Nicholas O’Donnell looks at the recent decision by a court to compel art advisor Lisa Jacobs to return the $1m profit she made in two-stage transaction that contradicted the terms of her contract with the Schulhof family.

Jacobs did something similar to what Yves Bouvier did in his dealings with Dimitry Rybolovlev. The difference is that Schulhof had an agreement (and brought suit in an American court.)

The court found Jacobs liable for fraud (affirmatively misstating the buyer’s offer), breach of contract, and breach of her fiduciary duty.  On the facts as the court found them, this conclusion is fairly obvious.  Any relationship will first be governed by the terms of an agreement if there is one, and this agreement spelled out clearly what Jacob’s compensation was to be (and not be).  As the record in the court states, the sin was not one of omission, but of affirmatively misrepresenting the factual position of the buyer.  Not only did Jacobs have to disgorge the $1 million she had been paid by the buyer, she was not even allowed to keep her $50,000, a penalty for being a “faithless servant.”

Art Advisors and Duty of Loyalty in Focus Again Over Sale of Basquiat (Art Law Report)