Commercial Division Blog

Posted: March 12, 2017 / Categories Commercial, Fiduciary Duties

Art Dealer Forfeits Commission Under Faithless Servant Doctrine

On February 27, 2017, Justice Ramos of the New York County Commercial Division issued a decision in Schulhof v. Jacobs, 2017 NY Slip Op. 50264(U), finding an art dealer liable for fraud and holding that she had forfeited her commission on a sale under the faithless servant doctrine.

In Schulhof, the defendant was found liable for fraud because she "misrepresented that" a "buyer was only willing to pay $5.5 million for the Work with knowledge that the buyer was actually willing and ready to pay" (and did pay) "$6.5 million." The court further held "as a faithless servant," the defendant "must account to" the plaintiff not only "for the $1 million of secret profits earned for the sale of the Work," but also that her "disloyalty to" the plaintiff "causes her to forfeit the $50,000 in compensation earned for the sale of the Work." (Internal quotations and citations omitted).