The seller and buyer of an artwork are free to negotiate and agree on when the risk of the damage to or loss of the artwork passes from one party to the other. Seller and buyer often agree that the risk will pass when ownership passes or upon delivery of the artwork to the buyer.
Reference could be made to the law governing contracts for the sale of goods in Hong Kong eg the Sale of Goods Ordinance (Cap. 26) ("SOGO") and common law for the passing of such risk. The passing of risk can differ if the buyer is a corporation as compared to a private individual consumer.
Section 2A of SOGO defines "Consumer" as follows:
1) you neither make the contract in the course of a business (a commercial transaction) nor hold yourself out as doing so;
2) the other party does make the contract in the course of a business (a commercial transaction); and
3) the goods passing under or in pursuance of the contract are of a type ordinarily supplied for private use or consumption.
Therefore, the buyer will be regarded as a "consumer" if the purchase of the art piece is from a businessman or a company for the buyer's private use (the buyer is the end user e.g private collector) but not for business purposes (such as resell to another party for profit making).
In consumer contract for the sale and purchase of artwork, the artwork could remain at seller's risk until the consumer has taken possession of the artwork.
For Hong Kong Art Law Services, please contact CHOW & CHEUNG [Tel: +852 2856 3799 or Email: cac@ccsn.hk]
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