Consigning Artwork: A Handshake Isn’t Going to Protect You

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Anton Pethukov Powerful handshake
Anton Pethukov, Powerful handshake, approx. 39 by 66 inches.

Artists may be at a disadvantage when working with art galleries and private dealers. Galleries and dealers have display spaces, marketing tools and connections to reach a greater pool of potential buyers. They have leverage. Unfortunately, there are some unscrupulous galleries and dealers who delay or deny payment, or refuse to pay for damage. So how can artists protect themselves when signing on with a gallery or dealer?
Working with galleries and dealers does not have to be a blind leap of faith. For starters, the Georgia Consignment of Art Act requires galleries and dealers to have a written contract with artists before the artist delivers work to the gallery or dealer. When a gallery takes a piece of art on consignment, it becomes the agent for that work and cannot treat the art as its own. Georgia law also holds galleries responsible for any loss or damage to artwork while it is in their control.
The Georgia Consignment of Art Act protections are wonderful, but a well written agreement that covers every step of the process does more. A written consignment agreement is an opportunity for the artist and gallery/dealer to clearly distribute responsibilities and assign expenses—such as delivery costs, exhibition and marketing expenses, insurance coverage and sale profits—so there are no surprises down the road. Some terms will be nonnegotiable for certain galleries/dealers, but others may be open to discussion.
Terms of Consignment
The agreement should say how long the gallery will hold the artwork and try to sell it. There is usually a provision allowing the artist or gallery to end the consignment period under conditions agreed to by the artist and gallery. The gallery may add wording to prevent the artist from terminating the consignment within the first few months of delivery of the artwork. To avoid any confusion about termination, artists may want to ask that the agreement provides written notice of a certain number of days, and not verbal notice.
Delivery and Re-Delivery of the Artwork
Some galleries pay to ship the artwork, while others require the artist to pay. This is often not negotiable, but artists may wish to include language about the type of shipping service and packaging used in order to manage costs and ensure the work is protected. Be clear on who is responsible for delivery costs for shipping to the gallery and back to the artist.
Under Georgia law, the gallery is responsible for any loss or damage to the artwork while it is in the gallery’s control, but artists should still clearly state in the agreement how the artwork will be insured and, in the event of a claim, how much of the insurance payment will go to the artist and by when, and how much the gallery will keep, if any. Additional insurance may also be available through the shipping company and the parties should agree as to who bears the cost of such insurance.
Exhibitions and Rights to the Artwork
Consignment does not mean the gallery temporarily owns the artwork. The artist is still the owner. This means the gallery cannot treat the work as its own property. For example, the gallery could not use the artwork as collateral for a bank loan. The consignment agreement will provide written approval from the artist to display the artwork and stipulate that the artist be credited. The artist may ask the gallery to put up a clear notice that the work is consigned so the ownership is clear, although it is not currently standard practice and the gallery may not agree to this. Artists may also want to request a provision stating that the gallery will not lend the artwork or send it anywhere outside the gallery without the artist’s permission.
In the consignment agreement, the agreement should state who is responsible for expenses relating to the consignment and exhibition of the work. Depending on the gallery and the nature of the exhibition, costs may be as simple as a few pizzas and flyers or as extravagant as champagne, caviar and TV/radio ads. If the artist is responsible for those costs, it may be prudent to add an “expense cap” after which the gallery will be responsible for all costs. Make sure whatever is agreed verbally is written into the contract. No detail is too small. Even if the gallery is not willing to agree to all the artist’s requests, at least both parties will understand where they stand and what is expected.
Pricing and Sale of the Artwork
Since most artist/gallery issues arise over the sale of artwork, the consignment agreement should clearly address details regarding the sale of the artwork. The artist usually sets the minimum price for the artwork in consultation with the gallery and often gives the gallery permission to sell at a slightly higher or lower price. The artist should also determine how much they must receive before the buyer can take the work home. The agreement should spell out how much of the gross sale amount the artist will receive, and a period of time by which the gallery will collect the money and pay the artist. If the artist will be responsible for any expenses, the agreement should state the artist’s right to review them before they are deducted from their payment. No one wants uncertainty or surprises. 
Other Agreements
Agreements for loaning artwork or temporarily placing with a collection are substantially the same as consignment agreements, but there are some differences. In both cases, the agreement should address who is responsible for shipping and delivery expenses and who will insure it against loss or damage, etc. If the buyer is unaware that the artwork is on loan, the artist may have no recourse against the buyer if they are not paid. To avoid this, the artwork should be labeled as on loan with the artist’s contact information or the agreement must stipulate that it is the gallery’s responsibility to inform potential buyers that the work is on loan.
In general, the written agreement should contain as many details as possible regarding expenses, insurance, delivery and payment. Artists typically have less bargaining power than galleries or dealers, but they can still ask questions and make sure everyone is clear on their rights and responsibilities. Even if the artist does not get everything they request, having everyone on the same page with clear expectations can result in better relationships and smoother business dealings, which is ultimately what everyone wants.
This article is for general informational purposes only and is not meant to address any specific situation or provide legal advice.  Protections for consigning artwork in other states may differ from Georgia law. 
Kelly Peterson is a student at Rutgers Law School and wrote this while an extern at Georgia Lawyers for the Arts.

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