Note: “Selling Your Work as Fine Art, Part 1" appeared as Legalities #13. That column discussed copyright, moral rights, resale royalties, and print disclosure obligations. This month’s column focuses on your relationships with galleries and fine art reps.

 

Q. I’m interested in showing my original paintings in a local gallery. The gallery owner says he will take the paintings on consignment. What does that mean, and what should be in the consignment contract? Wouldn’t it be better if he just bought the paintings from me?

Q. I was approached by an artist’s representative during open studios. She wants to show my artwork to galleries and possible corporate clients. What is involved in such a relationship?

A. The consignment relationship is the most typical way a traditional gallery will show your work. Essentially, the artwork is loaned to the gallery for display and potential sale. Upon a sale, the gallery takes a percentage of the sales price (usually 50%).  If the work is not sold, it is returned to the artist. In this role, the gallery is essentially acting as a sales agent for the artist. Alternatively, a gallery may be willing to buy your artwork up front, but most galleries won’t do that unless there is already an established market for your work. The gallery doesn’t want to amass a large inventory of unsold works. Under consignment arrangements, the artist, rather than the gallery, bears the risk that the work will not sell.

An artists’ rep is also a kind of sales agent. An artists’ rep’s job is to find venues for your fine art to be shown and/or sold. Often the focus is traditional art galleries, where your work would be taken on consignment. But increasingly, the potential clients could include corporate entities, like hotels, banks, professional firms such as lawyers or accountants, doctors’ offices, or office building owners. These corporate clients may have revolving art shows in their building lobbies, or they may have a permanent collection of artwork which they own and display in their offices. Thus, there is a rental market as well as a traditional purchasing market in the corporate field.

Traditional gallery consignments

Ideally, you should have a written consignment agreement with your gallery. Otherwise, general laws regarding commercial relationships may create unexpected and undesirable consequences in the gallery context. For example, if the gallery goes bankrupt, sometimes the consigned artwork will be considered part of its inventory, and the artwork will be taken and used to pay off the gallery’s creditors instead of being returned to the artist. 

In reaction to such problems, some states have special laws regulating consignments for artwork. For example, California’s law ensures that artwork cannot be subject to claims by creditors of the gallery. It requires galleries to hold proceeds from the sale of an artwork in trust for the artist, so the artist must be paid first before the funds can be used to pay any other bills. California law also makes galleries responsible for any loss or damage to the artwork while it’s in the gallery’s possession. The gallery must pay the artist the full market value of the lost or damaged artwork, not just what the artist would have received after the gallery’s commission. These provisions of California law protect you even if you don’t have a written consignment agreement, and they cannot be waived. So even if you are compelled to sign an agreement that includes a waiver or conflicting terms, those terms will not be given legal effect. See Cal. Civ. Code Section 1738 et seq.

Even in states that have such laws, it is better to have a written consignment agreement if possible. Unfortunately, it is not uncommon for galleries to shun written agreements. Whether you can get one will depend upon the particular gallery’s attitude and your bargaining power. In any event, you should be aware of the issues discussed below, and at least talk about them with your gallery. That way you will be sure that you and the gallery are not making different assumptions about how they will be handled. And sometimes having such discussions will help the gallery owner understand why it would be wise to have the agreement documented in writing. Finally, remember that under the law, an oral agreement is still an enforceable contract (if you have a conflict later, the problem would be, of course, proving what you originally agreed to if you didn’t put it in writing.) If you are unable to get the gallery to sign an agreement, at least make your own notes about what was said.

The consignment agreement should establish particular details of your consignment arrangement with the gallery. For example, the specific works consigned, the prices they may be sold for, and the commission the gallery will receive, all should be identified in writing. Also, it should state whether the gallery or the artist pays for the costs of shipping the artwork to the purchaser. If you are paying shipping costs, you should approve such costs before they are incurred.

The agreement should state whether the gallery has an exclusive right to show your work, or whether you remain free to show work in other galleries, open studios, etc.  Typically, a gallery will want exclusive rights at least in its geographic area. If so, you will want to be clear about what happens if you sell work at open studios or privately at your studio (“studio sales”), or if you do a specially commissioned work. Galleries often want a commission on such sales even if they were not directly involved in those sales.

You may also want clarity about how and when your work will be shown – for example, will it be in a group show, or a show devoted solely to your work? – and how promotions will be handled – for example, what materials will be produced, e.g., announcements, advertisements, catalogs? You will want to make sure that you have the right to review and approve such materials, and that they will have appropriate copyright notices. Also, who will pay for the promotional materials? – for mailing costs? – for costs of the opening reception? Again, if you are paying, make sure your prior approval is required.

The agreement should specify that you retain title in your work, and a “security interest” in the artwork and the proceeds from sales of your artwork, and that title does not pass to the purchaser until you are paid in full. It should set forth specifics for payment and accountings. Also, it should specifically require the gallery to include notice to purchasers of the artist’s copyright, moral rights and resale royalty rights (see Legalities #13); and that the gallery must give the artist all information about the purchasers. Many galleries are reluctant to give artists information about the purchasers. They are concerned that the artist will then use that information to arrange private sales. However, artists need such information in order to keep track of possible resale royalties. The gallery’s concern can be taken care of by including a provision that the gallery will receive its regular commission on any private sales to such purchasers.

The agreement should also explicitly state that the gallery is responsible for loss or damage to the artwork while in its possession, and during transport to purchasers or back to the artist. It should require the gallery to maintain adequate insurance, and specify that the artist will be reimbursed for the full value of the work if it is lost or damaged beyond repair.

Finally, you will want specific term and termination provisions. The term defines how long the initial arrangement will last. The agreement can provide for automatic renewal, or that it will expire unless you explicitly agree to renew. It should have specific provisions for termination, both for cause (on grounds that a party has violated its obligations under the agreement, for example, failure to pay the artist or failure to show the work) or without cause.

Artists’ reps and corporate venues

The role of an artist’s rep is similar to a gallery in that both are acting as an agent for sales of the artist’s work. Thus, your agreement with her should include the same types of provisions as the gallery agreement (discussed above). The artist/rep agreement should establish the amount of her commission, and details for payments and accounting. (When the rep gets you a gallery consignment, her commission will come out of the amount due to you under the gallery contract. When she arranges a direct sale or a rental, it will be a percentage of the purchase price or rental fee.)

Also like the gallery agreement, the artist/rep agreement should include provisions for how you will deal with promotions (who creates any portfolios, brochures, etc., and how costs are split), safeguarding your artwork while it is in the rep’s possession, and term and termination. 

The artist/rep agreement also needs to address some additional issues. If you already have a rep for your commercial work, these will be familiar. The artist/rep agreement should establish the geographic scope of her agency, and also what venues she will be responsible for. For example, if you have an established illustration clientele, you may want to be clear that the rep will not representing you in the commercial art field, and she will not be entitled to a commission on your illustration assignments. Or you may already have some established fine arts clients. If your rep will be taking over the relationship with those clients, typically her commissions for such “house accounts” will be smaller for a certain period of time. Upon termination, most reps expect to continue receiving commissions for period of months or years after termination (how much commission she will continue to receive, and how long, should depend upon how long she represented you). House accounts are normally exempted from such post-termination commissions.

You will want a “best efforts” provision, which requires the rep to use her best efforts in marketing and promoting your work. You will want to retain the right to establish the prices and terms governing sales and rentals of your artwork, and the right to review and reject any agreement negotiated by the rep. In this regard, note that many reps have form contracts for gallery consignments, corporate sales/consignments, and corporate rentals. It is important to review your rep’s form contracts to make sure that they adequately protect you on the various issues discussed in this column and Legalities #13 that they are clear about your retention of copyright, your entitlement to resale royalties, responsibility for loss or damage, etc.

In any of these agreements, it is particularly important to remind those that purchase or rent your work that they have not received any rights to reproduce it. Most people, including corporate clients, do not understand this. Too frequently I’ve heard of otherwise sophisticated corporations making this mistake. For example, one bank bought a painting for its private art collection. Eventually it became the centerpiece of the bank’s corporate headquarters, and a favorite of the bank’s president. At his urging, it became the bank’s signature image on brochures and other corporate identity materials. Neither the bank nor its graphic design firm thought to ask the artist for permission.

Another potential market for your paintings might be fine arts prints or posters. If your rep will be looking for these opportunities, the copyright considerations are different. In that case, you will be granting permission (or a “license”) for the work to be reproduced. You will want to make sure that the agreement appropriately limits the scope of reproduction allowed (for example, you can grant rights for fine arts posters, but not calendars or coffee mugs). Also you will want to have the right to see and approve the final prints, ensure that no alterations or modifications are made without your consent, and verify the way your name and copyright notice will appear.

There are some good form contracts in Tad Crawford’s book, “Business and Legal Forms for Fine Artists.” (http://www.allworth.com/Catalog/AC389.htm) However, as always you should consult a lawyer to ensure that you have an agreement appropriately tailored for your particular situation.