We reviewed in December an important decision that addressed the duties of loyalty that art advisors may, or may not, owe to their clients in dealing in the art market. That question—of to what extent advisors and consultants must subordinate their interests entirely to the clien—is of obvious importance in a marketplace where buyer and seller often do not interact with each other. Whereas December’s news about the sale of Cady Noland’s Log Cabin was a reminder that advisors are not necessarily fiduciaries, this month’s decision about the sale of a Basquiat painting underscores that where a fiduciary relationship exists, the penalties for straying from those obligations can be severe.
The recent decision involved claims by Michael Schulhof against Lisa Jacobs Fine Art. According to the court ruling, Jacobs had worked personally as a curator and advisor to Schulhof and his late mother Hannelore Schulhof between 1998 and Hannelore’s death in 2012. Michael Schulhof and Jacobs entered into a contract in October, 2011 to locate a buyer for Future Sciences Versus the Man by Jean-Michel Basquiat. The contract specified that the minimum acceptable price was $6 million, and that Jacobs would be paid a fee of $50,000 upon successful sale. It also included a provision that Jacobs was “not to accept any fee from the purchaser, in cash or in kind.”
Read the rest of the article, written by art lawyer Nicholas O'Donnell, on the Art Law Report.