Publication date: February 17, 2025
Definitions and types of defects that may burden movable property
A work of art, or a commodity that is the subject of trade may be subject to two types of defects, in accordance with the provisions of the Civil Code: a physical defect or a legal defect (5563 § 1 of the Civil Code). The defect of a sold item consists in the transfer to the buyer of an item that is not in accordance with the contract. Physical defects are based primarily on the lack of properties that such a thing should have due to the purpose specified in the contract or resulting from circumstances or intended use; lack of properties that the seller assured about; the impossibility of using the item for the purpose that was presented to the seller when concluding the contract and he did not raise any objection to such intended use; delivery of the item in an incomplete state and incorrect installation and start-up, if this was done by the seller or a third party for whom he is responsible, or by the buyer acting in accordance with the instructions received from the seller. These cases are only examples, in accordance with art. 5563 § 1 of the Civil Code, any inconsistency of the sold item with the contract is a physical defect, UNLESS it is a legal defect. Legal defects, which are usually less common, are also more difficult to resolve, as it is not enough to send the buyer a missing part or repair a broken table leg, as they are based on the legal status of the sold item – ownership, restrictions on use or disposal of the item; encumbrance of a third party right or non-existence of the right. Civil law allows the buyer, in the event of one or both types of defects, to submit a declaration of a price reduction or withdrawal from the contract. The seller undertakes to deliver a non-defective item for a specified price, so if he fails to fulfil his obligation, he should be held liable.
In the trade of works of art, both physical defects and problems related to legal defects of the goods appear. They significantly affect the market value of works of art. Physical defects of works of art, such as scratches or some kind of wear and tear that are a sign of the passage of time, are sometimes treated even as confirmation of the authenticity of an item created in the distant past. Legal defects, on the other hand, pose a greater challenge to sellers, buyers and lawyers or scientists dealing with this subject. In a situation where the buyer decides to buy an item that they know has an unregulated legal status or buys it at their own risk, they are not entitled to a claim against the seller for a refund of the price received if, due to a legal defect, they are forced to hand over the purchased item to a third party. This of course means that an experienced buyer interested in works of art will not risk buying a defective item at a high price if they know that this may result in a large financial loss in the future. On the other hand, a work of art that we know/assume with great conviction was made by a recognized author will certainly not be available on the market at a low price. An interesting example of such a situation is the painting, as it was believed for many years, by Rembrandt “Man in a Golden Helmet”. The artistic and aesthetic value of the work did not change after the discovery of its true author – Rembrandt’s student, but its market value dropped drastically when the authorship of the painting was no longer attributed to the famous Dutch painter. In modern times, we have such advanced technology and technique that it is not a problem to create a forgery almost equal to the original. This raises many problems in terms of legislation, especially copyright law and criminal law dealing with penalizing the spread and creation of forgeries.
Issues of determining ownership rights
The legal defect that poses the greatest challenge in the trade of works of art is the proper determination and assignment of ownership rights, especially when we are dealing with goods that have been on the market for many decades or even centuries, and therefore have often changed owners and possessors. The passage of time is associated with the possibility of losing necessary documents such as certificates of authenticity, sales agreements or wills containing provisions transferring ownership or disposing of the fate of the thing owned by the testator. Another problem is various types of conflicts or violations of law that may result in theft, theft and/or illegal export of works of art outside the country of origin. All such situations cause difficulties in determining the rightful owner of the thing. Wills, if they exist, may be contradictory or imprecise, the heirs, realizing the value of the bequeathed work, enter into disputes among themselves regarding the actual division of the estate. The testator has the right to impose additional obligations on his heirs – for example, transferring the work of art to a third party or organization of his choice or selling it within a specified period. An increase in the value of a work of art due to the increasing popularity of the author or recognition by a wide audience may cause an influx of third parties who suddenly remember that they have ownership rights, the previous owner begins to question the validity of concluded contracts or the legality of transferring rights in the past. Due to all these doubts, it is so important to prepare (by the seller or intermediary) and analyze (by the buyer) the provenance of the work of art. This term means the history of the origin and history of the work of art from the moment of its creation until a given moment, before the purchase. A reliable provenance contains all the relevant data regarding its creation (author, period, important details) and “journey” through subsequent owners, as well as all documents confirming its origin and authorship.
The lifeline for buyers of works of art is Article 169 § 2 of the Civil Code, which regulates the acquisition of goods from unauthorized persons. An unauthorized person is a term for an entity that has control over movable property but does not have the right to dispose of it. The buyer will not always be aware that the person from whom they are buying does not actually have the right to make this transaction. In such a situation, in order not to punish an unaware person acting in good faith, the provisions of civil law provide for the transfer of ownership to the buyer at the time of taking possession of the item, provided that the following conditions are met: conclusion of an agreement aimed at transferring ownership of the work of art; possession of the work by the unauthorized person and its delivery to the buyer; good faith of the buyer at the time of taking possession of the work. People interested in buying works of art or valuable antiques often visit antique shops in order to find items. It should be considered whether the mere fact of buying from an antique shop determines the buyer’s good faith? Antique shops are entities professionally involved in the trade of old items of historical, aesthetic or material value. Therefore, the buyer may assume that the item purchased from them is not characterized by any legal defect. However, the reality is not that simple. According to the Supreme Court case law, not only someone who acquired possession in full awareness of the unlawful acquisition is in bad faith, but also someone who acquired the item in circumstances based on which he should have assumed that he was acquiring the item from an unauthorized person (Supreme Court ruling of 17 June 1948, C I. 378/48 – Zb. Orz. 1949, item 28). Courts always take into account the entirety of the case under consideration, taking into account all the circumstances and possibilities of the seller and the buyer, which means that the mere fact of purchasing something in an antique shop does not ensure that the premise of good faith is met. If doubts could or even should arise as to the origin of the purchased item, or if, without exercising due diligence, the low price compared to the market value or the fact that the antiquarian was unable to present any documents concerning the fate and ownership rights of the valuable antiquities being sold arouse suspicion, the purchaser loses the rights to which a buyer in good faith is entitled.
The issue of acquiring lost, stolen or otherwise lost works of art (or other movable items) appears to be more complicated. According to Article 169 § 2 of the Civil Code, the purchaser of such a work may obtain the right of ownership only after three years have passed since the loss occurred. What is also important, the Polish legislator decides to grant a special status to items entered in the national register of lost cultural assets. It includes monuments entered in the register of monuments or on the List of Heritage Treasures, museum exhibits, library materials belonging to the national library resources and archival materials lost by the owner as a result of a crime consisting in the seizure of items.
Questionable provenance
In some cases, it is difficult to obtain reliable provenance, because it is impossible to clearly determine the authenticity, origin or compliance with the documentation of a given work of art. This can also lead to problems with determining the appropriate market value of the work. That is why the profession of an expert in works of art is so important. Unlike other countries, in Poland it is not properly regulated, therefore, any prosecution of such an expert must take place on the general principles provided by the civil and criminal codes. Experts acting as experts or appraisers in criminal proceedings are also liable under Article 233 § 4 of the Penal Code (deprivation of liberty from one to 10 years). Experts in the matter of the authenticity of works of art should be people with extensive knowledge and experience in the field of art history, technology of creating works of art and knowledge of the art market. Theoretically, since it is not a legally regulated profession, anyone who is commissioned to prepare an expert opinion can become one; they do not have to present any certificates or other documents confirming their competence. However, most often, art historians, conservators, people associated with museums or auction houses participating in the trade of works of art act as experts in this field. An expert who issued an erroneous opinion may be held liable under civil law (Article 471 of the Civil Code), but also liable under criminal law for fraud (Article 286 § 1 of the Penal Code) or forgery of documents (Article 270 of the Penal Code), if they intentionally prepared a false opinion or presented false documents supposedly confirming authenticity. The mere recognition of the features of a work of art as those attributed to a specific author cannot be the only basis for confirming its authenticity due to the active activity of art forgers. Properly establishing provenance requires an interdisciplinary approach – combining legal aspects of property rights, technological analysis of the work in terms of the materials used, cooperation with national and international authorities to help identify lost or looted goods.
Acquisition of a pledged item
Art collectors and investors increasingly often use the option of taking out a loan secured by works of art. Realizing how much capital can be tied up in a work of art, they decide to liquidate it, often in order to buy more works to supplement the collection. Thanks to this, works of art remain in constant circulation, which in turn can lead to the purchase of a work encumbered with a limited property right – a pledge. Such an event is one example of purchasing a defective item (legal defect). In Polish law, there are two forms of pledge – an ordinary pledge and a registered pledge. They encumber the item with the right of a third party to satisfy the claim from this item, regardless of whose property it has become. The establishment of a registered pledge is usually more beneficial for the debtor, as it does not require the release of the pledged item, and is only subject to entry in the register of pledges, which is necessary for such security to be created. An ordinary pledge, on the other hand, involves the release of the encumbered item to the pledgee. The difference between these two types also lies in the method of securing the claim. A register pledge provides for the possibility of satisfaction both through enforcement proceedings and in another legally permissible manner, e.g. by taking ownership of the subject of the pledge. In the case of an ordinary pledge, this possibility is limited only to enforcement proceedings; it is impossible for the parties to the pledge agreement to agree on the forfeiture of the debtor’s property in favour of the pledgee. However, the Civil Code protects persons acquiring movable property, provided that they are characterised by good faith. Art. 170 § 1 of the Civil Code states that even if the property in question, a work of art, is encumbered with a pledge, the right of a third party expires at the moment of delivery of the property to the purchaser. The key premise of this provision is good faith, i.e. the erroneous but justified belief that the person from whom we acquire the property has the right to dispose of it.
Special Act
The Polish legislator sometimes decides to grant special protection to assets associated with people distinguished in Polish history. The regulations that were created in this area concerned Józef Piłsudski and Fryderyk Chopin. From the perspective of works of art and artistic achievements, the Act of 3 February 2001 on the Protection of the Heritage of Fryderyk Chopin is more interesting. It provides for a broader scope of protection than the Copyright Act, as it grants civil law protection to personal assets that would not normally apply. Additionally, it grants the Minister responsible for culture and heritage (hereinafter referred to as the “Minister”) special status and powers, as he is appointed to exercise non-property copyrights to Chopin’s works, to take care of their integrity, and to protect them from distortion and use that would be detrimental. In connection with this, he is also entitled to file a civil lawsuit demanding the cessation of infringements of personal assets, removal of the effects of the infringement, compensation, financial compensation or a monetary payment for a social purpose.
This Act establishes the Fryderyk Chopin National Institute, whose main task is to safeguard the protection of the legacy of this distinguished composer. The Institute’s competences also include managing real estate and other things related to Chopin, owned by the State Treasury or held by state organizational units. The Institute is responsible for granting licenses for the use of industrial property rights. This decision is issued by the Director of the Institute, with the help of the Council (an advisory body). However, there is no possibility of appealing the Director’s decision to another body or to court. The condition for obtaining consent to use Chopin’s image or name is to do it in a way that does not bring “disrepute”. However, the definition of this concept is not provided by the legislator, so it is necessary to refer to the statutory definitions and the common meaning of the word. According to the definition of the PWN dictionary, it means “something that offends or humiliates someone”. As can easily be inferred, this criterion is unclear, to a large extent the assessment of whether something will constitute disrepute or not remains subjective.
An interesting and widely criticized provision of the act is Article 1, Section 1, Sentence 1, which states that all of Chopin’s works and items related to him constitute a national asset. According to commentators, this provision cannot be considered an attempt to nationalize Chopin’s works, but rather an emphasis on their value to the Polish nation and the need for their special protection. It cannot be used to derive legal and property rights consequences.
Trade in correspondence and personal and copyright rights
It is impossible not to mention the phenomenon of trading, for example, at auctions, with private correspondence of famous people after their death. This phenomenon is associated with a number of legal and ethical problems. Letters written by and addressed to a distinguished person may be considered a kind of collector’s items that are part of their oeuvre. From a legal perspective, introducing correspondence into trade is possible if the seller has the right to ownership of its material medium, e.g. the card on which the letter was written, the envelope in which it is located. However, the right to ownership of the medium does not guarantee ownership of the copyright to the content of the work (letter) (Article 52, paragraph 1 of the Act of 4 February 1994 on copyright and related rights). The correspondence of a famous person may be covered by copyright if, in accordance with Article 1, paragraph 1 of the aforementioned Act, it is creative in nature and has an individual character, i.e., for example, it contains literary works or the author’s reflections. In addition, the content of letters is also subject to protection under the provisions on the protection of personal rights, including the secrecy of correspondence, which originate in the Constitution of the Republic of Poland and are developed by the Civil Code in Article 23 and the Act on Copyright and Related Rights in Article 82. The latter provision prohibits the distribution of correspondence for a period of 20 years from the death of the addressee, except for the situation of obtaining appropriate permission from the addressee or their closest relatives (spouse, descendants, parents, siblings). Judgment VI Ca 1875/15 emphasizes that Article 82 of the Copyright Law grants special posthumous protection to the correspondence of the addressee, however, during their lifetime, both the sender and the addressee of the correspondence may not consent to its distribution, invoking the protection of personal rights, in particular the secrecy of correspondence, protection of privacy and honor. The key issue when selling correspondence of famous people is to make sure that the sale is conducted in accordance with the provisions of civil and copyright law. It is also necessary to respect the privacy of the sender and the addressee of the letters and to obtain appropriate permissions, as the authors are protected by generally applicable law.
Museums’ management of collections
An interesting phenomenon related to aspects of ownership of works of art is also the issue of their management by museums. Particular attention should be paid to entire collections of works taken over and exhibited by museums. On what basis do we distinguish such a collection? Can such an object as a “collection” exist independently in civil law relations under the current law? The definition of the term “collection” can be found in the Act of 23 July 2003 on the protection and care of monuments. According to its art. 6 sec. 1 item 2 letter b), movable monuments may be collections constituting sets of objects gathered and arranged according to the concept of the persons who created these collections. Accordingly, it should be recognized that a collection constitutes a certain whole created in accordance with the collector’s intention, while it is emphasized that it must be arranged according to some criteria, and cannot be merely a collection of things gathered without any overall plan of things. As for the independence of a collection, there are two divergent views in the doctrine. One, emphasizing the distinctiveness and value of the collection as a whole, not its individual components, allows, and even considers it necessary, to treat it as a separate subject of civil law transactions. The other, on the other hand, indicates that only individual items included in the collection can be the subject of transactions, not the collection as a whole. Supporters of this option cite as an argument Article 45 of the Civil Code and the definition contained therein, which states that a thing is a material object; one single item, not many items that make up one collective whole. This view seems to be more popular in the doctrine. It is assumed that a collection as a whole can be the subject of civil law transactions, but the subject of ownership remains the individual items separated from it.
Collections in museums can be exhibited on various legal grounds. The most beneficial solution for museums is to transfer the collection to them on the basis of a donation agreement, which transfers ownership from the previous owner to the museum. However, this is not the only way, as very often collectors practice “lending” their collections to museums under a loan agreement or as deposits for a specified period, either with the actual intention of disseminating the collected works or with a more selfish intention – the desire to increase the market value of the objects. One of the most famous examples of the acquisition of a collection by a museum in Poland is undoubtedly the purchase in 2016 on behalf of the State Treasury of the Czartoryski Princes’ Collection from the Czartoryski Princes’ Foundation, when a huge number of objects became the property of the Polish nation and were transferred to the care of the National Museum in Krakow. In the years preceding this purchase, works of art from the Czartoryski Princes’ collection were the subject of museum exhibitions on the basis of a deposit.
In the case of museums, entire architectural interiors, including utility furniture, are often treated as integral parts of a collection or set and are subject to special protection. Elements of the room’s equipment, such as preserved fireplaces, wainscoting or chandeliers, may obtain the status of a monument under the Act of 23 July 2003 on the Protection and Care of Monuments. An example is the Łańcut Castle, protected as a whole with all architectural elements of the interior. Utility furniture and other elements of the decor in museum collections are both an aesthetic element and a carrier of information about the history of the place visited. Documentation about them collected by museums allows for determining their authenticity, date and place of origin, and sometimes also the author, if they decided to put their signature on the object. Patent descriptions allow for tracing the history of the development of technology and production and discovering who was the author of innovative solutions. In addition, these descriptions contain detailed technical information about the construction and methods of operation of objects, which allows modern conservators and restorers to accurately reproduce mementos of past times.
The trade of works of art is associated with many legal and ethical issues. One must remain very vigilant both when deciding to buy a given work and when being on the other side of the transaction – selling the work. The issues of this issue are complex, requiring interdisciplinary knowledge and experience, so as not to expose oneself to legal or financial consequences.