“Saying that someone lacked mental capacity is a very strong claim to void a contract,” comments Amineddoleh. She notes, however, that in Gagosian’s current complaint “they focus on the other argument,” that because payment was never made in full by Pelham on behalf of the Qatari sheik and the return of the balance of funds was accepted, the initial contract was void.
The argument has the benefit of making the matter “a somewhat cut and dry contracts case,” says Amineddoleh. “The interesting aspect is that this being the art market, so many things aren’t publicly available.” Private sales such as those which were arranged between Widmaier-Picasso, Pelham, and the Qataris and between Widmaier-Picasso, Gagosian, and his anonymous buyer are among the most secretive of the already astoundingly opaque art market.
Such secrecy is generally to the benefit of those who wish to maintain a certain level of discretion when huge sums of money and prized artworks are changing hands. However, it can also impact those immediately involved in unforeseen ways. Potentially still behind closed doors could be details of the circa-$100 million offers Gagosian, in the initial filing, claims were made for the work in 2011, as well as evidence of due diligence measures that might serve as additional support to Gagosian’s claim that he was unaware of the previous purchase agreement. “In high-stakes cases,” such as this one, says Amineddoleh, one would expect contractual assurances “about having good title to a work and that there aren’t any clouds on the title.”
Whether such evidence will be uncovered through the course of the current court proceedings remains to be seen. (It may well be unnecessary, if the presiding judge sides with Gagosian’s lawyers that Pelham’s contract was indeed voided by CSP’s acceptance of Widmaier-Picasso’s returned funds.) However, the case “will give other people a reason to take pause when they’re entering into transactions,” says Amineddoleh.