When Selling prints, disclose or face the consequences.
COUNTLESS (OKAY, THREE) clients have asked our help in deciphering
the numerous disclosure requirements for selling
prints and photographs produced in multiples, a market that
has grown exponentially of late.
Quincy, for instance, was a bicoastal dealer with galleries
in Los Angeles and SoHo. He was on the verge of selling some
etchings and asked our advice in complying with the California
and New York disclosure statutes. Based on his questions,
it didn’t take an Einstein to figure out not only that Quincy
wasn’t complying with these laws, but that his knowledge of
them was practically nil.
We began by zeroing in on the California Sale of Fine Prints
Act of 1970, the first law of its kind in the U.S. The statute
was intended to protect consumers from abuses in the print
market, where unsuspecting buyers might, for instance, mistake
a monoprint for a monotype. It prohibits art dealers from
selling or consigning a multiple “into or from this state unless a
certificate of authenticity is furnished to the purchaser or consignee,
at his or her request,” and mandates that the certificate
disclose certain information, such as the size of the edition.
“So if the purchaser doesn’t specifically request a certificate,”
asked Quincy, “I don’t have to provide one, right?”
Wrong. The law makes clear that, in any event, a certificate
must be provided prior to a sale or consignment. If the purchaser
pays for the print prior to delivery of the work, the certificate
must be provided no later than the time of delivery.
“If I just need to give a buyer a simple certificate of authenticity,”
Quincy observed, “compliance is no big deal.”
Wrong again. The certificate is only one of the requirements.
Sellers in California must also include in any catalogue, advertisement,
or other written material detailed information on the
multiple, including (among other items) the artist’s identity,
whether or not the artist signed the multiple, the medium used
to create it, when it was produced, and—if it is from a limited
edition—the exact number of multiples in the edition. At the
buyer’s request, this information must be provided prior to
payment or the placing of an order for the multiple. If payment
is sent to the dealer before the work is delivered, the dealer must
provide the information at the time of, or prior to, delivery. The
buyer may be entitled to a full refund of the purchase price “for
reasons related to matter contained in such information” if he
returns the multiple within 30 days of receipt.
The corresponding law in New York, titled “Full Disclosure
in the Sale of Certain Visual Art Objects Produced in Multiples,”
was passed in 1982 and is closely modeled on the
California statute. It, too, requires dealers to make various
written disclosures about each multiple sold. Moreover, in
order to comply with both laws, print dealers must do some
math, since different disclosure requirements apply depending
on when the multiple was created. The two states divide the
date of creation into four distinct time periods. In the case of
California, these are: before 1900, from 1900 to 1949, from
1950 to 1982, and on or after January 1, 1983. New York’s
dates are roughly similar. The more recent the time period, the
more disclosure required.
“If they wanted dealers to comply, they should have simplified
the laws,” Quincy griped. “It hardly seems worth the
effort for a cheap little litho.” We had good news for him: Prints
sold for $100 or less are exempt from both the California and the New York disclosure
statutes.
Quincy furrowed his brow. “Isn’t the artist who made the prints—or
the person who consigned them to me—responsible for mistakes in the
information he provides?”
The answer is: It depends on your time zone. California does hold the
seller liable for incorrect or false disclosure regarding multiples. Under
that law, dealers (but not artists) are held to a standard of “strict liability”
for any mistakes in the certificate of authenticity and violations of
the law, which means that ignorance is no excuse. New York does not
have the same requirement.
“That’s totally unfair!” exclaimed Quincy. “How do I, as a dealer,
know the artist isn’t scamming me with bogus edition numbers?”
Apparently, the New York legislature wondered the same thing. In
striking contrast to the California statute, an artist who sells or consigns
a multiple of his own creation in New York will be viewed as a merchant,
and will therefore incur the same liability as a dealer for any misrepresentation.
Furthermore, under the New York law, if the dealer can show
that his liability arises from faulty information given in writing by the
consignor, artist, or merchant, he can seek damages.
“Can I avoid liability under the disclosure laws by making some sort
of disclaimer?” our client asked.
The answer is yes in California, but possibly not in New York. The
latter’s law states that if the dealer makes disclaimers about information
required to be disclosed, he will be absolved of liability only if he made
“reasonable inquiries, according to the custom and usage of the trade”
to ascertain the correct information.
For an aggrieved collector to seek relief under the laws, he must
first return the problematic print to the seller (which may tempt an
unscrupulous dealer to resell the work to another buyer). Second, in
California the purchaser can seek civil remedies, such as rescission,
interest, lawsuit costs, reasonable attorneys’ fees, expert witness fees,
treble damages for willful noncompliance, civil penalties of $1,000
per violation with a possible civil penalty surcharge of $1,000, and
injunctive relief. Neither California nor New York imposes criminal
fines or imprisonment, so the risk to dealers is probably slight.
In New York the civil penalties are limited to $500. Although both
states allow their attorneys general to take action, they may only impose
civil penalties.
The good news for Quincy is that, to date, disclosure laws have
proved so ineffectual that almost no private lawsuits have been brought
under their provisions. One often-cited exception was the 1982
California case Charlene Grogan-Beall v. Ferdinand Roten Galleries,
Inc., concerning Grogan-Beall’s purchase of a number of prints from a
California gallery. Except for the numerical indication on the prints, the
gallery gave her no information about the history or uniqueness of the
works. Two subsequent purchases of prints by her from the same gallery
were also problematic: The gallery provided an incomplete certificate
of authenticity for one print and only sent the required information on
the second print three months after the purchase.
Grogan-Beall initiated a class action on behalf of California print
buyers for the gallery’s failure to comply with the state’s disclosure provisions.
The court ordered the gallery to return to her the money paid
for the prints, plus interest, but also required that she return the prints
in order to recover damages for willful violation of the law. The court
denied her request for attorneys’ fees and ultimately denied certification
for a consumer class action.
Our own view is that although government enforcement in this area
has been virtually nonexistent to date, this may change as the prices
charged for multiples…multiply. In fact, you can count on it. Download this article here.