1L A L I V E Avocats Contractual Problems of Authenticity and Attribution The Swiss Law Approach Carolyn Olsburgh

2 Titre Sous-titre L A L I V E Avocats Authenticity and Attribution – Swiss law INTRODUCTION Situation: Purchase of a work of art with the belief that it is an original (or by a certain artist)… … but it later turns out to be a fake. Major change in Switzerland since 1st June 2005

3 Titre Sous-titre L A L I V E Avocats Authenticity and Attribution – Swiss law INTRODUCTION Scope of presentation: Contract between buyer and seller  not relationship with expert Code of obligations  not Vienna Convention on Contracts for the International Sale of Goods (CISG) System in the absence of contractual derogations  not clauses limiting/excluding seller’s liability

4 Titre Sous-titre L A L I V E Avocats Authenticity and Attribution – Swiss law INTRODUCTION or Performance of the contract Seller’s liability for defects Debtor’s liability non-performance Art. 97 et seq.Art. 197 et seq. Not applicable Deception (dol) Fundamental Mistake (erreur essentielle) Formation of the contract Art (1)(4)Art. 28 Evidentiary difficulties

5 Titre Sous-titre L A L I V E Avocats Authenticity and Attribution – Swiss law I. PRE-CONTRACTUAL DUTY TO INFORM Section I THE SELLER’S PRE-CONTRACTUAL DUTY TO INFORM THE BUYER

6 Titre Sous-titre L A L I V E Avocats Authenticity and Attribution – Swiss law I. PRE-CONTRACTUAL DUTY TO INFORM - Recognised in art transactions - Basis: duty of good faith (Art. 2 CC) - Existence / extent:  disparity of knowledge between the parties  access to information - Exception: awareness of other party’s mistake - Breach: « culpa in contrahendo »  damages

7 Titre Sous-titre L A L I V E Avocats Authenticity and Attribution – Swiss law II. REMEDIES OF THE DEFRAUDED BUYER Section II REMEDIES OF THE DEFRAUDED BUYER

8 Titre Sous-titre L A L I V E Avocats Authenticity and Attribution – Swiss law II. REMEDIES OF THE DEFRAUDED BUYER or Performance of the contract Seller’s liability for defects Debtor’s liability non-performance Art. 97 et seq.Art. 197 et seq. Not applicable Deception (dol) Fundamental Mistake (erreur essentielle) Formation of the contract Art (1)(4)Art. 28 Evidentiary difficulties

9 Titre Sous-titre L A L I V E Avocats Authenticity and Attribution – Swiss law II.1 REMEDIES – FUNDAMENTAL MISTAKE Section II.1 FUNDAMENTAL MISTAKE (“erreur essentielle”)

10 Titre Sous-titre L A L I V E Avocats Authenticity and Attribution – Swiss law II.1 REMEDIES – FUNDAMENTAL MISTAKE Authenticity / Attribution = “a fact which, pursuant to the rules of good faith in the course of business, could be considered by the mistaken party as a necessary basis of the contract” (Art. 24(1)(4) CO). operative mistake

11 Titre Sous-titre L A L I V E Avocats Authenticity and Attribution – Swiss law II.1 REMEDIES – FUNDAMENTAL MISTAKE ‘Van Gogh case’ (Swiss Supreme Court, 16 October 1956) “The authenticity of the painting which was admitted by both parties, at the time the contract was concluded, was a circumstance which objectively, in the perspective of loyalty in business, seemed paramount, so that a mistake on this issue could not be considered as a simple mistake as to the motives without any legal consequences. It was clear that the claimant would not have bought the painting and would not have paid the requested price had he not been persuaded of its authenticity”. Autoportrait, 1889, Musée d'Orsay, Paris

12 Titre Sous-titre L A L I V E Avocats Authenticity and Attribution – Swiss law II.1 REMEDIES – FUNDAMENTAL MISTAKE Three cumulative requirements: 1.The purchaser had no knowledge that the object being sold was a fake 2.The authentic nature of the object was a decisive element for the purchaser when entering the contract 3.The seller should have realised that the authenticity of the object was a decisive element for the sale Right to nullify the contract 1 year from discovery of mistake (Art. 31 CO)

13 Titre Sous-titre L A L I V E Avocats Authenticity and Attribution – Swiss law II.1 REMEDIES – FUNDAMENTAL MISTAKE 1.Restitution 1 year from knowledge of claim 10 years after claim arose (Art. 67) Payment of purchase price (‘Picasso case’) reimbursement of purchase price return of object SellerBuyer

14 Titre Sous-titre L A L I V E Avocats Authenticity and Attribution – Swiss law II.1 REMEDIES – FUNDAMENTAL MISTAKE 2.Damages SellerMistaken Buyer claim if mistake is attributable to buyer’s negligence (Art. 26) no claim (unless culpa in contrahendo)

15 Titre Sous-titre L A L I V E Avocats Authenticity and Attribution – Swiss law II. REMEDIES OF THE DEFRAUDED BUYER or Performance of the contract Seller’s liability for defects Debtor’s liability non-performance Art. 97 et seq.Art. 197 et seq. Not applicable Deception (dol) Fundamental Mistake (erreur essentielle) Formation of the contract Art (1)(4)Art. 28 Evidentiary difficulties

16 Titre Sous-titre L A L I V E Avocats Authenticity and Attribution – Swiss law II.2 REMEDIES – LIABILITY FOR DEFECTS Section II.2 SELLER’S LIABILITY FOR DEFECTS

17 Titre Sous-titre L A L I V E Avocats Authenticity and Attribution – Swiss law II.2 REMEDIES – LIABILITY FOR DEFECTS Lack of authenticity / misattribution = absence of a quality promised by the seller, or which the buyer could reasonably expect, which substantially reduces the value of the object seller’s liability for defects (Art. 197)

18 Titre Sous-titre L A L I V E Avocats Authenticity and Attribution – Swiss law II.2 REMEDIES – LIABILITY FOR DEFECTS - No need of seller’s fault - No need of seller’s knowledge (Art. 197(2)) - Only if buyer was not aware (Art. 200) or could not have been aware - Buyer’s duty to examine the object and notify the seller of defects (Art. 201)

19 Titre Sous-titre L A L I V E Avocats Authenticity and Attribution – Swiss law II.2 REMEDIES – LIABILITY FOR DEFECTS Buyer may rescind the contract (Art. 205 and 208) reimbursement of purchase price direct damages further damages (only if fault) return of object SellerBuyer

20 Titre Sous-titre L A L I V E Avocats Authenticity and Attribution – Swiss law II.2 REMEDIES – LIABILITY FOR DEFECTS Limitation period for claims relating to cultural property 1 year following delivery Good faith sellerBad faith seller 1 year after discovery 30 years following delivery 30 years following delivery Art. 210(1bis) Art. 210(3) and 210(1bis) 1st June 2005

21 Titre Sous-titre L A L I V E Avocats Authenticity and Attribution – Swiss law CONCLUSION Performance of the contract Seller’s liability for defects Formation of the contract or Art (1)(4) Art. 197 et seq. Fundamental mistake Nullity: 1 year/unlimited (Art. 31) Reimbursement: 1 year/10 years (Art. 67) Damages (culpa in contrahendo): 1 year/10 years (Art. 60) Good faith seller: 1 year /30 years Bad faith seller: 30 years (Art. 210)

22 Titre Sous-titre L A L I V E Avocats Authenticity and Attribution – Swiss law CONCLUSION Liability for defects v. fundamental mistake 1. Limitation Period 2. Proof 3. Damages