TEFAF 2020: Legal Update

When TEFAF 2020 kicks off today, UK and EU sellers of artworks will need to be particularly mindful of new laws and old regulations when brokering deals, especially given the increased potential of distance sales being concluded following the unfortunate coronavirus outbreak.

Besides complying with the new EU anti-money laundering regulations that came into effect this year (for more information on this see our UK law briefing here), sellers of works at TEFAF will need to remember the EU regulations relating to "off-premises" sales and "distance sales" which will apply to artworks sold at the fair to private collectors. Risks concerning these regulations can be managed by including specific wording in contracts, invoices, and terms of business, but failure to address the regulations' requirements can lead to unhelpful consequences.

The UK Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (the Regulations) which implement EU law that is present in one form or another in every EU country including the Netherlands, provide specific consumer protections when sales occur "off-premises" or are "distance sales".

"Consumers" are defined as "an individual acting for purposes which are wholly or mainly outside that individual's trade, business, craft or profession." The Regulations therefore mainly apply to private collectors and do not apply to customers who are businesses or partnerships, or to individuals who purchase works for business purposes. The Regulations also do not apply to non-EU and non-UK private collectors.

There is contradictory legal commentary as to whether sales to private collectors at art fairs, including TEFAF, are considered "off-premise sales" i.e. sales that occur in a place which is not the usual or frequent business premises of the seller. Regardless, sales to private collectors that do not occur in person, over the telephone, email or social media (e.g. Whatsapp and Instagram) will almost certainly been classed as a "distance sale."

When off-premises or distance sales occur, sellers are required to provide private collectors with detailed information before the private collector is bound by the sales contract. This information is usually quoted on the invoice and must include the fact that the private collector has a right to cancel the sale within 14 days in return for a full refund (minus the cost of any damage caused to the item post-sale). Failure to inform the private collector of this fact is a criminal offence and can result in the cancellation and refund period extending to one year. It also removes the seller's right to deduct from the refund the cost of any damage caused to the item post-sale.

Other information that must be provided (the majority of which is often found on most invoices) includes:

• A description of the item being sold and its price
• Information on the payment for and delivery of the item (including any delivery charges)
• The identity of the seller, its address and contact details
• The address and identity of any other trader on whose behalf the seller is acting
• Details of the right to cancel, and a standard model cancellation form
• Details as to who must pay for the return of the item
• A reminder that the seller is under a legal duty to ensure that the item sold conforms with its description under the contract; and
• Details of any private collector deposits and financial guarantees.

The information must be provided on paper or (and only if the private collector agrees) in another "durable medium" such as email. Once the sale has been concluded, the dealer must give the consumer a copy of the signed contract or confirmation of the contract, and the confirmation must include all the above-listed information.

At a time when sales may be difficult to consummate, this added legal burden is unwelcome but we would simply suggest sellers are alive to the issue to avoid sales being unwound at a later date.