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RICS P ROP E RT Y JO U RN A L

P E RS O N A L P R O P E RTY C O N S U M ER L AW

Small print, big issues Pierre Valentin and Azmina Jasani explore the ramifications of recent consumer protection laws for the sale of fine art, antiques and collectibles

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ine art, antiques and collectibles can be sold in various ways: by public auction, private sale through dealers and galleries, art fairs and online. Relatively new developments in the area of consumer protection, namely the enactment of the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (the regulations) and the Consumer Rights Act 2015 (the act), have significant implications for the art trade, depending on how and where the sale is concluded. Reasonable minds would agree that these laws are meant to protect consumers of goods sold on the high street, but it is more difficult to understand why consumers of fine art, antiques and collectibles – often sophisticated buyers guided by expert advisors – should be afforded the same protection. Unfortunately, consumer protection laws apply equally to washing machines and Old Masters, and as a result, art dealers and auctioneers must reconsider how they do business, in order to minimise the risk of financial loss and penalties. Compliance has forced art dealers and auctioneers to adopt new, inconvenient business models. This article describes these laws, and examines the ways in which they affect art businesses.

Statutory framework The regulations and the act collectively govern contracts relating to the sale of goods, the provision of services and the provision of digital content by a trader to a consumer (see box, right). They do not apply to contracts between traders or between consumers; neither do they apply to contracts under which a consumer sells to a trader. In this article, 50  SEP T EMBER/OC T OBER 2 016

we will only focus on the impact of consumer protection laws on contracts for trader-to-consumer sales. Before we describe the effects of the regulations and the act, we make four preliminary remarks. bb If you, as the trader, sell stock to a consumer, you must comply with the consumer protection rules because you are engaged in a trader-to-consumer sale. If you sell to a consumer as an agent for the owner, the consumer protection rules also apply, provided the owner – your principal – is also a trader. But they do not apply if the owner is a consumer, because both the buyer and the seller are consumers and the laws do not apply to a consumer-to-consumer sales contract; the fact that you invoice the buyer in your name does not change the analysis. If you as the trader sell to another trader on behalf of the owner, the consumer protection rules do not

Definitions bb A “trader” is defined as “a person acting for purposes relating to that person’s trade, business, craft or profession, whether acting personally or through another person acting in the trader’s name or on the trader’s behalf”; see section 2(2) of the Consumer Rights Act 2015. bb “A trader claiming that an individual was not acting for purposes wholly or mainly outside the individual’s trade, business, craft or profession must prove it”; again, see the act at section 2(4). bb A “consumer” is “an individual acting for purposes that are wholly or mainly outside that individual’s trade, business, craft or profession” under section 2(3) of the act.

apply either, irrespective of whether the owner is a consumer or a trader, because neither a consumer-to-trader sale nor a trader-to-trader sale is covered by the consumer protection rules. It is therefore essential to consider in what capacity you are selling – as principal or agent – and whether the owner and buyer qualify as a “trader” or as a “consumer”. There is an exception that applies to live auctions, as described below. bb While this article concentrates on sales, it is important to note that the regulations and the act apply equally to the provision of services. If you sell as agent for the owner, you provide a service to them, and you typically charge them a commission. If the owner is a consumer, then you are providing a service to a consumer and the consumer protection rules apply to the provision of that service, as a trader-to-consumer contract. If your principal is another trader, the rules do not apply, as this constitutes a trader-to-trader contract. You may also provide other services such

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