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Digital Art Warranties, Picasso and NFT

 by Giuseppe Calabi

Until a few years ago, artworks and blockchain seemed to exist on two parallel lines that would never cross. However, recent developments in the art market have taught us that the opposite is true: blockchain and NFTs are becoming common elements of the art market dictionary, especially when it comes to guaranteeing the authenticity and provenance of artworks.
Before investigating the role of these new tools in the art market, it is necessary to understand how warranty work in legal terms in relation to authenticity and provenance of the work of art, as well as the seller’s warranty, and thus understand why these digital tools can become an important resource.

Dealing with this issue in strictly legal terms, what are the warranty obligations of the seller of a work of art, let’s say, a painting by Picasso?
Certainly, the seller must not tokenise the work. On the contrary, they must exercise a certain degree of diligence, especially if they wish to avoid the purchaser exercising remedies against them (in other words, terminating the sale and claiming liquidated damages in addition to restitution of the price).
Under Italian law, the seller is obliged to indemnify the buyer against defects which render the goods unfit for use or significantly diminish their value (Art. 1490(1) of the Civil Code), unless the buyer knew of such defects at the time of the conclusion of the contract, or if they were easily recognisable. All this, unless the seller has warranted that the work was free from defects (Art. 1491 Civil Code).
On this issue, can an attribution that changes over time be considered a defect? According to case law, the termination of a contract of sale for aliud pro alio, which is therefore based on the assumption that the contract of sale relates to an asset other than the one actually sold, can be asserted only if the authenticity has been guaranteed by the seller or agreed upon by the parties (Cass. 7299/93 and 17995/2008): only in this case, therefore, can the authenticity operate as an identifying element of the work sold capable of justifying the termination of the contract in the event of a change of attribution or inauthenticity.
It is therefore obvious that a prudent buyer will ensure that this guarantee is formalised in the sale contract.

So, what role do expertise, appraisals, and certificates of authenticity play?
Such documents are generally issued by individuals (hopefully, but unfortunately not always, experts in a particular artist or artistic movement) who freely express their opinion on the work submitted to them for examination. Generally, case law recognises the value of opinion of such documents. Therefore, unless the negligence or bad faith of the person making the statement can be demonstrated, the fact that the opinion expressed therein is subsequently contradicted does not entail the liability of the expert who made it and, often, does not affect the contract of sale relating to the work whose attribution has changed, also because of the time barring rules gove
rning remedies and the general rule of prescription of rights.
Although they may change, the documents relating to authenticity (or attribution) and provenance remain fundamental in the purchase and sale of works of art: in this regard, it should be noted that professional operators are obliged to deliver to the purchaser the documentation attesting to the authenticity or at least the probable attribution and provenance of the work to be sold under Article 64 of the Code of Cultural Heritage (Legislative Decree 42 of 22 January 2004).
Finally, especially in the field of contemporary art, particular attention should be paid to artists and their heirs, who are the holders of the moral rights of authorship: they are entitled to recognise or deny the authorship of a work by the artist. In other words, they can decide whether a work is authentic or not. This mechanism, which usually takes the form of the so-called certificate of authentication, takes on particular forms and procedures in some cases: an example is that of wall drawings by a well-known artist, always accompanied by an artist’s certificate drawn up ad hoc for the buyer of the work, indicating the location of the work and an undertaking by the buyer to communicate the transfer of the work so that the artist could know and trace his works through the issue of a new certificate addressed to the second buyer.
In conclusion, although expertise, certificates and appraisals are subject to change, they are always an essential basis for guidance when selling or buying a work of art.

The present and the future: blockchain and NFTs
In this context, the question now arises as to what role new digital authentication tools such as blockchain and NFT can play.
Art traceability tools such as those developed using blockchain are valuable solutions, especially for proving the origin of a work of art, but their effects will not be felt in practice for decades to come.
Some more doubts might exist in relation to the proof of authenticity of works via blockchain: in fact, given the changeability of the identity of works of art, while for works by contemporary “crypto-art” artists, such as Beeple, the NFT system is an absolutely feasible solution (since it is a digital work of art), in relation to older works (think again of the Picasso painting) it will objectively be more difficult to reconstruct the chain of provenance or to provide a secure attribution judgement, even by means of this tool.
However, it would be a wasted opportunity for the market not to assess these new systems with due attention and curiosity, and to try to make the best use of them in the context of (also) traditional works transfers.

In any case, the golden rule of art sales, according to which the more the work is accompanied by documentation certifying its attribution and provenance, the more one can trust that a proper prior investigation has been carried out, will certainly also apply in the case of these new tools.

It will be interesting in the future to see how information chains in blockchains and certificates of authenticity will relate to each other: what if, for instance, a work circulated as authentic accompanied by certification on the blockchain is at some point declared not legitimate?
In conclusion, the recent cases related to crypto-art lead us to reflect on the art world as a whole, and on the fact that there is increasing attention to market transparency, which also takes the form of clear tracing of the provenance and certification of the authenticity of the works, and that the guarantees issued on these points therefore have an increasingly strong weight and value.