## Facts

- Sculpture Guild of America (SGA) acquired a bronze sculpture attributed to Pablo Picasso, *Tête Cubiste (Tête de Fernande)*, and offered it to SWCA, an art dealer.
- SWCA retained Thomas Segal, an independent dealer, to locate a buyer; Segal contacted Christie’s, an auction house.
- Werner Spies, author of the Picasso sculpture catalogue raisonné, issued a certificate stating the sculpture was a Picasso from the Vollard edition.
- Christie’s and SWCA executed a July 16, 2002 letter agreement authorizing Christie’s to sell the sculpture for $5,000,000 on SWCA’s behalf; it gave Christie’s a right to rescind if it reasonably determined the sale could expose Christie’s to liability.
- Christie’s sold the sculpture to Samuel I. Newhouse Jr. under a July 19, 2002 agreement that permitted Newhouse to rescind if the work was found unauthentic; Christie’s paid Segal a portion of the commission.
- In 2004–2005, Christie’s developed doubts about authenticity, including concern the sculpture was a “surmoulage” (a cast of a cast) viewed by many experts as unauthentic or outside the intended edition.
- Christie’s rescinded the sale to Newhouse and refunded the purchase price, then sought to rescind upstream against SWCA and recover the net proceeds previously paid; SWCA refused.
- Christie’s sued asserting, among other theories, breach of contract and authenticity-warranty claims; SWCA moved for partial summary judgment to dismiss the breach-of-contract and principal–agent causes of action, and Christie’s cross-moved for partial summary judgment on warranty liability against SWCA and SGA.

## Issues

1. Whether Christie’s contractual rescission right—triggered by its “reasonable” determination of potential liability exposure—was reasonable as a matter of law or instead presented a fact question barring summary judgment on the breach-of-contract claim.
2. Whether SWCA and SGA, by furnishing authenticity documentation and related representations, made an express warranty of authenticity under New York’s Arts and Cultural Affairs Law and the parties’ dealings.
3. Whether SWCA was entitled to summary judgment rejecting principal liability for conduct or representations made by Segal (and related sales efforts) in connection with the transaction.

## Decision

- SWCA’s motion for partial summary judgment was denied.
- The court held the reasonableness of Christie’s belief that the transaction could expose it to liability (and thus justify rescission) presented a triable issue of fact.
- The court denied summary judgment to SWCA on principal–agent liability because the record permitted a factfinder to conclude Segal acted for SWCA in locating a buyer and in facilitating representations tied to the sale.
- Christie’s cross-motion for partial summary judgment was granted in part and denied in part.
- The court held that an express warranty of authenticity existed as a matter of law under the Arts and Cultural Affairs Law based on the authenticity certificate and its use in the sale, binding SWCA and SGA on that warranty.
- The court left for trial disputed factual questions bearing on rescission, responsibility allocation, and damages.

## Legal Principles

- A contractual “satisfaction” or rescission clause conditioned on a party’s “reasonable” determination is subject to an objective reasonableness standard and good faith; where reasonableness is disputed, summary judgment is generally inappropriate.
- Under New York’s Arts and Cultural Affairs Law, statements of authorship or attribution made in connection with the sale of fine art, including through certificates or similar documentation provided to support a transaction, can create an express warranty of authenticity.
- A seller or consignor that supplies authenticity documentation for use in marketing and selling a work may be bound by the resulting express warranty running through the transaction.
- Principal–agent liability may present a triable issue where a dealer engages an intermediary to locate a buyer, accepts the transaction’s benefits, and the intermediary’s conduct is tied to representations used to consummate the sale.

## Conclusion

The court denied SWCA summary judgment because the contract rescission dispute turned on fact questions about the reasonableness of Christie’s liability concerns and related agency allegations, but granted Christie’s partial summary judgment that the transaction documents created a statutory express warranty of authenticity binding SWCA and SGA, leaving remaining liability and damages issues for trial.


Christie’s Inc. v. SWCA, Inc., 22 Misc. 3d 380, 867 N.Y.S.2d 650 (Sup. Ct. N.Y. Cnty. 2008)