Investing in art can be a lucrative business, but it is not entirely risk-free. The sale or purchase of works of art still sometimes leads to disputes between the parties involved, especially when art is purchased remotely.
Sharing collections through loans is an important activity of museums and sometimes private collectors. On the one hand, a flexible and pragmatic approach is needed to ensure that loan procedures are not too burdensome. On the other hand, it is recommended that a loan agreement clearly sets out the responsibilities of both parties to avoid misunderstandings.
For example, a loan agreement defines the duration of the loan and cost sharing. In addition, this agreement could include arrangements on transport, conservation, security, insurance, intellectual property rights and marketing. Problems can arise in particular when no clearly defined liability clauses are included in the loan agreement. This can lead to unpleasant situations, for instance when the lender tries to hold the borrower liable for damage caused to the artwork in question after it has been returned.
The borrower should exercise due diligence and ensure that it is aware of its responsibilities and liability to the lender before taking a work of art on loan. It is in the interest of both parties to be aware of potentially outstanding claims, as these may render the artwork in question susceptible to seizure. Within international lending, a declaration of immunity guarantee could provide protection against seizure, but it is important to be aware that such a guarantee does not include immunity from jurisdiction. This is accompanied by a growing international tendency to limit immunity in the sense that cultural objects confiscated by foreign governments in connection with the persecution of a targeted group, e.g. Nazi looted art, are not protected.
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GMW lawyers will be happy to help you with all your art law issues.
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