Art sale agreement in Poland: key legal considerations

Art sale agreement: does Polish law define a “work of art”?

Polish civil law does not define the term “work of art”, and an art sale agreement is not listed in the Polish Civil Code as a separate type of named contract. Only tax law, more specifically Article 120 of the Polish Act on Tax on Goods and Services, identifies particular categories of objects that may be classified as “works of art”, including paintings, collages, drawings, pastels, original sculptures and statues. The Act expressly states, however, that this definition was created solely “for the purposes of this chapter”, namely Chapter 4 of the Act on Tax on Goods and Services.

Consequently, this definition applies only for VAT purposes. Other Polish statutes use related terms such as “antiques”, “collectors’ items”, “museum objects” and “historic objects”, but do not define the term “work of art”.

It is considerably easier to define a concept related to a work of art, namely a “work” protected by copyright. Under Article 1 of the Polish Act on Copyright and Related Rights, a work means any manifestation of creative activity of an individual nature, established in any form, irrespective of its value, intended purpose or manner of expression. Moreover, Polish Supreme Court case law provides specific guidance for assessing whether the result of a person’s work may constitute a copyright-protected “work”. According to the courts, legal protection may extend to:

• “any manifestation of intellectual activity bearing the characteristics of personal creation, and any original human thought expressed in a specific, independent form” (judgment of the Supreme Court of 23 June 1936, case no. I K 336/36);
• “any form of intellectual creation (…) provided that its final result and external form display characteristics distinguishing it from other works through the originality of the idea and the manner in which the subject is presented” (judgment of the Court of Appeal in Warsaw of 14 June 2009, case no. III SA/Wa 3132/08);
• “any work (…) provided that, at least in terms of its form, it demonstrates some creative elements, even if minimal” (judgment of the Supreme Court of 31 March 1953, case no. II C 834/52);
• “any creation (…) in which the author’s creative effort is manifested, meaning that ingenuity and an individual approach have given the work an original form” (judgment of the Supreme Court of 27 March 1965, case no. I CR 39/65).

When assessing whether a particular object constitutes a work of art, reference may also be made to a functional criterion, that is, the reasons for which an art sale agreement is typically concluded. These will undoubtedly include:

• the unique, unusual and original nature of the artwork;
• its ability to satisfy the buyer’s aesthetic preferences;
• investment considerations, including the anticipated increase in the artwork’s market value over time or the diversification of an investment portfolio.

In many cases, however, whether an object is regarded as a work of art may depend on non-legal considerations, including the parties’ subjective understanding, the physical characteristics of the object covered by the agreement and the purpose of the transaction itself. Cultural and historical differences in the definition of art may also influence whether a particular object is perceived as a work of art.

Art sale agreement: why must the subject matter be precisely identified?

The purpose of an art sale agreement is broadly the same as that of any other sale agreement. Under Article 535 § 1 of the Polish Civil Code, the seller must transfer ownership of the item to the buyer and deliver it, while the buyer must accept the item and pay the seller the agreed price. The transfer of title enables the buyer to use the artwork in accordance with the rights attached to ownership.

There is, however, a fundamental legal difference between the sale of a typical mass-produced item and the sale of a work of art. In the former case, the buyer’s priority is to obtain an item that meets specified functional criteria, for example a 50 cm by 50 cm painting depicting a still life.

An art sale agreement, by contrast, assumes that the purchased object is the original physical medium of a work created by a particular artist, originates from that artist, or was created within a particular historical context. The subject matter of the agreement therefore has not only aesthetic or functional value, but also artistic value and, in some cases, historical value. This makes it unique from the perspective of both ownership and copyright.

Practical tip: in light of the above, the subject matter of the sale should be identified as precisely as possible, for example by specifying:

• the artist and their signature, meaning a signature or mark identifying the creator;
• the technique used, for example oil on canvas, watercolour or pastel;
• the dimensions of the artwork;
• the subject matter, for example landscape, portrait, still life or abstraction;
• the artistic style, for example Impressionism, Surrealism or Realism;
• the date of creation, meaning the year or period in which the artwork was produced, which may affect its value and historical context;
• its condition, including whether it remains in its original condition or has undergone restoration;
• the type and condition of the frame, which may affect both the presentation and value of the work.

Where the subject matter of the art sale agreement is merely a copy of a particular work, the transaction will generally constitute an ordinary sale of an item rather than the sale of an original work of art.

Sale of a work of art and copyright

Copyright provisions in an agreement concern the rights held by the creator in relation to their work. These rights may be divided into:

• moral rights, including the right to be recognised as the author, to identify the work with the author’s name or pseudonym, and to supervise the manner in which the work is used; and
• economic rights, which include the right to use and dispose of the work and to receive remuneration for its use.

Moral rights are inalienable: an artist cannot waive them and, still less, sell them. Economic rights, on the other hand, may be transferred and disposed of by the artist. An agreement with an artist should therefore not be limited to the transfer of ownership of the physical object. Given the particular nature of an artwork, it should also contain appropriate provisions governing the transfer of copyright to the buyer.

In practice, this usually means including a clause under which economic copyright is transferred to the buyer, namely the new owner of the artwork. This permits the work to be exploited in specified fields of use, which may include public display, reproduction, rental or further distribution.

Agreement with an artist: payment of the price

Another essential element that should be regulated precisely in an art sale agreement is payment of the price. The price is the amount the buyer undertakes to pay in exchange for the transfer of ownership of the artwork.

Practical tip: properly drafted payment provisions should address matters such as:

• the amount, specifying the exact sum the buyer must pay for the work of art;
• the payment deadline, specifying when the buyer must pay the price. This may be a fixed date or may depend on the satisfaction of defined conditions, such as delivery of the artwork to a location indicated by the buyer;
• the payment method, which will generally be a bank transfer;
• the currency in which payment is to be made, which may be particularly important in international transactions;
• the allocation of costs, specifying whether payment-related costs, such as bank commissions and transfer fees, are to be borne by the buyer, the seller or divided between the parties;
• any consequences of late payment, such as the right to charge interest or withdraw from the agreement.

Properly regulating these matters should help reduce the parties’ legal exposure and minimise the risk of disputes.

Delivery and acceptance under an art sale agreement

An art sale agreement should also regulate the delivery and acceptance of the artwork in detail. Clear acceptance terms help minimise the legal risks associated with the buyer’s acceptance or rejection of the subject matter of the agreement.

Practical tip: properly drafted delivery and acceptance provisions should regulate, as precisely as possible:

• the place and time of acceptance, including where the artwork will be handed over and the date and time of delivery;
• the conditions of acceptance, including any conditions that must be satisfied for acceptance to take place effectively, such as the presence of both parties, the presentation of relevant documents and verification that the artwork corresponds to its contractual description;
• the method of confirming acceptance, for example by signing a handover and acceptance report or another document confirming that delivery complies with the agreement;
• the legal consequences of acceptance, including any consequences of accepting or rejecting the artwork and the possibility of submitting complaints or claims if defects are discovered;
• additional provisions, including arrangements concerning transport, insurance and liability for the artwork while in transit.

Art sale agreement: claims available to a buyer who has purchased a forged artwork

First and foremost, the seller should declare in the agreement that its subject matter is an authentic work, meaning that it was created by the stated artist in accordance with their own vision and concept, represents the artist’s unique creative expression and individuality, and is not a copy or forgery of another work.

It is also worth noting that where professional art dealers are involved, particularly auction houses, their statements may be especially significant when assessing defects in a work of art. Such statements may constitute public assurances with legal consequences. If a buyer decides to purchase a work in reliance on such an assurance and it later proves inconsistent with the facts, the buyer may have stronger grounds for pursuing claims against the auction house in respect of the defective item.

Claim for performance

Under Article 353 § 1 of the Polish Civil Code, an obligation is a legal relationship under which the creditor may demand performance from the debtor and the debtor is required to provide it. A claim for performance, meaning proper performance of the agreement, becomes due when the creditor, in this case the buyer of the artwork, is entitled to demand it. This should be regulated precisely in the agreement. In many cases involving the sale of a forgery, however, actual performance may be impossible because the seller does not possess the original artwork.

Withdrawal from the agreement and a claim for damages

The buyer may set the seller an appropriate additional deadline for performance and, if that deadline expires without performance, withdraw from the agreement under Article 491 § 1 of the Polish Civil Code.

The buyer may then demand repayment of the purchase price and seek compensation for the loss suffered as a result of the transaction.

Practical example from Polish case law:

“In the statement of claim, the claimant sought repayment of the equivalent value of 140 forged works of art sold to him by the defendant. (…) The claim asserted in the statement of claim may undoubtedly be regarded as a claim for damages. A claim for damages under Article 471 of the Civil Code does not, however, cover restitution of the performance already rendered, but compensation for damage caused by improper performance of the obligation. The defendant rendered the performance covered by the only written agreement concluded by the parties by delivering the paintings to the claimant. However, the paintings did not possess the characteristics whose existence the defendant had warranted, namely their authenticity. Since the buyer’s interest was not satisfied, it had to be concluded that the defendant had failed to perform the obligation properly” (judgment of the Regional Court in Łódź, Second Civil Division, of 17 July 2014, case no. II C 1447/10).

Contractual penalty

From the buyer’s perspective, it may be reasonable to include a clause in the art sale agreement providing for a contractual penalty payable by the seller if the seller’s declaration concerning the authenticity of the artwork proves to be false.

Art sale agreement: summary

An art sale agreement should identify the subject matter of the sale precisely and regulate the price, delivery, acceptance and the parties’ liability. Buyers should understand that purchasing an artwork does not automatically transfer the economic copyright in it: this issue must be regulated separately and as precisely as possible. From the buyer’s perspective, the seller’s representations, particularly as to the authenticity of the work, will be crucial. If the artwork proves to be a forgery, the buyer may be entitled to withdraw from the agreement, recover the purchase price and claim damages.