2.99 See Answer

Question: In 1987, Kerstin Lindholm of Greenwich,


In 1987, Kerstin Lindholm of Greenwich, Connecticut, bought a silkscreen by Andy Warhol titled Red Elvis from Anders Malmberg, a Swedish art dealer, for $300,000. In 1998, Lindholm lent Red Elvis to the Guggenheim Museum in New York City for an exhibition to tour Europe.
Peter Brant, who was on the museum’s board of trustees and also a Greenwich resident, believed that Lindholm was Red Elvis’s owner. He was told by Stellan Holm, a Swedish art dealer with whom he had dealt in the past, that Malmberg had bought the work, however. Holm also informed Brant that Malmberg would sell it for $2.9 million. Malmberg refused Brant’s request to provide a copy of an invoice between Lindholm and himself on the ground that such documents normally and customarily are not disclosed in art deals.
To determine whether Malmberg had good title, Brant hired an attorney to search the Art Loss Register (an international database of stolen and missing artworks) and other sources. No problems were found, but Brant was cautioned that this provided only “minimal assurances.” Brant’s attorney drafted a formal contract, which conditioned payment on the delivery of Red Elvis to a warehouse in Red Elvis to a warehouse in Red Elvis Denmark. The exchange took place in April 2000.a Later, Lindholm filed a suit in a Connecticut state court against Brant, alleging conversion, among other things. The court issued a judgment in Brant’s favor. Lindholm appealed to the Connecticut Supreme Court.
A person buys goods in the ordinary course if the sale to the person comports with the usual or customary practices in the kind of business in which the seller is engaged or with the seller’s own usual or customary practices “ [according to Connecticut General Statutes Annotated Section 42a-1-201(9), Connecticut’s version of UCC 1–201(9)]. A person buys goods in good faith if there is “honesty in fact and the observance of reasonable commercial standards of fair dealing” in the conduct or transaction concerned [under Section 42a-1-201(20)].
We are required, therefore, to determine whether the defendant followed the usual or customary practices and observed reasonable commercial standards of fair dealing in the art industry in his dealings with Malmberg. The defendant presented expert testimony that the vast majority of art transactions, in which the buyer has no reason for concern about the seller’s ability to convey good title, are “completed on a handshake and an exchange of an invoice.” It is not customary for sophisticated buyers and sellers to obtain a signed invoice from the original seller to the dealer prior to a transaction, nor is it an ordinary or customary practice to request the underlying invoice or corroborating information as to a dealer’s authority to convey title. Moreover, it is not customary to approach the owner of an artwork if the owner regularly worked with a particular art dealer because any inquiries about an art transaction customarily are presented to the art dealer rather than directly to the owner. It is customary to rely upon representations made by respected dealers regarding their authority to sell works of art. A dealer customarily is not required to present an invoice establishing when and from whom he bought the artwork or the conditions of the purchase……………………………………….

Required:
How did the “usual and customary” methods of dealing in the art business help Malmberg deceive the other parties in this case? What additional steps might those parties have taken to protect themselves from such deceit?
Considering the international locales in this case, why was Lindholm able to bring an action against Brant in Connecticut?


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2.99

See Answer