The term ‘good faith purchaser’, sometimes known as a bona fide purchaser, in the art market, relates to someone who buys a work honestly and without knowledge of any pre-existing problem attached to it.

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The precise legal meaning of the term varies significantly across jurisdictions and legal systems, but it can be widely understood as referring to a buyer believing that the seller has the legal right to sell the work, with no reason to suspect otherwise. 

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Unsurprisingly, the concept is particularly important in the secondary market, where works may have passed through multiple owners, dealers and jurisdictions over many decades. 

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Why it matters

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The principle itself developed through property and commercial law, where courts are geared towards balancing the rights of original owners against the protection of honest buyers participating in legitimate trade. Like many principles tied to due diligence, there is no singular or convenient set of rules or checklist available to conclusively establish whether a purchase was bought in good faith. 

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In the court room, attention will fall on the extent to which a buyer acted honestly and with ‘reasonable’ diligence. The latter can differ depending on the experience and background of the individual involved. For example, a dealer with 30 years’ experience in the art trade will be expected to behave very differently over missing dates in a provenance, than a buyer shopping online, with no previous interaction or knowledge of the art world.

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The application of law regarding ‘good faith’, and adjoining concerns with fraud, concealment and limitation periods, are treated differently across jurisdictions. In the UK and the US, there is a general commitment to the principle that thieves can never pass good title which can leave innocent purchasers vulnerable, although the precise rules and expectations differ, even across states.  

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‘Good faith’ in practice:

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There is no comprehensive rule book to establish a ‘good faith’ purchase, but there is some consistent advice as to risk can be reduced:

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• Treat due diligence as risk management, not just a formality. Simply shifting a mindset from ‘do we have provenance?’ to ‘does this provenance make sense?’, can help concentrate attention onto whether the information presented is explainable and proportionate. 

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• Escalate concerns: Courts are clear that wilful blindness is no excuse. Inconsistent information, pressure to close sales quickly, and secrecy over the beneficial owner of proceeds, it is worth considering how credible everything would sound whilst stood in front of a judge.

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• Document your process: As with all due diligence, a strong set of processes and a detailed audit is the best way to protect your interests and demonstrate your approach to risk.

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• Don’t treat any database or check as sole authority: The tools and platforms available to checks risks are on the rise, but there is no singular way to eliminate risk. Information needs to be gathered from sources which feel appropriate for the transaction and then considered carefully by individuals and businesses, prior to a transaction.

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