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Arts & Communication Legal risks and art exhibition contracts

From the perspective of the artwork lender, it is Article 245 (1) of Taiwan’s Civil Code also addresses culpa
undoubtedly preferable to enter into a consensual contract, in contrahendo but limits compensation to contract signing
as the actual delivery of the artwork significantly increases expenses, necessary preparation costs, and damage from lost
risk. For the borrower, while adopting a real contract means contract opportunities. In Taiwan, violations of the duty of
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there is no obligation to comply with the contract until the care that infringe on the personal or property rights of the
artwork is received, this can be disadvantageous. If the counterparty are covered under culpa in contrahendo. 17
borrower has already made investments in the early stages In both China and Taiwan, the victim is generally
of the exhibition, such as promotion, renting a venue, and responsible for proving the infringing party’s violation of
setting up the exhibition hall, seeking compensation for
any losses may become difficult. This disadvantage will be good faith principles, along with the resulting damage and
further elaborated below. causation. However, regarding subjective fault, such as
“malice” or “intent,” Chinese academics generally believe the
3.2. Assumption of corresponding responsibilities infringing party must prove their lack of fault (Table 1). 11,17
In general, when a contract is established through mutual Germany’s approach to culpa in contrahendo does
agreement, both parties are bound by its terms and cannot not have general rules but treats each case individually.
arbitrarily rescind or annul the agreement. The contract Depending on the situation, the subjective fault and the
gains its binding force upon establishment. However, scope of compensation can vary. For example, under
before a contract is formalized, the parties are not subject Articles 122 and 179, liability does not require subjective
to these constraints. fault, whereas, under Articles 307 and 309, fault is necessary

To protect the reliance interests of contracting parties for liability.
during the negotiations, most countries in the continental Regarding compensation, when the party directly
law system have established the concept of culpa in causes bodily or property damage (inherent interests) to
contrahendo. If one party infringes upon the other’s the counterparty, the counterparty can claim damages for
contractual performance interests, may bear liability for breach of contract based on culpa in contrahendo. This
breach of contract as an unfavorable consequence. approach helps mitigate the perceived “unjust” severity of
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Article 500 of Mainland China’s Civil Code outlines tort law. In the U.S., emphasis is placed on consideration,
culpa in contrahendo. According to academic consensus, and when there is a promise supported by consideration, a
to be liable under culpa in contrahendo, the party must be party that fails to fulfill its contractual obligations as agreed
at fault (a subjective factor), and compensation is limited bears liability and is generally entitled to compensation
to reliance losses. These include expenses incurred in based on expected interests. 15
preparation based on the other party’s promise and the loss It should be noted that although U.S. courts have
of opportunities to contract with third parties. traditionally allowed parties the freedom to negotiate
There is an ongoing debate over whether culpa in before establishing a contract without the risk of culpa
contrahendo covers damages to inherent interests due to in contrahendo, certain specific circumstances have been
violations of the duty of care (protection). 11,18 Although clarified through case law. In these instances, the injured
some scholars argue that inherent interest losses should party may claim compensation for reliance losses or
be included, no such court cases in Mainland China have request the return of benefits obtained by the party at fault
supported this view. 19 during negotiations. 15

Table 1. The different burdens of proof for parties in China depend on the type of liability
Parties Types of liability Complying Party Defaulting Party
Culpa in contrahendo 1. Evidence of preparation or negotiation for contract (Disputed: Evidence of one’s own innocence or non-fault)
formation;
2. Evidence that the offender has breached the
pre-contractual obligations;
3. Evidence of losses incurred;
4. Evidence of the causal relationship between the offender’s
act and the damages
(Disputed: Evidence of the offender’s subjective fault).
Liability for breach of contract 1. Evidence of the existence and validity of the contract; Special cases: Evidence of one’s own innocence or
2. Evidence that a breach of contract occurred. non-fault

Volume 3 Issue 1 (2025) 7 doi: 10.36922/ac.2881