Question

Hania, an avid art collector, decided to open a high end gallery to display her collection. Opening was set for April 15. In anticipation of the opening, Hania purchased 2 paintings by “Renoir” from Northeby's Auction House at an auction on February 15 for a total purchase price of $400,000.00. The works had been advertised in Northeby's catalogue prior to the sale as having a Northeby “expert certified value of $600,000.00”. Hania viewed the paintings prior to the auction and thought they would make an impressive addition to her collection.

On February 25, when Hania's insurance company's appraisers examined the paintings they determined that they were not original "Renoirs" but were very good copies. They estimated the value to be approximately $200,000.00.

Hania exhibited the "Renoirs" at her opening on April 15 as planned and contacted Northeby's the 2 next day. She offered to return the paintings in exchange for $600,000.00 which was the “expert certified value”. Northeby's refused and claimed that they were under no obligation to accept the paintings or return or pay any money. They pointed out that the following clause was on the reverse side of the ticket purchased by Hania which entitled her to bid at the auction, and was also

included in the catalogue that was provided at the auction.

"Although Northeby's takes every effort to ensure the authenticity of all work, we provide no guarantee. Items purchased may be returned within 14 days of purchase

for full refund. No other claim may be made."

Hania claimed that Northeby’s failed to properly advise her of the refund policy and, more importantly, had sold her paintings that were worth a fraction of what she thought.

Required: Hania commences an action against Northeby's based on misrepresentation and mistake. Discuss the basis for the action and the possible remedies she may seek. What is the likely outcome of the action? Be certain to explain the applicable legal principles as part of your answer.

Answer 1

Hania can file a lawsuit against the Northeby's advertisement related to sale of the "Renior Paintings" having an expert certified value of $600,000 as this is misrepresentation of facts. Making an incorrect claim amounts to misrepresentation of facts and Northeby's have disclosed false advertisement.

Hania only has an option file a lawsuit against Northeby's since return policy of Northeby's has already elapsed i.e 14 days from Purchase date i.e 15th February. She can't return the paintings to Northeby's and the only option she can resolve is going legal.

She will definitely win the legal battle since she has a valid points and proofs related to Expert Certified Value by the Northeby's.