Question: I have completed the sale of a painting except that I cannot deliver it to the buyer by the agreed date because I cannot find a shipper willing and able to do the job (or because the storage facility in which the painting is stored has temporarily closed). The buyer claims that I am in breach of contract and is making threats. What can I do?
Answer: The first step is to check the law that governs the contract of sale of the painting. If the contract includes an applicable law clause, the law referred to in the clause typically governs the contract. If the contract does not include an applicable law clause, the first thing to ascertain is the applicable law. If you, the buyer and the painting itself were in England when the contract was concluded, it is more likely than not that the contract is governed by English law. If you, the buyer and/or the painting were in different jurisdictions when the contract was concluded, seek legal advice.
The second step is to check whether the contract contains a clause on delivery of the painting to the buyer. It is assumed that the contract does contain a clause on delivery because the obligation to deliver falls on you. The contract could have provided that the buyer must collect. If the contract is silent on whether the seller delivers or the buyer collects, under s. 29(2) of the Sale of Goods Act, the place of delivery is the seller’s place of business if he has one, and if not, his residence; except that, if the contract is for the sale of specific goods (like a painting), which to the knowledge of the parties when the contract is made are in some other place (e.g. a storage facility), then that place is the place of delivery.
Assuming that English law governs the contract, if the buyer is a business and you have agreed a delivery date, the courts may construe delivery by that date as being of the essence. In other words, late delivery would entitle the buyer to terminate the contract and where applicable, claim damages. Where the buyer is a consumer, in some circumstances, late delivery may entitle him/her to treat the contract as at an end. The parties’ respective rights will depend on the interpretation of the delivery clause and in doubt, seek legal advice.
There are various concepts under English law that help soften the inflexibility of contract terms. When the parties’ performance has been hindered by an event outside of their control, a force majeure clause may excuse a party from performing its obligations on time. Unfortunately, few art sale contracts contain a force majeure clause.
If there is no force majeure clause in the contract, the doctrine of frustration may be of assistance. This doctrine has the effect of discharging the contract. The doctrine operates within narrow limits and the courts may find that frustration cannot be relied upon when there is merely a delay in delivering the painting caused by the pandemic.
You may want to consider whether the buyer is actually making a loss as a result of late delivery. This may be the case if, for example, the buyer is another dealer buying to resell. The question then is, even if you succeeded in delivering the painting to the buyer, would the buyer succeed in delivering it to his buyer? The buyer might claim breach of contract and make threats, but if he is not suffering loss as a result of the alleged breach, he has nothing to claim for.
The best approach will be to keep an open dialogue with the buyer, and to explore options. Perhaps the buyer can arrange collection of the painting and the two of you reach agreement on the cost of such collection. Ultimately, the buyer should appreciate that if he brought a claim for breach of contract before the courts and argued that the delay in delivery that arose from the pandemic was an inconvenience or caused a minor loss, the courts are unlikely to look favourably at his claim.
You should consider whether the risk of loss of, and damage to, the painting is yours or the buyer’s. This is relevant to the question of who insures the painting whilst it remains in your possession. Contracts often provide that ownership and risk pass at the same time. If so, ownership and risk may lie with the buyer, especially if the buyer has paid the price in full. If the contract is silent on the passing of risk, s. 20 of the Sale of Goods Act provides that the goods remain at the seller’s risk until the property in them is transferred to the buyer. When the property in them is transferred to the buyer, the goods are at the buyer’s risk whether delivery has been made or not. However, where delivery has been delayed through the fault of either buyer or seller (this is technically our scenario), the goods are at the risk of the party at fault as regards any loss which might not have occurred but for such fault. Given that we are in a situation where you have failed to deliver the painting on time, accordingly you could be liable for loss of/to the painting if there is no clause in the contract stating when risk passes to the buyer, it would be sensible to continue to insure it until you are able to deliver it. If the contract is clear that risk is with the buyer, you may still want to consider it prudent to insure the painting until delivery.
Last but not least, if the painting is in a storage facility which has closed or is operating reduced services due to the lockdown, and you continue to insure the painting, you should contact your insurer to confirm that the policy remains in place and all risks are covered despite the fact that the storage facility is not operating as usual.