“Guarantee: [The Seller] agree[s] that subject to the guarantee set out in the following paragraph, [the Painting] will be sold “as is”, with all faults and imperfections and errors of description. Subject as above, neither [the Seller] nor Sotheby’s shall be responsible for errors of description or for the genuineness or authenticity of the Property nor make any representations or warranties with respect to the physical condition, size, quality, rarity, genuineness, authenticity, importance, provenance, exhibitions, literature or historical relevance of the Property, and no statement anywhere, whether oral or written, shall be deemed such a representation or warranty. Notwithstanding the generality of the preceding paragraph, Sotheby’s shall guarantee to the buyer that [the Painting] is not “counterfeit” (an imitation intended to deceive). This guarantee will not be assignable and will only be applicable to the original buyer and not to any subsequent owner or owners who acquire an interest in [the Painting]. In the event Sotheby’s determines that [the Painting] is “counterfeit”, you agree to a rescission of the sale and will return to the buyer the purchase price received by you for [the Painting] and the buyer will return [the Painting] to you. Sotheby’s reserves the right to consult independent expert advice on whether [the Painting] is “counterfeit” and will only rescind a sale if the buyer can: (i) provide, within five (5) years from the date of their agreement to purchase [the Painting], written evidence raising doubts as to the authenticity or attribution of the item; (ii) transfer good title in the item free from third party claims; and (iii) return the item to Sotheby’s in the condition in which it was purchased.”
“EPC Nevada LLC … Dear Sirs Frans Hals, “Portrait of a Gentleman, half-length, wearing Black”, signed with monogram lower right: FH, oil on oak panel, 13 ½ by 10 ½ in. (the “Property”) This letter agreement (the “Agreement”) confirms the terms under which the seller and Sotheby’s in London (“Sotheby’s”) as the seller’s agent, will sell the Property to you subject in all respects to receipt by Sotheby's of a licence or licences allowing the permanent export of the Property from the United Kingdom to the U.S.A. (the “Licence”). 1. You agree to pay to Sotheby's a purchase price of US$ 11,287,500 (eleven million two hundred and eighty seven thousand and five hundred US dollars) for the Property (inclusive of Sotheby's buyer’s premium) (the “Purchase Price”) in US dollars, by wire transfer to the following account: … Account Name Sotheby's, in three instalments (each, an “Instalment” as follows: - a first Instalment of US$ 1,000,000 shall be payable by you to Sotheby's within five (5) business days of signature of this Agreement by you; and - a second Instalment of US$ 1,000,000 shall be payable by you to Sotheby's within five (5) business days of signature of this Agreement by you; and - a third Instalment equal to the balance of the Purchase Price shall be payable by you to Sotheby's within 30 days of signature of this Agreement by you. You agree that in the event that you should default on payment of an Instalment, in addition to any other legal remedies that may be available to Sotheby's, Sotheby's will be entitled to exercise one or more of the following remedies, at Sotheby's discretion: (a) charge you default interest at 6% per annum above HSBC Bank plc’s base rate on the amount due from the date on which the Purchase Price is payable to the date Sotheby's receives payment of the amount due in full; (b) demand immediate payment of the Purchase Price in full; and (c) cancel the sale of the Property retaining the right to damages for your breach of contract. You hereby acknowledge and agree that in the event that you default on payment of the second Instalment and/or third Instalment, the seller will retain the first Instalment in full as liquidated damages and title to the Property will remain vested in the seller. 2. As soon as reasonably practicable following receipt by Sotheby's of (i) the Property; (ii) the Licence; (iii) the Purchase Price in full in cleared funds and (iv) written confirmation from you of the location in Seattle, Washington, U.S.A. at which you would like the Property to be delivered (the “Delivery Location”) Sotheby's shall arrange for the Property to be shipped from London to the Delivery Location at no cost or risk to you. You hereby agree to pay any taxes or duties due in connection with the shipment and your purchase of the Property under this Agreement. Upon arrival of the Property at the Delivery Location, the condition of the Property shall be inspected by Sotheby's. 3. You acknowledge and agree that title to and risk in the Property shall not transfer, and the Property shall not be released, to you until the later of (i) receipt by Sotheby's of payment of the Purchase Price in full as cleared funds and (ii) arrival of the Property at the Delivery Location and completion of a condition inspection by Sotheby's. … 4. You agree that subject to the guarantee set out in the following paragraph, the Property will be sold “as is”, with all faults and imperfections and errors of description. Subject as above, neither the owner nor Sotheby’s shall be responsible for errors of description or for the genuineness or authenticity of the Property nor does either make any representations or warranties with respect to the physical condition, size, quality, rarity, genuineness, authenticity, importance, provenance, exhibitions, literature or historical relevance of the Property, and no statement anywhere, whether oral or written, shall be deemed such a representation or warranty. Notwithstanding the generality of the preceding paragraph, in the event that Sotheby’s determines that the Property is “counterfeit” (an imitation intended to deceive), as your sole remedy Sotheby’s will rescind the sale and the owner will return the purchase price for the Property to you. This offer to rescind is only available on condition that you: (i) provide Sotheby’s, within five (5) years from the date of this Agreement, written evidence raising doubts as to the authenticity or attribution of the Property, (ii) are able to transfer good title in the Property free from third party claims; and (iii) can return the item of Property to Sotheby’s in the condition in which it was purchased. This offer to rescind does not apply if, at the date of this Agreement, the Property description in this Agreement accords with generally accepted views of scholars and experts or indicates that there is a divergence of such views, or if the only method of establishing that the Property is “counterfeit” relies on a process which is either not in general use at the date of this Agreement or likely in Sotheby’s opinion to risk damage to the Property. This offer to rescind is only made to you personally and may not be transferred or assigned in any way by you. 5. This Agreement shall be governed by and construed and enforced in accordance with English law. In the event of a dispute hereunder, you agree to submit to the jurisdiction of the English courts in favour of Sotheby’s. … This Agreement represents the entire agreement between you and Sotheby’s concerning the sale of the Property and neither party may amend or supplement any provision other than in writing signed by each party. 6. … Please would you sign both originals of this Agreement where marked below, to confirm your agreement with its terms and return one copy to Sotheby’s.”
“To create privity of contract it must be established not only that the principal contemplated that a sub-agent would perform part of the contract, but also that the principal authorised the agent to create privity of contract between the principal and the sub-agent, which is a very different matter requiring precise proof.”
“What is clear from these citations is that, as a matter of English law, the Court will not conclude that there is privity of contract between a sub-agent and the principal merely because the principal is aware that his agent will delegate functions to a sub-agent and authorises such delegation … Before a contract between [principal and sub-agent] could be found to exist as a matter of English law, the Court would have to be satisfied not only that [the principal] contemplated the involvement of [the sub-agent] as collecting bank, but in Wright J’s words ‘authorised [the agent] to create privity of contract between [the principal] and [the sub-agent].”
“… an implied term … that Sotheby’s must exercise the Discretion [“to determine whether the [Painting] is “counterfeit” (being an imitation intended to deceive)”]… ; (b) by reference to the “written evidence” “provided” by the Buyer in relation to condition (i) [“that you … provide Sotheby’s, within five (5) years from the date of this Agreement, written evidence raising doubts as to the authenticity or attribution of the Property”] and (c) in accordance with … their fiduciary duties as the Seller’s agent.”
“… in the event that Sotheby’s determines that the Property is “counterfeit” (an imitation intended to deceive), as [Nevada’s] sole remedy Sotheby’s will rescind the sale and the owner will return the purchase price for the Property to you. This offer to rescind is only available on condition that you: (i) provide Sotheby’s, within five (5) years from the date of this Agreement, written evidence raising doubts as to the authenticity or attribution of the Property …. This offer to rescind does not apply if, at the date of this Agreement, the Property description in this Agreement accords with generally accepted views of scholars and experts or indicates that there is a divergence of such views. This offer to rescind is only made to you personally and may not be transferred or assigned in any way by you.”
“Frans Hals, “Portrait of a Gentleman, half-length, wearing Black”, signed with monogram lower right: FH, oil on oak panel, 13 ½ by 10 ½ in.”
“You agree that subject to the guarantee set out in the following paragraph, the Property will be sold “as is”, with all faults and imperfections and errors of description. Subject as above, neither the owner nor Sotheby’s shall be responsible for errors of description or for the genuineness or authenticity of the Property nor does either make any representations or warranties with respect to the physical condition, size, quality, rarity, genuineness, authenticity, importance, provenance, exhibitions, literature or historical relevance of the Property, and no statement anywhere, whether oral or written, shall be deemed such a representation or warranty.”
“The proper interpretation of the Generally Accepted Views Proviso is that the contracting parties set the level of commercial risk that was mutually acceptable. Basically, it was open to the parties to either rely on the views of connoisseurs in the art market (i.e. “scholars and experts”), or they could choose to agree a contract where the [Painting] would be subject to technical and scientific testing. On this contract the Buyer and the Seller agreed to set the bar at the level of view of scholars [and] experts. So, if the [Painting] description in the contract accorded with the generally accepted views of scholars and experts, the Offer to Rescind would not apply.”
“As of27 June 2011 , two Scholars (Prof Slive and Dr Biesboer) confirmed the attribution of the [Painting] to Frans Hals and one Scholar (Prof Grimm) rejected it. This represents a majority supporting the attribution. … These are identified in this report eight Experts … As of27 June 2011 , five of these Experts confirmed or supported the attribution of the [Painting] to Frans Hals (with the other three doing so after that date). Combining this with the views of the Scholars, the views expressed thus confirmed by an overwhelming majority the attribution to Frans Hals, with Prof Grimm the only dissenting voice.”
“… I considered that the work lacked the quality and artistic personality of a Hals. Once I had come to the view that [the Painting] was not by Hals, the date of the work was irrelevant to me; there was no need for me to investigate further. I formed the view that [the Painting] could not have been painted by Frans Hals because multiple constituents of [the Painting] are inconsistent with Hals’ works. For example, Hals’ paintings generally exhibit elements of impulsive, dynamic brushwork. They are also typically clear and simple. By contrast, [the Painting] contained an array of dots and excessive brushstrokes, which are not consistent with Hals’ hand. … In addition, the diagonal rhythm and impulsive action that I would expect to see in an authentic Hals painting were missing from [the Painting]. Moreover, [the Painting] lacked the dominant focus on the eye of the sitter, which is characteristic of Hals’ paintings.”
“This guarantee will not be assignable and will only be applicable to the original buyer and not to any subsequent owner or owners who acquire an interest in [the Painting].”
“This offer to rescind is only made to you personally and may not be transferred or assigned in any way by you.”
“… it is now clear that Sotheby’s paid [Nevada]$10.75m of the purchase price plus the buyer’s premium not by reference to any term of [Contract B], but solely because it considered it to be in its best commercial interests to do so. This was an extra-contractual payment made for pure business reasons, not because of any contractual obligation arising under the Sale Agreement.”
“Finally, I also wanted to confirm, as you requested, that in the event the painting is determined to be a counterfeit, you would be entitled to the return of the$11,287,500 that you paid for the painting.”