Dealer or agent? You make the call! 1 1

[Rick2you2]

Wall Street Journal has an article in today’s paper about it.

After reading it, I agree with the Russian tycoon even if it upends the art market. When you use someone as your purchasing agent, you have a legitimate expectation that the agent will engage in full disclosure about a transaction with you and not trade on the account for his personal benefit. If “x” bought something on day 1 knowing that “y” was planning to buy it, and if x had an agreement with y to arrange for its sale to y, then I do have a problem with this. Now, if x did not have a prior agreement with y, then I am okay with it because y had no reasonable expectation that x was acting in his own interest.

[Bronty]

On 1/8/2024 at 8:49 AM, Rick2you2 said:

Wall Street Journal has an article in today’s paper about it.

After reading it, I agree with the Russian tycoon even if it upends the art market. When you use someone as your purchasing agent, you have a legitimate expectation that the agent will engage in full disclosure about a transaction with you and not trade on the account for his personal benefit. If “x” bought something on day 1 knowing that “y” was planning to buy it, and if x had an agreement with y to arrange for its sale to y, then I do have a problem with this. Now, if x did not have a prior agreement with y, then I am okay with it because y had no reasonable expectation that x was acting in his own interest.

The article is behind a pay wall for me, but on what basis is that determination being made?

Other articles mentioned he would invoice the Russian for artwork, not for services, which is more consistent with dealer than agent.

But, again, its behind a pay wall for me.

The Russian had to have an expectation that Bouvier was not doing this for free.     So, he had to expect that there was either a mark up, or that he'd be invoiced a percentage.

If he wasn't invoiced a percentage, it would likely have been pretty clear the work was being marked up to him. 

This is not a rube at play here.      This is a billionaire who's no doubt seen it all and then some.

Edited January 8 by Bronty

[Rick2you2]

On 1/8/2024 at 12:07 PM, Bronty said:

The article is behind a pay wall for me, but on what basis is that determination being made?

Other articles mentioned he would invoice the Russian for artwork, not for services, which is more consistent with dealer than agent.

But, again, its behind a pay wall for me.

The Russian had to have an expectation that Bouvier was not doing this for free.     So, he had to expect that there was either a mark up, or that he'd be invoiced a percentage.

If he wasn't invoiced a percentage, it would likely have been pretty clear the work was being marked up to him. 

This is not a rube at play here.      This is a billionaire who's no doubt seen it all and then some.

Here are the key points from the article (involving the suit against Sotheby's, the case against the agent was apparently settled in a Swiss court). The essence of your point is in the last quoted paragraph. The art purchaser's (Rybolovlev's) case hinges on the issues of reliance on Bouvier, Bouvier's knowledge of that reliance, and essentially taking advantage of it with the active cooperation of Sotheby's. I found Sotheby's defense to be disconcerting, to say the least, and in a US court would not be impressive if the Russian can prove his claimed facts. Adhering to industry practice doesn't mean a whole industry isn't in violation of basic legal principles and potentially liable. Moreover, knowledge can be inferred from the arguable results:

"For years, Rybolovlev relied almost entirely on the collecting advice and negotiating skills of Bouvier, a Swiss private dealer better known in art circles for running an art-storage facility in Geneva. 

The Russian alleges Sotheby’s helped Bouvier source masterpieces to buy, helped hash out the deal terms and later reassured Rybolovlev that he was making savvy art purchases by writing gushy appraisals of the works, while knowing the collector was paying his go-between millions more than Bouvier paid Sotheby’s for each artwork.

...

Sotheby’s said that it “strictly adhered to all legal requirements, financial obligations and industry best practices during the transactions of these artworks. Any suggestion that Sotheby’s was aware of the buyer’s alleged misconduct or intention to defraud Mr. Rybolovlev is false.”

Bouvier, who last month settled his own legal dispute with Rybolovlev in Swiss court, has maintained that he did nothing wrong. His spokesman said Bouvier signed no contract with the collector and so was free to act in his own best interests as a private dealer and could charge Rybolovlev whatever he deemed appropriate for the art he resold. Bouvier won’t attend the coming trial, though he did provide a sworn deposition, the spokesman said." 

Those relationships between the Russian and the art procurer, and the procurer and the seller, and the seller's knowledge of the ultimate buyer, are what set the case apart from just "arbitrage".

 

[Aahz]

It's funny that this topic has come up because I just watched the documentary on this, and my first thought was, "How is Bouvier still alive?"  Regardless of the the question of contract etc (and I realize this is a lawsuit), to me the main issue was that (at least how it was presented in the documentary), that Bouvier lied to Rybolovlev.  If he said that the seller didn't want to go below x when he knows it's y, that is not a mark up or percentage, it's a lie.

[delekkerste]

On 1/6/2024 at 6:30 AM, MyNameIsLegion said:

no, this was different. You may not have been in the hobby then or you're too young.

Tim is a Boomer.  

[Bronty]

On 1/9/2024 at 8:25 AM, Aahz said:

It's funny that this topic has come up because I just watched the documentary on this, and my first thought was, "How is Bouvier still alive?"  Regardless of the the question of contract etc (and I realize this is a lawsuit), to me the main issue was that (at least how it was presented in the documentary), that Bouvier lied to Rybolovlev.  If he said that the seller didn't want to go below x when he knows it's y, that is not a mark up or percentage, it's a lie.

(I haven't seen the documentary) but yes, I hear you there.   From what little I've read it almost comes across like Rybolovlev forgot Bouvier was a dealer and completely self interested.    Not your friend, but happy to appear so in order to juice the price up.      Not much different than what can happen in our hobby except at smaller numbers.

[MyNameIsLegion]

On 1/9/2024 at 8:01 AM, delekkerste said:

Tim is a Boomer.  

 What? Well that explains his laissez faire attitude about a great many things. 🧐. He probably missed this dust up on the comical-l list in 1999 because he couldn't link his AOL account to the listserv.  

[PhilipB2k17]

On 1/5/2024 at 6:20 PM, John E. said:

Hung jury.

A crime may have been committed when Sotheby's Samuel Valette sent "formal" emails raising the price of the Modigilani by the hour. According the article, we can apparently "infer that Valette raised the price at Bouvier's request." Although I would like to see the evidence of that request, because that's too important for me to just infer. Then there's skipping Valette's company in the provenance. I don't know what the legality of that is.

On the other hand, you have a filthy rich oligarch who has entered and disrupted the market. Remember when we all could buy birth pages of Tigra's groomer all-day, every-day for $50? Then all that CGC money poured into the birth page/1st appearance market and now Tigra's groomer pages are $5,000. How can Sotheby's not say that Modigilanis used to be $8M, but now they're $100M once these Russian player got into the market. If I were Sotheby's, I would say that they were grossly underestimating the art and were adjusting prices to the "new normal." I mean geez--all parties honestly or deceptively--underestimated the value of the Mundi.

In fact, I don't know why the F Sotheby's kept Valette on the payroll when they should have fired him and hired Bouvier. What fault of Bouvier for getting a way better price for the art than Vallete could? Bouvier clocked in 800 transactions over a period of 10 years and Sotheby's didn't jump on that talent? Tsk. I mean, Bouvier acted as a middleman. So instead of making up imaginary owners as a sales tactic, would it have been a crime if Vallete was out of the picture and Bouvier straight up said, "Sotheby's wants $107.5M for this painting.Take it or leave it."

I mean, do these guys deserve one slap per cheek with a pair of white leather gloves? I wouldn't disagree with that.

Someone (who I am not naming) just posted the "first appearance" of Godzilla in a Marvel Comic for $25,000. And its technically not even that, because it's the first interior appearance in Godzilla #1, and not the cover, which is the true first marvel appearance of Godzilla. Oh, and it's not even the first Godzilla appearance in comics. 

A decent Godzilla page by Trimpe is about $1500-$2500 depending on content. Maybe you get a premium for a good page from issue #1 -- so $3000-$4000? Max? Why not put that page on Heritage if you think you'll pull $25K?

Edited January 9 by PhilipB2k17

[PhilipB2k17]

Well, you need to enter into a contract with the middleman whereby he agrees that he has a fiduciary duty to act in your bests interests when he is doing the legwork to find a piece of art. In other words, you either pay him a commission, or a flat fee, and he agrees that he will not double deal, or conspire to defraud you -- and that he acts in good faith subject to breach of contract, etc. 

 

[PhilipB2k17]

On 1/9/2024 at 9:07 AM, Bronty said:

(I haven't seen the documentary) but yes, I hear you there.   From what little I've read it almost comes across like Rybolovlev forgot Bouvier was a dealer and completely self interested.    Not your friend, but happy to appear so in order to juice the price up.      Not much different than what can happen in our hobby except at smaller numbers.

Again -- you can enter into a contract with the Dealer to make him or her adhere to certain fiduciary principles. IN Real Estate, you can hire a Buyer's Agent, who only represents the buyer and is not also a listing agent who steers clients to their own listings, etc. The entre real estate brokers system just suffered a massive loss in a class action suit where they were double dealing and making buyers pay the commissions of the listing agents, rather than the seller.

Unscrupulous people will manipulate any system to their own benefit. 

[ThothAmon]

Did I read correctly that the oligarch sold for triple the allegedly inflated $137,000,000 “lost” davinci?  
 

Edited January 9 by ThothAmon

[Bronty]

On 1/9/2024 at 11:58 AM, PhilipB2k17 said:

Again -- you can enter into a contract with the Dealer to make him or her adhere to certain fiduciary principles. IN Real Estate, you can hire a Buyer's Agent, who only represents the buyer and is not also a listing agent who steers clients to their own listings, etc. The entre real estate brokers system just suffered a massive loss in a class action suit where they were double dealing and making buyers pay the commissions of the listing agents, rather than the seller.

Unscrupulous people will manipulate any system to their own benefit. 

I'm not disputing that you CAN enter into a contract along those lines.   But did he?   

 

[Bronty]

On 1/9/2024 at 12:17 PM, ThothAmon said:

Did I read correctly that the oligarch sold for triple the allegedly inflated $137,000,000 “lost” davinci?  
 

 

Its not a bad day's work.

[Rick2you2]

On 1/9/2024 at 11:55 AM, PhilipB2k17 said:

Well, you need to enter into a contract with the middleman whereby he agrees that he has a fiduciary duty to act in your bests interests when he is doing the legwork to find a piece of art. In other words, you either pay him a commission, or a flat fee, and he agrees that he will not double deal, or conspire to defraud you -- and that he acts in good faith subject to breach of contract, etc. 

 

I don’t agree with that. Fiduciaries have special duties under the law, like lawyers for example. You don’t have to be a fiduciary for the law to impose duties upon you. Anyone who intentionally commits a material misrepresentation of fact with knowledge that someone else will rely on it to his detriment commits classic fraud. Someone who accidentally misrepresents can be liable for negligent misrepresentation. Anyone who acts as an agent, whether by formal agreement or not, owes duties to the principal not to engage in double-dealing, but to work for the principal (with the existing legal relationship a matter of fact for a jury regardless whether there is a written contract). The law also imposes duties of “good faith and fair dealing” in any contractual relationship (at least in my states). Concealing material information from the Russian certainly sounds like it in this case. And, some states have Consumer Fraud laws which place special duties of disclosure and fair dealing on a seller which are beyond the common law (but they vary by state). Someone dealing with a NJ domiciliary who violates the Consume Fraud Act is liable for triple damages and attorneys fees. Not, however, for N.Y domiciliaries who have a different law.

Then we hit equitable remedies. If someone is aware that another person is relying on them, and the other person knowingly takes advantage of that reliance, then agreements can be voided and restitution ordered even if the misrepresentation is not negligent. So, the Russian could get back the difference he paid to the procurer and what the procurer of the art bought it for because of the advantage taken.

There are probably some more I could add to the list, but that should do to convince anyone at least in N.J. or N.Y. not to mess with shortcuts.

[PhilipB2k17]

On 1/9/2024 at 1:29 PM, Bronty said:

I'm not disputing that you CAN enter into a contract along those lines.   But did he?   

 

You would think a Billionaire could afford to have a lawyer draw up such a contract. 

[PhilipB2k17]

On 1/9/2024 at 1:42 PM, Rick2you2 said:

I don’t agree with that. Fiduciaries have special duties under the law, like lawyers for example. You don’t have to be a fiduciary for the law to impose duties upon you. Anyone who intentionally commits a material misrepresentation of fact with knowledge that someone else will rely on it to his detriment commits classic fraud. Someone who accidentally misrepresents can be liable for negligent misrepresentation. Anyone who acts as an agent, whether by formal agreement or not, owes duties to the principal not to engage in double-dealing, but to work for the principal (with the existing legal relationship a matter of fact for a jury regardless whether there is a written contract). The law also imposes duties of “good faith and fair dealing” in any contractual relationship (at least in my states). Concealing material information from the Russian certainly sounds like it in this case. And, some states have Consumer Fraud laws which place special duties of disclosure and fair dealing on a seller which are beyond the common law (but they vary by state). Someone dealing with a NJ domiciliary who violates the Consume Fraud Act is liable for triple damages and attorneys fees. Not, however, for N.Y domiciliaries who have a different law.

Then we hit equitable remedies. If someone is aware that another person is relying on them, and the other person knowingly takes advantage of that reliance, then agreements can be voided and restitution ordered even if the misrepresentation is not negligent. So, the Russian could get back the difference he paid to the procurer and what the procurer of the art bought it for because of the advantage taken.

There are probably some more I could add to the list, but that should do to convince anyone at least in N.J. or N.Y. not to mess with shortcuts.

"Fiduciary" is a legal term of art, and can easily be used a proxy for all of the other statutory or contractual, or common law duties you specified. When you are talking about a multimillion-dollar art purchase, I should think you'd want your art agent to have a fiduciary responsibility to act solely for your benefit and in your best interests, rather than rely on a particular forum's law. But, again, it's a matter of taste, really. How much layering of legal protection do you want to put into a contract? 

Edited January 12 by PhilipB2k17

[Rick2you2]

On 1/12/2024 at 12:00 PM, PhilipB2k17 said:

"Fiduciary" is a legal term of art, and can easily be used a proxy for all of the other statutory or contractual, or common law duties you specified. When you are talking about a multimillion-dollar art purchase, I should think you'd want your art agent to have a fiduciary responsibility to act solely for your benefit and in your best interests, rather than rely on a particular forum's law. But, again, it's a matter of taste, really. How much layering of legal protection do you want to put into a contract? 

They are not the same, and yes you should expressly include the word. Both owe duties of loyalty and obedience, but a fiduciary is held to a higher standard. See the Content Authority, Agent vs. Fiduciary. Where financial matters are concerned, I would recommend the specific use of the word “fiduciary” as it is a disfavored interpretation, compared to “agent”. In other words, if you don’t expressly say it, you may not get it.

[Bronty]

On 1/12/2024 at 11:56 AM, PhilipB2k17 said:

You would think a Billionaire could afford to have a lawyer draw up such a contract. 

You know, both parties have to sign a contract.    Just because you draw up a contract you like and bring it to me doesn't mean I won't tape it to a urinal and use it for target practice.

[Rick2you2]

On 1/13/2024 at 10:42 PM, Bronty said:

You know, both parties have to sign a contract.    Just because you draw up a contract you like and bring it to me doesn't mean I won't tape it to a urinal and use it for target practice.

Actually, they don’t have to sign it all to be bound by it. Agency law requires no signed writing. Its existence can be based on the facts and circumstances. So can fiduciary status (which is a disfavored interpretation). You can still be bound by it even if you don’t sign it but begin performance. I have this discussion regularly with contractors I represent (although not on agency status). Only if no performance and no signature is provided will the contracting be avoided. 

Real estate contracting is treated differently because it generally involves the purchases and sale of land. Also, states often have statutes governing real estate contracting.

[Bronty]

On 1/14/2024 at 8:22 AM, Rick2you2 said:

Actually, they don’t have to sign it all to be bound by it. Agency law requires no signed writing. Its existence can be based on the facts and circumstances. So can fiduciary status (which is a disfavored interpretation). You can still be bound by it even if you don’t sign it but begin performance. I have this discussion regularly with contractors I represent (although not on agency status). Only if no performance and no signature is provided will the contracting be avoided. 

Real estate contracting is treated differently because it generally involves the purchases and sale of land. Also, states often have statutes governing real estate contracting.

That’s good information but I was just responding to the idea that “well he can afford a lawyer so he should just draw it up to his advantage, which is ridiculous on its face.   
 

It also doesn’t really answer the question of whether or not Bouvier was in fact an agent here.