Private treaty sales finally to be introduced in France

   |  18 August 2011  |  AMA  |  Tweet  |  LinkedIn

Paris, 18 August 2011, Art Media Agency (AMA).

As of September, auction houses in France will be marked by the enforcement of the law enabling free practice of voluntary sales in public auctions. The bill has modified parts of the Code de Commerce concerning auction houses to make the activity more flexible. The key reform is that they will have the right to sell items in private. Here is an overview of the key reforms in order to highlight what will change within the French auctioneering world.

The new law begins by stating: “Voluntary sales of objects at public auction will be free of practice”. This signals the legislator’s desire to render the system more liberal and accord more confidence to auction houses. This heightened liberty will be counterbalanced by an a posteriori system of control.

Without changing the functioning and mechanism of auctions (mandate and adjudication), several restrictions have been abolished. With the new law, voluntary sales will be free of practice as will the type of objects auctioned: operators of voluntary sales will now be free to sell new items. As a result, France will be able to compete directly with Switzerland in terms of jewellery; due to previous restrictions, Geneva was often preferred over Paris. Though the practice was already somewhat tolerated beforehand, artists will now legally be able to sell their works (which are considered new) via auction houses, whose competence has been opened up to wholesale.

On the condition that the seller is informed beforehand, private sales are thus now allowed and carried out by verbal procedure. “After sales” are no longer limited in time, however the conditions of implementation remain the same. Auction houses purchasing a work with the intent of re–selling remains in principle forbidden, yet can be permitted in cases of deadlock or in order to guarantee a minimum hammer price for the seller. During the resale, a clear, unambiguous advertisement must state that the item is owned by the operator. There has also been a softening of the rules regarding advances on hammer prices, as well as time delays between re–auctioning items that previously failed to sell.

The changes have also brought about a more lenient practice of the profession in France: approval from the Conseil des Ventes – France’s art industry watchdog – has been replaced by a simple declaration and certain conditions, notably insurance. Members of the European Union will also be able to come to France and organise occasional sales more easily without having to meet all the French conditions.

Problems faced on the Internet relating to the differences between brokerage and online auctions are to be resolved through an agreement stating that brokers must inform their clients of their position and be clear about the service offered, especially with regards to guarantees. Artprice – who has been awaiting this reform in order to open its online brokerage service – is subsequently likely to become an important operator on both the French and international art market.

The Conseil des ventes (CVV), whose status as an independent public authority was not recognised, will thus control the profession in a more independent manner. This independence will notably be born from the adherence of members from outside of the artistic milieu.
The European directive also aims at preventing conflicts of interest inherent to the art market as its small size often obliges actors to take on several roles. Experts and other sale operators will consequently be forbidden to buy “for their own interest items proposed at auction” and “to sell their own possessions via the operator for whom they offer their services.” The integrity of the market will equally be protected by an ethics code that is currently being drafted by the CVV.

Liberation and protection of the customer are at the heart of this reform, which will come into force on 1 September and is expected to give the French art market a considerable boost.

 

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