At the Christie’s evening auction of postwar and contemporary art in London this past June, a choice work by Takashi Murakami, Flower Ball Blood (3-D) V, 2007, was withdrawn at the eleventh hour. No reason was given, but Murakami’s production company, Kaikai Kiki, had stopped the sale of the picture with a court order tied to its pending lawsuit in Tokyo against the consignor, the Japanese real estate firm Cerulean. The suit alleges a breach of the sales agreement and demands that the company return the work.

Cerulean had acquired the painting in January for 68 million yen ($630,000) with the stipulation that it could not be resold for10 years in order to prevent speculative art deals. However,as alleged in the Tokyo District Court complaint, Cerulean consigned it barely six months later to Christie’s London, where it was estimated at £300,000 to £400,000 ($600–800,000). Efforts to reach Cerulean were unsuccessful, and a spokesman at Christie’s  London declined to discuss the matter, apart from confirming that it was the consignor’s decision to withdraw the picture.

The case shines a spotlight on the little-known but widespread practice of so-called artist/gallery resale agreements in primary market transactions. As a source close to Murakami explains, such pacts offer “a way for the artist to control and protect his intellectual property in the marketplace.”

For their part, dealers from Matthew Marks, in New York, to Stuart Shave, in London, use them to at least attempt to govern where an artwork goes once the collector decides to part with it. Top-tier galleries typically seek to maintain the career of a major artist or rising star over the long term, and high auction prices aren’t always matched in the larger market. In addition, works at auction may not fetch stellar prices and can easily wind up in the hands of anonymous collectors, or worse, speculators unknown to the original dealer.

“Dealers don’t want you buying something from them today and flipping it in six months at Sotheby’s or Christie’s,” says the Dallas collector Howard Rachofsky. “They want to get a competitive edge in the marketplace.” He describes resale agreements as “annoying but not objectionable” and points out that “if the numbers weren’t so big in today’s world, this would be a moot point.”

Although the wording varies, these clauses basically require or request the buyer to agree, in writing or otherwise, to give the gallery or artist the right of first refusal, usually for a limited time, when the work is about to be resold. A typical clause appears in the invoices of the Chelsea dealer Friederich Petzel: “If the purchaser decides to sell this work within five years of purchase, the gallery will have the right of first refusal to buy back the work at fair market value. Fair market value shall be determined by the gallery’s retail price for works of similar scale and significance at the time of resale and/or auction house estimates, if applicable.”

Petzel, whose stable includes such sought-after artists as Wade Guyton and Sarah Morris, says that the agreements have their place, “especially with clients whoare less familiar with our gallery space. It’s useful to establish a new business relationship where it’s clear that a collector takes on a responsibility by buying awork of art from us.”

Some buyers, however, find such terms onerous. Todd Levin, of the New York–based Levin Art Group and the longtime curator of the Adam Sender collection, says that certain gallerists seem to believe that the resale of primary artwork for any reason is gross negligence. “In the case of gallerists who feel this way, what they should really write on the invoice is: ‘If you resell this piece for any reason at any time in the future, you will be judged to be in default of this contract, and you will never be allowed to step foot in the gallery again, and we’ll never speak to you again under any circumstances.’That’s something that I would at least understand.”

Levin made his somewhat satirical comment after describing the aftermath of the November 2006 sale by Sender of a group of guaranteed works at Phillips de Pury & Company that caused considerable consternation in the art world. As one well-connected adviser put it, “Sender was given priority because the dealers believed he was a true collector, and now he’s viewed as a speculator and a seller.”