Derek Fincham writes on "Will the Statue of Frauds Crack the Art Market's Shield of Anonymity in New York?" his column "The Empty Frame" for the Spring 2013 issue of The Journal of Art Crime.
In his seminal 1982 article, Harvard Law Professor Paul Bator noted that the art trade is shrouded in mystery. In the thirty years since Bator examined the international art market, little has changed with respect to the basic information which is made available when works of art are bought and sold at auction. Auction house catalogues typically include little more than a cursory "this work is from a private collection." That may change, at least in New York when the State's highest court will take up a recent auction dispute.
In September of 2008, a 19th century “fine Russian silver/enamel covered box with gilt interior” was slated to be auctioned by the William J. Jenack Auctioneers. Prior to the auction, the auction house received an absentee bid from Albert Rabizadeh. This absentee bidder’s form included Mr. Rabizadeh’s name, phone number, address, email address, and credit card number. The defendant was assigned bidder number 305, as indicated on his form, and his bid for a price of $400,000 was the winning bid for the antique box. This dispute arose, as so many of them do, when the winning bidder refused to pay for the antique. Auction houses rely on the binding nature of these bids in conducting their business, so it should come as no surprise that the Jenack auction house brought a suit against the allegedly derelict bidder. The low of contract might ordinarily be sufficient to require Mr. Rabizadeh to pay the asking price. At the initial trial, Mr. Jenack successfully sued and the trial court held that Rabizadeh was required to make good on his winning bid. However a well- established principle of English and American law, the statute of frauds, requires that certain agreements be reduced to writing. And the district court ruling was overturned on appeal.Derek Fincham is an assistant professor at South Texas College of Law where he teaches art law and legal writing. He has lectured on ARCA's Postgraduate certificate program in art crime and cultural heritage protection since 2009. He earned his PhD from the University of Aberdeen, King's College, for his dissertation examining the response of the United States and United Kingdom to the illicit trade in art and antiquities. He holds a JD from Wake Forest University, and a BA in History from the University of Kansas. He regularly blogs on heritage issues at www.illicit-cultural-property.blogspot.com.
The ninth issue of The Journal of Art Crime, edited by Noah Charney and published by ARCA, is available electronically (pdf) and in print via subscription and Amazon.com. The Associate Editor is Marc Balcells (ARCA '11), Graduate Teaching Fellow, Department of Political Science, John Jay College of Criminal Justice -- The City University of New York.