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I was recently presented for a third time with a scenario which dealers must come across from time to time. A collector sought some advice from an expert in the field, on a work which the collector was thinking of selling.

The pair got on well; the collector visited the expert’s impressive premises, discussions were held, emails exchanged and some helpful input was provided from the expert how best to present the work: eg don’t sell it now, don’t just go to the obvious well-known port of call, sell it quietly, discreetly, much better for it to be ‘fresh to the market’ etc.

The collector left matters in abeyance for quite some time while he turned his mind to other things.

Eventually he returned once again to ventilate the sale of this work with the expert.

It was a large and unusual 17th century Spanish picture in very poor condition but very valuable nevertheless.

Discussions were renewed and all went well. Eventually the expert took the picture in for review and consideration.

He then made an offer. This was accepted and the collector was delighted with the deal.

Sold for a ‘huge amount’

A few years later the collector was advised by a friend that ‘that picture that you sold – it went for a huge amount of money at an auction the other day’. The ‘huge amount of money’ proved to be many times the price he had received.

The collector came to see me.

Going through the correspondence it was very clear that the collector had sought ‘advice’ from the expert and the expert had indeed been ‘an adviser’ to the collector.

The word ‘advice’ had actually been used in correspondence. And it was the expert that had sold the picture for the ‘huge amount of money’.

The bottom line was that, given the facts, and all the surrounding circumstances, the expert owed a ‘duty of care’ to advise the collector on the best price available.

So, the usual exchange of correspondence commenced between myself on the collector’s behalf and the expert’s solicitors.

“There was no duty of care at all”, said the expert’s lawyers. “The position was as follows…”

“Yes there was, it was plain and obvious”, said I, on behalf of my new client, and I too went on to elaborate.

And so the argument went on, and on, for some considerable time. As a matter of law we advised that there was a misrepresentation entitling our client to rescind the contract of purchase and that it was now therefore rescinded.

After many months, there was a substantial payment out by the expert, very much reduced from the claim made, but plenty to leave the client delighted with the result.

Make it clear

It is very easy for dealers to fall into this trap. To avoid doing so they want to make it completely clear – as I recommended to ATG readers in issue No 2561 last year – from the beginning that they are not advising the customer walking through the door but that they are themselves a potential customer – ie an independent third-party purchaser only with no duty of care to the potential seller.

The critical thing is to avoid ‘crossing the line’ from being a potential purchaser to being ‘an adviser’.

Stick at all times to the role of purchaser. This may not be easy but it will be worth it.

Milton Silverman is senior commercial dispute resolution partner at Streathers Solicitors LLP, London.