Pryor Cashman and partner Paul Cossu recently obtained a victory on behalf of gallery client New York Art World, LLC in connection with a purchaser’s default on an invoice for a multi-million dollar Keith Haring artwork.
Edelman Arts claimed that it had “cancelled” the invoice it had previously accepted from New York Art World, and made two arguments for this purported cancellation right: (1) that it was permitted by law to cancel the invoice within 30 days, and (2) that Edelman Arts was a disclosed agent for a principal (i.e., a resale client) who had failed to make payment to Edelman Arts.
Justice Joel Cohen of the New York State Supreme Court granted summary judgment on New York Art World’s claim for breach of contract, finding that Edelman Arts’ defenses lacked any merit. Importantly, the Court noted that Edelman Arts’ use of a resale certificate confirmed that it was “purchasing . . . [t]angible personal property for resale,” and not acting as the agent of a principal. Similarly, the Court found no authority for Edelman Arts’ claim that it could cancel the invoice, where the document contained no provision for such cancellation.
Justice Cohen’s decision highlights that art dealers are subject to liability when they agree to purchase an artwork in their own name (even if they intend to immediately resell the artwork to a client), particularly if they use a resale certificate to make the purchase and paper the resale as a separate transaction. Further, after agreeing to purchase an artwork, either at a gallery, art fair, or otherwise, there is no automatic “right of cancellation” in the event that the purchaser suffers from a case of “buyer’s remorse.”
The court’s full decision is available here.
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