Sotheby's contract waives withdrawal fee if AG disputes Berkshire Museum art sale

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PITTSFIELD — Opponents of the Berkshire Museum's sale of art have wondered: If the institution had a change of heart, could it remove works from sale without paying a big financial penalty?

The answer, for the most part, is no, according to a meaty paragraph 8 in the museum's June 13 consignment agreement with Sotheby's.

The passage is contained in one of the formerly impounded court documents released this week by the museum at the request of The Berkshire Eagle.

"Except for the Right to Amend, you may not withdraw any Property from sale after the date on which you sign this Agreement," the contract says.

But amid that fine print on "Withdrawal," one possible escape hatch lurks.

Art can be removed from a planned auction by Sotheby's if "the sale of such lot subjects us and/or you to liability, including objections from an Attorney General ...." Later in the same paragraph, the contract notes that if property is removed for that reason, "you will not be charged a Withdrawal Fee."

One attorney following the case said Tuesday that the language appears to grant that withdrawal right to either party.

In court filings, the Attorney General's Office has noted that the museum would face a significant penalty for removing works.

The Attorney General's Office, which is investigating the legality of the sale of 40 works of art, has itself raised objections, seeming to fulfill the condition of the contract provision.

Those objections helped it secure a 30-day injunction from a Massachusetts Appeals Court justice that halted four planned auctions the week of Nov. 12.

In another section, the contract gives the museum the right to withdraw items without penalty, but because the passage contains redactions, it is unclear whether the time frame for that provision has passed.

It reads, "You and we agree that, prior to (REDACTION) you may (i) withdraw any item of Property without penalty (other than the items of Property that are (REDACTION) ...."

In that instance, the blacked-out area continues for nearly two full lines of text.

'Hammer' terms

The contract also reveals that Sotheby's planned to share with the museum part of the premiums paid by buyers — a sweetener referred to as an "enhanced hammer."

Such arrangements are made by auction houses to entice business, particularly in cases where a seller is bringing in objects of high value that will generate significant fees paid by buyers.

Further, the contract waived any seller's commission fee.

Under the terms reached by Sotheby's and the museum, money from a share of the buyer's premium would be paid to the museum on top of the "hammer" price actually paid by the buyer for any one lot at auction.

The percentages of the hammer prices are blacked out in the contract document submitted to Berkshire Superior Court, in connection with litigation there.

One specific share was set in the contract for works that brought hammer prices of less than $3 million, and another share for those sold for more than $3 million.

The terms are generous to the museum because Sotheby's stood to make millions from the sales. The high sale estimate on two works alone, Norman Rockwell's paintings, came to $30 million.

In a filing Monday in response to The Eagle's motion to end the impoundment, the museum asked that a passage in the Sotheby's contract related to the "enhanced hammer" be further redacted.

"This redaction is necessary to protect a trade secret of third-party Sotheby's Inc.," according to a response filed by Felicia H. Ellsworth of the Boston law firm WilmerHale.

But on Tuesday, the museum agreed to release the same document that the court had impounded, including mention of the existence of the "enhanced hammer."

The release of the documents resulted in the cancellation of a scheduled Wednesday hearing related to the newspaper's request to have the impounded files released to the public.

Larry Parnass can be reached at lparnass@berkshireeagle.com, at @larryparnass on Twitter and 413-496-6214.


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