ned, who told him that it was not a Valyrian steel blade but rather was
made of stainless steel.
With reference to the Sale of Goods Act 1979, can Rob return the sword to the seller?

Problem 2:
[1] In February 2016, Barbara Bettinghouse admired an artwork from a gallery called Artz n
Bitz in the small English town of Shaftsbury. Displayed in the gallery was a bronze sculpture of a
dolphin jumping through an inflatable ring.
[2] The dolphin sculpture was too large for Barbara’s London apartment. The gallery owner said
that she did not have any other editions on the premises, but could call the artist to see if such a
work could be commissioned. Barbara was running late for a lunch meeting and said she would
be back later to discuss things further.
[3] That afternoon, Barbara returned to the gallery. The artist had agreed to make a smaller
version, which would be ready by June 2016 at a cost of £15,000. The gallery owner required a
deposit of £5,000 and that Barbara sign a slip to confirm that the commission would go ahead.
[4] At that time, the artist was developing his yoga practice and had decided to no longer work
in bronze. The gallery owner told Barbara that she had to persuade him to take the commission.
She expressed a fear that if he had too much time to think about it, he might change his mind.
[5] As she presented the confirmation slip, Barbara received a telephone call from her
daughter’s nanny. The dog had eaten her daughter’s favourite toy. Her daughter was hysterical
and would not calm down. Without hanging up the call, Barbara checked the price of the
sculpture and signed the slip. The gallery owner thanked her and explained that she required
the deposit within two weeks.
[6] Three months later, Barbara received a call from the gallery announcing that the work was
ready for delivery. Barbara transferred the outstanding payment to the gallery and arranged a
date for delivery.

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[7] The work was delivered but on unwrapping, Barbara discovered that it was much smaller
than she had envisaged. In addition, the dolphin was not jumping through an inflatable ring;
instead, it balanced a pineapple on its nose. Barbara was not happy. She called the gallery
owner, demanding a full refund and that they arrange to collect it. The gallery owner apologized
but said that this was not possible.
[8] The slip that Barbara signed stated that the gallery is ‘not responsible for any variation of
any part of commissioned works.’ It also stated that the ‘express terms of this document
constitute the entire agreement between the signatory parties.’
Is the gallery owner right? Advise Barbara with reference to the laws of England and
Wales. What further information might you want?

5. Contract I: Consumer Protection


Reading:

Required Supplemental
Texts:
Roach (provided) Chapter 9 Merryman (LRC) 1036-1053
O’Sullivan & Chapter 9
Hilliard (LRC)

Cases:
(1) Director General of Fair Trading v.
First National Bank [2001] UKHL 52
(2) XL Specialty Insurance Co v. Christie’s
2016 NY Slip Op 01901 (Mar. 17 2016)
*compare to:
(3) AXA Art Ins Corp v. Christie’s 2016 NY
Slip Op 30148(U))

Legislation:
(1) Unfair Contract Terms Act 1977
(“UCTA”) (UK)
(2) Consumer Contracts (Information,
Cancellation and Additional Charges)
Regulation 2013 (UK)
(3) Consumer Rights Act 2015 (UK)
(4) UCC §2-302 (US)

For those with a civil law background


Cartwright (LRC) Chapter 9

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Class Preparation:
1) What is an exclusion clause? What sorts of things does it try to exclude?
2) What are the benefits of an exclusion clause?
3) What are the problems of an exclusion clause?
4) What do courts consider when evaluating the validity of an exclusion clause?
5) Are limitation clauses interpreted as restrictively as exclusion clauses? How do you
know that?
6) When is UCTA triggered?
7) Can you exclude or restrict liability for death or personal injury resulting from
negligence? Define “personal injury” for the purposes of the UCTA.
8) How does the UCTA define a “business”?
9) Under UCTA, can you exclude or restrict liability for breach of contract?
10) What is and where can you find the “reasonableness test” in UCTA?
11) What factors do the courts take into account when deciding that the requirement of
“reasonableness” is satisfied?
12) According to the 2013 Regulations, how does the legislation define an “off-premises”
sale?
13) If an art dealer concludes a sale in a gallery of which he is not the owner, what
information should the dealer give the client to ensure that he does not commit a
criminal offence?
14) If a dealer sells an artwork to a consumer in an “off premises” sale, does the consumer
have the right to later cancel that sale?
15) When is CRA 2015 triggered?
16) What does CRA define as an “unfair term”?
17) What is the rule of L’Estrange v. Graucob?

6. Contract I: Misrepresentation and Vitiating Factors


Reading:

Required Supplemental
Texts:
Roach (provided) Chapter 10 Merryman (LRC) 1016-1036
O’Sullivan & Chapter 10
Hilliard (LRC)

Cases:
(1) Shogun Finance Ltd. v. Hudson [2003]
UKHL 62
(2) Leaf v. International Galleries Ltd
[1950] 2 KB 86
(3) Thomson v. Christie Manson & Woods
[2004] EWCH 1101 (in this case, read the
judgment at first instance, not the Court
of Appeal judgment, which is cited at
[2005] EWCA 555)

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Legislation:
(1) Misrepresentation Act 1967 (UK)

For those with a civil law background


Cartwright (LRC) Chapter 7

Class Preparation:
1. What effect do the following have on a contract?
a. Mistake
b. Misrepresentation
2. With reference to Shogun:
a. According to Lord Nicholls, what is the difference between face to face dealings
and those conducted at a distance?
b. What does Lord Millett (dissent) conclude of the decision in Kings Norton Metal
Co Ltd v. Edridge Merrett & Co Ltd?
3. Summarize the position on mistake of identity post-Shogun: is it more likely that a court
will find mistake in relation to (a) face to face dealings or (b) written contracts? Why?
4. Could the buyer in Leaf International claim for the mistaken belief that the painting was
that of an Old Master? If not, under what circumstances could a claim be brought?
5. Define misrepresentation as a legal term.
6. Define mistake as a legal term.
7. Name the four different headings under which one could claim for a misrepresentation.
Which of these do you think is most likely to be used and why?
8. Under section 2(1) of the Misrepresentation Act 1967, when can damages be claimed for
misrepresentation?
9. What was or were the claimed misrepresentations in Thomson v. Christie’s (judgment at
first instance, not the appellate judgment)?
10. Can you exclude liability for misrepresentation in a contract? Pay attention to section 3
of the Misrepresentation Act 1967, as amended by section 8 UCTA. If so, how? Why? If
not, why do you think not?

7. Contract I: Exam Briefing and Writing a Law Exam


Exam briefing
Structuring a law exam answer

You will be provided with a sample law exam to work with during this class; you may be
given exercises as well beforehand

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