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Every now and then, a spectacular case of art fraud comes to light, shaking up the market for high-end works that can cost millions of dollars. Less spectacular, but perhaps more interesting from a legal perspective, are cases of “sleepers,” works that were misattributed or underattributed when they were sold, but later reattributed and sold for a good deal more. 

In When Sleepers Awake: Sellers’ Regret and Art-Market Intermediaries, Duke Law professor Deborah A. DeMott examines how unique attributes of the market for visual art raise legal questions about the responsibilities of expert intermediaries, such as auction houses or art dealers, to the sellers they represent. Cases of fraud typically involve a straightforward intention to deceive, observes DeMott, the David F. Cavers Distinguished Professor of Law and an expert in art law and questions of fiduciary obligation. But in sleeper cases, “neither the buyer nor the seller has done anything that is legally objectionable,” she said.

In the art market, attribution is key to a work’s monetary value and its overall significance. And unlike the market for most products, which can be purchased from anywhere they are sold, valuable works of art typically change hands with the help of expert intermediaries. Once a work is consigned to a dealer or auction house, the consignee acts as their agent, and owes the consignor duties of loyalty and duties of performance. 

In sleeper cases, the role of the intermediary takes on heightened importance: Did they fail in their duty to detect the work’s potential value? What can be reasonably expected when it comes to an object whose attribution has the potential to change, whether as a result of new scholarship, a change in condition (such as cleaning the surface of an artwork), or technological innovation (the use of x-ray or other tools to see under layers of varnish or paint)? 

“I was interested in the phenomenon that I call ‘seller’s regret,’” said DeMott. Sellers who later see a work they consigned resold and purchased for more may blame the intermediary who did not recognize its potential value in the first sale, even if they had no objections at the time the item was sold and the intermediary, whose compensation is typically a percentage of the sale price, is also incentivized to seek a high price. 

“These are also cases in which the seller, as of the time of the sale, is perfectly happy,” she continued. “That price just becomes deeply objectionable as perhaps new information emerges or the higher value becomes evident.”

In such cases, the buyer is often someone with enough knowledge — or luck — to spot a potentially underpriced item. But intermediaries are also supposed to bring expertise to the table. So how can courts decide whether the intermediary has adequately discharged their duties?

Real-life examples  

In one well-known 1989 case, a UK couple sold two small, dirty paintings of foxhounds through a provincial auction house where the husband had previously worked. The paintings had been a wedding gift and were displayed in a dark corner in a hallway; the wife testified that she “had never particularly liked them.” 

The pair of paintings eventually sold for £840 (British pounds), more than twenty times the reserve price of £40 and far above the estimate of £30-£50 that they had accepted upon handing them over to the auction house. The buyer had them cleaned, and they were attributed to the painter George Stubbs, deemed by one critic “the greatest animal painter” of the 18th century. 

The buyer subsequently resold them through Sotheby’s for £88,000 and the couple sued the auction house that had fetched them a mere £840. It turned out that the buyer was an art dealer who was familiar with Stubbs’ paintings of foxhounds. 

“In a lot of these cases, the buyer has invested in expertise that enables them to recognize something that others have not recognized,” DeMott said.

Should the provincial auction house have done better by the couple? The plaintiffs won at trial, but the auction house won on appeal. The Court of Appeal found that the provincial auction house had not breached its duties of care and diligence. “Local auction houses deal with all kinds of objects, and it’s very much, by definition, a volume business,” DeMott points out. In fact, an employee of the provincial auction house had even traveled into London to show the foxhounds to Christie’s to see if they might be valuable, but Christie’s didn’t think they were. 

“The court makes the very important point that the law does not expect local provincial auction houses to operate to the same high standard that it would expect of a so-called leading auction house,” DeMott said, highlighting the range of obligations owed by intermediaries even within the category of auction house. “It’s not realistic.”

In another important case from 2022, a prominent Old Masters dealer who had sold many previous paintings for the plaintiffs was tasked with selling the painting La Bénédicité (“Saying Grace”) (c. 1740), attributed to Jean-Baptiste-Siméon Chardin. The London-based dealer first saw the work in 1990 when he was employed by the auction house Christie’s. According to his notes from 1990, he gave the painting three possible valuations that ranged from £80-120,000 to as much as £800,000-£1,200,000, depending on how confident the house could be in whether it was an “autograph” work by Chardin himself; a copy by one of his apprentices; or a copy by one of his apprentices in which Chardin had also had a hand. 

In 2014, working independently as a dealer, he was asked to clean nine paintings from the plaintiffs’ estate and assess them for potential sale. For La Bénédicité, he consulted Pierre Rosenberg, the leading authority on Chardin, who told him it was a “reworked copy.” The defendant told the plaintiffs he thought it was “probably” by Chardin but it was dirty and hard to tell. He had it lightly cleaned and insured for £1 million. Just to be sure, though, he traveled to the Louvre in Paris and looked at what DeMott calls a “primary exemplar” of the painting, which had been exhibited by Chardin at a 1740 salon. He eventually sold it for £1,150,000, without definitive attribution, to a Stockholm-based dealer who further cleaned it, revealing a signature. This dealer then sold it and another painting for a reported $7.5 to $10 million. 

The court ruled that the dealer had not been negligent, both because he had consulted the leading authority on Chardin and had sought to compare the painting to the version at the Louvre. And he had no obligation to return to the leading authority to ask whether he’d changed his assessment. What’s more, DeMott writes, “the defendant’s acknowledged expertise as a dealer in Old Masters itself weighed against a duty to seek input from others.” 

Sellers’ regret is not unique to the art market, said DeMott. Selling a piece of land that later is found to lie atop a diamond mine or oil reservoir can also trigger remorse. But she finds the art cases particularly interesting for their specificity in laying out an intermediary’s obligations.

“Sleeper cases ask the court to look at very specific transactions in sophisticated and complicated settings,” said DeMott. “Their opinions tend to be highly informative about how these kinds of markets work, and how market intermediaries go about performing their work.”