On May 18, 2017, New York art dealer Anatole Shagalov, whose business is Nature Morte LLC, was the winning bidder at a Sotheby’s sale for an untitled work by Keith Haring (1958-1990). The hammer price was $5,600,000, and the buyer’s premium added another $937,500 for a total of $6,537,500.
Shagalov never paid for the work, despite promising Sotheby’s that he would. By October of that year, Sotheby’s informed Shagalov that it was selling the work privately, as per the conditions of sale and the New York Uniform Commercial Code (UCC). On October 13, 2017, the Haring work was sold privately for $4,400,000.
Sotheby’s went to court to collect the difference, and on June 10 a judge granted Sotheby’s motion for summary judgment and awarded Sotheby’s $1,508,750, plus 9% interest from the date of the sale. It’s expected that the final bill to Shagalov will be approximately $2,000,000.
Shagalov argued in court that he had been promised special financing terms and that the $4,400,000 resale was too little.
It made no difference to the judge, who noted that Sotheby’s conditions of sale allowed the firm to resell the purchased property and specified that “the purchaser will be liable for any deficiency, any and all costs, handling charges, late charges, expenses of both sales, our commissions on both sales at our regular rates, legal fees and expenses, collection fees, and incidental damages.”
It’s an expensive lesson and a cautionary tale. The sale by auction is an enforceable contract, strictly governed by both the UCC and an auction house’s conditions of sale.
Originally published in the August 2020 issue of Maine Antique Digest. © 2020 Maine Antique Digest