11 ORIGINAL ART: SALES, COMMISSIONS, AND RENTALS
The last chapter developed a background of contractual law in order to prepare for a discussion of the particular contracts into which an artist may enter. The artist’s sale of an artwork directly to a purchaser, whether of an already completed work or of commissioned work, will be explored in this chapter along with the less common arrangement in which art is rented.
Basic Contractual Terms
If a purchaser decides to purchase a work, the artist should at least insist on a simple written contract in a form such as the Model Bill of Sale on page 116. It can be a brief form stating no more than the artist’s name, the purchaser’s name, the date, the title and description of the piece sold, the price, the sales tax due, if any, and the total amount payable. By including this basic information, the bill of sale is useful as a record of the transaction in at least two ways. First, it helps keep track of sales for income tax purposes, since all the prices paid are recorded. The artist need only transfer the amounts from the bills of sale to the ledger for income. Second, it can help in maintaining an overall inventory of work and keeping track of who owns the artist’s work at any given moment. Again, the artist will want to transfer the information from the bill of sale to a ledger, file, or slide book in which all the works created are recorded.
The bill of sale can also be expanded to deal with various contingencies that may occur in a given transaction. These may arise from the nature of the work, the manner of payment, or the artist’s desire to enforce certain standards of treatment for the work after sale. Such additional clauses can be added under Terms of Sale.
For example, the artist is the owner of copyright from the moment of creation of a work. However, the artist may still wish to express this in the bill of sale so the purchaser has no misunderstanding about his or her right to make reproductions. At the same time, the artist might want to permit limited reproductions that fall into the category of “fair use.” Such a provision might read as follows:
The Artist hereby expressly reserves all rights whatsoever to copy or reproduce the work to the Artist, his or her heirs, executors, administrators, and assigns. The Artist has placed copyright notice in his or her name on the Work. The Artist shall not unreasonably refuse permission to reproduce the Work for catalogs and other publicity purposes incidental to public exhibition of the Work, provided all such reproductions bear appropriately placed copyright notice in a form identical to that appearing on the Work.
The risk of loss passes to the purchaser on delivery of the work as discussed on pages 00–00. If the purchaser is to pick up the work at the artist’s studio, the risk of loss passes to the purchaser at such time as the purchaser could reasonably have been expected to pick up the work. The bill of sale can alter the time that risk of loss will pass to the purchaser. Of course, the passage of the risk of loss from one party to another should, ideally, be determined in view of the insurance coverage that each party has. This clause might read: “The risk of loss shall pass to the Purchaser on the ______________ (specify when the risk of loss shall pass, such as ‘on the date hereof’).”
The bill of sale might include acknowledgment of receipt of the work by the purchaser and receipt of payment by the artist if these events occurred.
It is not uncommon for purchasers to make installment payments in order to purchase a work. Such a clause might provide: “The price shall be paid in ______ equal monthly installments, commencing on the _______ day of ______________, 20_____, and ending on the ________ day of _____________, 20______.”
If installment payments are used, the artist should consider retaining a security interest in the work until full payment has been made. Such a security interest would require the filling out and filing of Uniform Commercial Code Form 1 with the Secretary of State or local agency for filing, such as the County Clerk. This would protect the artist’s interest in the work from other creditors of the buyer until such time as the artist has been paid in full. Form 1 is available at any stationery store that carries legal forms. It is easy to fill out, since it requires a limited amount of information. This includes the name and address of the debtor (the buyer is the debtor until all payments are made), the name and address of the secured party (who is the artist), and a description of the art that is covered. When signed by the artist and filed with the proper agency, the artist has precedence over any other creditor who might seek to assert a claim over the art or proceeds from the sale of the art. In general, the debtor must also sign Form 1 unless a separate security agreement has already been signed by the debtor.
Provisions relating to the integrity of the work, non-destruction, restoration, a right to exhibit, and an art resale proceeds right are discussed in relation to the Projansky contract.
Instead of using a bill of sale, the terms of sale could also be set forth in a brief letter to the purchaser. The artist would sign the letter and the purchaser would sign beneath the words “Agreed to.”
Projansky Contract
The Projansky contract, or The Artist’s Reserved Rights Transfer and Sale Agreement, was drafted by New York City attorney Bob Projansky to rectify a common problem for artists, whereby they often lose their control over, and ability to profit from, artwork after it is sold. It seeks to create, by contract, rights that are somewhat similar to moral rights and art resale proceeds legislation. In reading over the provisions of the contract, reproduced on page 117, the artist should remember that not all of the proposed provisions need to be used for every sale and some sales will require provisions not present in the contract. The actual terms will vary, depending on the bargaining power of the parties, but the Projansky contract will aid the artist in developing an awareness of what can be demanded.
The Projansky contract, like the bill of sale, starts by setting forth the names and addresses of the parties. The “whereas” clauses explain the motives of the parties and prepare a rationale for the duties and rights under contract. The first whereas clause states that the artist has created a work of art, which is described by the title, dimensions, medium, and year. The next “whereas” clause embodies the fundamental goal of the Projansky contract; it states that, “the parties want the Artist to have certain rights in the future economics and integrity of the Work.” An earlier edition of the Projanksy contract set forth a more detailed basis for such rights: (1) that the value of the artwork sold would be affected by subsequent works created by the artist; (2) that the value of the work would, in fact, increase; (3) that the artist should share in any such increase in value; and (4) that the artist’s intention in creating the work should be recognized by giving the artist a certain control over the work.
The Artist’s Economic Benefits
The Projansky contract requires each work to have a permanently affixed notice showing that future transfers are subject to the contract (Article 11; Specimen Notice and Notice). Exchanges, gifts, inheritances, receipt of insurance proceeds, and similar transfer transactions relating to the work are covered by the contract as well as sales (Article 2). Depending on the nature of the transaction, either price or value is entered under Article 1 and used to calculate gross art profit, which is simply the excess of the present transfer value or price over the previous transfer value or price (Article 2 [d]). The purchaser agrees to have anyone who purchases the work sign a Transfer Agreement and Record (abbreviated as TAR, as required by Article 2 [b] and shown with the contract) and each subsequent purchaser is bound by all the terms of the original agreement (Article 12). Each time the work is sold, the seller within thirty days must file a current TAR signed by the new purchaser (Article 2 [b], [c]) and pay 15 percent of gross art profit to the artist (Article 2 [a]). The artist also reserves all reproduction rights in the work (Article 10) and has a right to receive 50 percent of any rentals received by the purchaser (Article 9). The term of the economic benefits would be for the lives of the artist and spouse, plus an additional twenty-one years (Article 13).
The provisions can be illustrated by an example. In 2012 the artist sells a work for $3,000, subject to the Projansky contract. In 2015 the work is sold for $4,500. The owner who sells in 2015 must, within thirty days, file a current TAR and pay 15 percent of the $1,500 profit to the artist. If, in 2015, the artist had transferred ownership of the work through gift or barter, the Projansky contract could still be used. Similarly, if in 2015 the owner transfers the work by a method other than sale, the 15 percent of gross art profit would still have to be paid to the artist. If the party who purchases in 2015 for $4,500 resells in 2019 for $6,500, the artist will be entitled to receive 15 percent of $2,000 and a new TAR must be filed with the artist.
The Artist’s Control
The artist also gains substantial control over the work after sale under the Projansky contract. Of course, reproduction rights are reserved to the artist (Article 10), which offers aesthetic control as well as economic benefits. The purchaser must give written notice to the artist of any intended exhibition (Article 4). The earlier edition of the contract had a much stronger provision that allowed the artist to either give advice or veto any proposed public exhibition. Upon showing satisfactory proof of insurance and prepaid transportation, the artist is entitled to borrow the work back from the purchaser for a sixty-day period every five years for exhibition at a nonprofit institution. The purchaser agrees not to “permit any intentional destruction, damage, or modification of Work,” (Article 7), rights which the artist would not have in most states in the absence of a specific contractual provision. If the work is damaged, the purchaser must consult with the artist prior to making repairs and, if possible, use the artist to do the repairs (Article 8). The term of the contract is limited to the life of the artist as to notice of the purchaser’s exhibitions, the artist’s right to possession once every five years, and the artist’s right regarding restorations. Lastly, any party forced to bring suit for a breach of the contract may demand reasonable lawyer’s fees as well as other remedies (Article 14).
The Projansky contract might seem to favor only the artist, raising the question whether any but the most successful artist would have the bargaining power to persuade a purchaser to use the contract. However, there are benefits to the purchaser, the most important of which is the right to receive the artist’s written certification of the work’s provenance and history (Article 5). Also, the purchaser can feel more assured that the work is being treated as the artist would wish.
Arguments against the Projansky Contract
The merits of the Projansky contract have been warmly debated, although the contract has not come into wide use. Some argue that use of copyright by artists would provide much of the economic benefit sought by the Projansky contract. A difficult problem for the artist would be enforcement of the provisions requiring the filing of a current TAR and the payment of 15 percent of gross art profit. Since artworks as an investment may not be easily salable, the purchaser might be quite reluctant to accept a work that could be resold only if the new purchaser agreed to the substantial obligations of the Projansky contract. The purchaser may additionally be deterred by the prospect of work burdened by the Projansky contract passing through the purchaser’s estate.
Also, there must be an increase in the value of the work for the artist to benefit economically. For many artists, who are fortunate simply to sell their work, this increase may not occur. The contract, therefore, will benefit artists whose work does not increase in value only by giving such artists some control over the work at the expense of negotiating a more complex contract. Since the artist will not have to pay purchasers if the work decreases in value, the contract is argued to be unfair. In any case, appreciation of a work may be caused by inflation, in which case the appreciated value is merely an illusion. But still the 15 percent must be paid back to the artist. Some collectors even argue that increases in the value of the artist’s work are due to the collector giving the work prestige by the collector’s ownership of the work. And if the artist’s work sells for such high prices, why can’t the artist create more pieces for a sale at the new price levels?
Arguments for the Projansky Contract
The best argument for the Projansky contract may simply be that it is an equitable proposal. Artists should receive part of the appreciation in value of work and maintain certain controls over the work after sale. The purchaser who refuses to purchase a work under such conditions fails to respect the integrity of either the artist or the artist’s work. Copyright laws are most beneficial for works that are intended for mass production and sale, not for unique or original works, which may well not be reproduced during the artist’s lifetime. Also, since the payment back to the artist need only be made if the work appreciates in value, the purchaser will necessarily have made a profit each time such a payment must be made. And, frequently, an artist’s early work represents the crucial period during which the artist’s sensibility developed. Such work will always have a special aesthetic value to both the artist and the public. Often that aesthetic value will be translated into a substantial discrepancy between the prices such work brings compared to prices for later work. This would certainly be the case, for example, with an artist like de Chirico, whose early Surrealist work was crucial to an entire movement while his later work received no acclaim.
A Compromise
The use of the Projansky contract will depend on bargaining power. Any artist who can persuade a purchaser to use the contract would certainly be justified in doing so. Even greater restrictions could be required by the artist—for example, that the work not be resold by the purchaser for a certain period of time. However, many artists will wish to modify the Projansky contract in ways that are more favorable to the purchaser. Bob Projansky suggests, for example, placing a higher value for the work in Article 1 so the gross art profit is initially less. Another alternative Projansky proposes is to have the 15 percent of gross art profit be used as a credit against the purchase of additional works from the artist. But it is possible to go beyond Projansky’s proposals for modification. For example, the 15 percent of gross art could be changed to a lower figure. Or the contract might require that only the first purchaser, but not subsequent purchasers, be bound to pay the 15 percent of appreciated value. The artist might be willing to go even further and completely omit any requirement for payment of a part of appreciated value, but keep the requirements giving the artist privileges of control after the work is sold.
The issues raised by the Projansky contract penetrate to a deeper level than mere contractual negotiations. In fact, the very concept that art is to be treated as a commodity like other commodities is brought into question. Each artist will find a personal answer to either the fairness or the practicality of the Projansky contract, but there can be no doubt of the value of this innovative contract in bringing such issues to the attention of both artists and the public.
Commission Agreement
The crucial terms of a contract for a commissioned work must attempt to ensure that the purchaser will be satisfied with the finished work, while letting the artist be certain that the work in progress is, in fact, satisfactory. Of course, the artist should never agree to satisfy the purchaser, except perhaps to agree to create a work that reasonably should satisfy the purchaser. A subjective approach to measuring a purchaser’s ultimate “satisfaction” is far more dangerous. A capricious purchaser might use a subjective satisfaction clause as an escape hatch, declining to purchase a perfectly good painting or sculpture that a hard-working artist completed in good faith. On the other hand, satisfaction must be the artist’s goal. The more opportunities provided for consultation and approval in the process of creation, the better the likelihood of success in the regard.
The preliminary design provides the first opportunity to see whether the artist and purchaser mutually understand one another with regard to the intention and execution of the work (see Model Commission Agreement, Paragraph 1). The approximate budget, size of the finished work, materials, construction, scope of the artist’s work, and responsibilities of the purchaser, such as posing or providing work-space, should all be specified (Paragraphs 1 and 2). The preliminary design fee must be paid upon signing the agreement. A completion date for the design is specified and the purchaser must notify the artist within two weeks of any proposed changes in the design. In the event of changes, the artist is entitled to receive additional compensation on an hourly basis. If the purchaser decides not to have the work created, the artist retains the design fee and all rights in the designs remain the property of the artist (Paragraphs 5 [A] and 6).
Having specified the rights of the parties at the earliest stage of their relationship, the commission agreement then looks to the satisfactory completion of the designs and the continuation of work (Paragraph 2). In order to be certain the parties are in agreement as to the satisfactory progress of the work, a sequence of three progress payments is used. The first payment is made upon the purchaser’s giving written approval of the preliminary design, the second when the work is one-third completed, and the final payment, with any sales tax, upon completion of the work (Paragraph 2).
The issue of satisfaction is resolved by giving the artist the power to determine when the work is completed. Since the artist is “a recognized professional artist” and the purchaser wants the art created “in artist’s own unique style,” it is reasonable to allow the artist to determine completion of the work and deviate from the preliminary design if necessary (Paragraph 2). If, at any stage, the purchaser is dissatisfied, the agreement may be terminated (Paragraph 5). If this happens, the artist is entitled to a fee based on the degree of completion and owns the work, but the purchaser is freed of any further obligations to pay for completion of the work (Paragraph 5 and 6). Of course, the purchaser might negotiate in the contract for the return of some or all payments in the event of termination, but this will depend on the relative bargaining strengths of the parties.
A date is provided for completion and final delivery of the work, but the artist shall not be liable for damages in the event of delays (Paragraph 3, and 5 [D]). If the artist cannot finish the work within ninety days of the delivery date, the artist must return all progress payments to the purchaser but retains all rights in the work (Paragraph 5 [E]). The purchaser might well insist either that the specific reasons, such as illness or acts of God, be given to excuse delays or that the purchaser have an option to accept the partially completed work rather than merely to receive back the payments to date. Also, it is wise to specify where the work is to be received, any installation that may be necessary, and who will pay for insurance and the costs of transportation (Paragraph 4). Since the artist is excused from any penalties other than return of payments if the work is not completed, the purchaser might also object that it is harsh to charge interest on unpaid progress payments and at the same time to give the purchaser no rights in the work until the final payment is made (Paragraph 2).
Other provisions cover the artist’s ownership of copyright, the purchaser’s agreement not to destroy or alter the work, the purchaser’s obligation to maintain the work properly and the artist’s rights to make repairs, if practical, and borrow the work for exhibition (Paragraphs 7, 9, 10, 11). If the work is a portrait, the purchaser waives his or her right of privacy. This is important if the artist becomes the owner of the work because of a termination or wishes to exploit the work in multiples. Obviously the artist should obtain the purchaser’s approval of any plans to reproduce the work.
The commission agreement may be simpler or more sophisticated depending on the work. If the work will be of very long duration, more than three progress payments would be reasonable. The purchaser may require the artist to maintain insurance on the work in progress so that the work can be replaced at no cost to the purchaser in the event of damage or theft (Paragraph 4). Also, a provision should definitely be included governing the effect of the death of either the artist or the purchaser while the work is in progress. If the artist dies, a fair provision might be to have the work, in whatever stage of progress, belong to the purchaser, while the payments to the date of death remain in the artist’s estate (Paragraphs 5 [F] and 6). The same provision would be reasonable if the death of the purchaser makes further performance impossible—for example, a portrait. Otherwise the estate of the purchaser should be required to perform as if the purchaser were living (Paragraph 13).
These are not all the possible terms of an agreement for a commissioned work, but knowledge of the more important terms and general approach will enable the artist to negotiate fair and effective agreements for commissions.
Model Commission Agreement
Agreement dated as of the ______ day of _________, 20_____, between _______________________ (“the Artist”), whose address is ________________________ ________, and _________________________ (“the Purchaser”), whose address is ___________________________.
Whereas the Artist is a recognized professional artist; and
Whereas the Purchaser admires the work of the Artist and wishes to commission the Artist to create a work of art (“the Work”) in the Artist’s own unique style; and
Whereas the parties wish to have the creation of this work of art governed by the mutual obligations, covenants, and conditions herein,
Now, therefore, in consideration of the foregoing premises and the mutual covenants hereinafter set forth and other valuable considerations, the parties hereto agree as follows:
1. Preliminary Design. The Artist hereby agrees to create the preliminary design for the Work in the form of studies, sketches, drawings, or maquettes described as follows:__________ ______________ _______________________________ in return for which the Purchaser agrees to pay a fee of $______ upon the signing of this Agreement. The Artist agrees to develop the preliminary design according to the following description of the Work as interpreted by the Artist:
Title:
Materials:
Dimensions:
Description:
Price:
The Artist shall deliver the preliminary design to the Purchaser within _______ days of the date hereof. The Purchaser may, within two weeks of receipt of the preliminary design, demand changes, and the Artist shall make such changes for a fee of ________per hour, provided, however, that the Artist shall not be obligated to work more than _________ hours making changes.
2. Progress Payments. Upon the Purchaser’s giving written approval of the preliminary design, the Artist agrees to proceed with construction of the Work, and the Purchaser agrees to pay the price of ______________ for the Work as follows: one-third upon the giving of written approval of the preliminary design; one-third upon the completion of one-third of the construction of the Work; and one-third upon the completion of the Work. The Purchaser shall also promptly pay the following expenses to be incurred by the Artist in the course of creating the Work: ______________. The Purchaser shall pay the applicable sales tax, if any, with the final progress payment. Completion of the Work is to be determined by the Artist, who shall use the Artist’s professional judgment to deviate from the preliminary design as the Artist in good faith believes necessary to create the Work. If, upon the Artist presenting the Purchaser with written notice of any payment being due, the Purchaser fails to make said payment within two weeks of receipt of notice, interest at the prime interest rate for banks in ________________ shall accrue upon the balance due. The Purchaser shall have a right to inspect the Work in progress upon reasonable notice to the Artist.
3. Date of Delivery. The Artist agrees to complete the Work within _______ days of receiving the Purchaser’s written approval of the preliminary design. This completion date shall be extended for such period of time as the Artist may be disabled by illness preventing progress of the Work. The completion date shall also be extended in the event of delays caused by events beyond the control of the Artist, including but not limited to fire, theft, strikes, shortages of materials, and acts of God. Time shall not be considered of the essence with respect to the completion of the Work.
4. Insurance, Shipping, and Installation. The Artist agrees to keep the Work fully insured against fire and theft and bear any other risk of loss until delivery to the Purchaser. In the event of loss caused by fire or theft, the Artist shall use the insurance proceeds to recommence the making of the Work. Upon completion of the Work, it shall be shipped at the expense of _____________ to the following address specified by the Purchaser: __________________________. If any special installation is necessary, the Artist shall assist in said installation as follows:___________________________.
5. Termination. This Agreement may be terminated on the following conditions:
(A) If the Purchaser does not approve the preliminary design pursuant to Paragraph 1, the Artist shall keep all payments made and this Agreement shall terminate.
(B) The Purchaser may, upon payment of any progress payment due pursuant to Paragraph 2 or upon payment of an amount agreed in writing by the Artist to represent the pro rata portion of the price in relation to the degree of completion of Work, terminate this Agreement. The Artist hereby agrees to give promptly a good faith estimate of the degree of completion of the Work if requested by the Purchaser to do so.
(C) The Artist shall have the right to terminate this Agreement in the event the Purchaser is more than sixty days late in making any payment due pursuant to Paragraph 2, provided, however, nothing herein shall prevent the Artist bringing suit based on the Purchaser’s breach of contract.
(D) The Purchaser shall have the right to terminate this Agreement if the Artist fails without cause to complete the Work within ninety days of the completion date in Paragraph 3. In the event of termination pursuant to this subparagraph, the Artist shall return to the Purchaser all payments made pursuant to Paragraph 2, but shall not be liable for any additional expenses, damages, or claims of any kind based on the failure to complete the Work.
(E) The Purchaser shall have a right to terminate this Agreement if, pursuant to Paragraph 3, the illness of the Artist causes a delay of more than six months in the completion date or if events beyond the Artist’s control cause a delay of more than one year in the completion date, provided, however, that the Artist shall retain all payments made pursuant to Paragraphs 1 and 2.
(F) This Agreement shall automatically terminate on the death of the Artist, provided, however, that the Artist’s estate shall retain all payments made pursuant to Paragraphs 1 and 2.
(G) The exercise of a right of termination under this Paragraph shall be written and set forth the grounds for termination.
6. Ownership. Title to the Work shall remain in the Artist until the Artist is paid in full. In the event of termination of this Agreement pursuant to Subparagraphs (A), (B), (C), or (D) of Paragraph 5, the Artist shall retain all rights of ownership in the Work and shall have the right to complete, exhibit, and sell the Work if the Artist so chooses. In the event of termination of this Agreement pursuant to Paragraph 5 (E) or (F), the Purchaser shall own the Work in whatever degree of completion and shall have the right to complete, exhibit, and sell the Work if the Purchaser so chooses. Notwithstanding anything to the contrary herein, the Artist shall retain all rights of ownership and have returned to the Artist the preliminary design, all incidental works made in the creation of the Work, and all copies and reproductions thereof and of the Work itself, provided, however, that in the event of termination pursuant to Paragraph 5 (E) or (F) the Purchaser shall have a right to keep copies of the preliminary design for the sole purpose of completing the Work.
7. Copyright. The Artist reserves all rights of reproduction and all copyrights in the Work, the preliminary design, and any incidental works made in the creation of the Work. Copyright notice in the name of the Artist shall appear on the Work, and the Artist shall also receive authorship credit in connection with the Work or any reproductions thereof.
8. Privacy. The Purchaser gives to the Artist permission to use the Purchaser’s name, picture, portrait, and photograph, in all forms and media and in all manners including, but not limited to, exhibition, display, advertising, trade, and editorial uses, without violation of the Purchaser’s rights of privacy or any other personal or proprietary rights the Purchaser may possess in connection with reproduction and sale of the Work, the preliminary design, or any incidental works made in the creation of the Work.
9. Non-Destruction, Alteration, and Maintenance. The Purchaser agrees that the Purchaser will not intentionally destroy, damage, alter, modify, or change the Work in any way whatsoever. If any alteration of any kind occurs after receipt by the Purchaser, whether intentional or accidental and whether done by the Purchaser or others, the Work shall no longer be represented to be the Work of the Artist without the Artist’s written consent. The Purchaser agrees to see that the Work is properly maintained.
10. Repairs. All repairs and restorations that are made during the lifetime of the Artist shall have the Artist’s approval. To the extent practical, the Artist shall be given the opportunity to accomplish said repairs and restorations at a reasonable fee.
11. Possession. The Purchaser agrees that the Artist shall have the right to possession of the Work for a period not to exceed sixty days for the purpose of exhibition of the Work to the public, at no expense to the Purchaser. The Artist shall provide proof of sufficient insurance and prepaid transportation. The Artist shall have such right of possession for one period not to exceed sixty days every five years.
12. Non-Assignability. Neither party hereto shall have the right to assign this Agreement without the prior written consent of the other party. The Artist shall, however, retain the right to assign monies due to the Artist under the terms of this Agreement.
13. Heirs and Assigns. This Agreement shall be binding upon the parties hereto, their heirs, successors, assigns, and personal representatives, and references to the Artist and the Purchaser shall include their heirs, successors, assigns, and personal representatives.
14. Integration. This Agreement constitutes the entire understanding between the parties. Its terms can be modified only by an instrument in writing signed by both parties.
15. Waivers. A waiver of any breach of any of the provisions of this Agreement shall not be construed as a continuing waiver of other breaches of the same or other provisions hereof.
16. Notices and Changes of Address. All notices shall be sent to the Artist at the following address:____________________ and to the Purchaser at the following address:___________________. Each party shall give written notification of any change of address prior to the date of said change.
17. Governing Law. This Agreement shall be governed by the laws of the State of ______________________.
Artist:_____________________________
Purchaser:_________________________
Under this agreement, the purchaser has the right to purchase the artwork and apply rental payments to the purchase price (see Model Rental Agreement, Paragraph 12). The agreement is not meant to be adopted as is, but to be modified and adapted to the artist’s needs. The artist will have to decide, for example, how much to charge (museums frequently charge about 5 percent of the sales price per month, but the artist might want to charge a little more) and how long the artist wishes the renter to be able to lease the work. The artist will also have to set a policy on who must pay for shipping and insurance while the work is in transit. Although it is obviously to the artist’s advantage to have the renter pay these costs, the artist may be willing to absorb them if there is a good chance the rental will result in a sale. In Paragraph 4 a blank has been left for the amount for which the artwork is to be insured.
Since the artist continues to own the rented work, it is particularly important that it be protected. The use is limited to personal use by the renter and any reproductions must be approved by the artist (Paragraphs 6 and 9). Maintenance of the work is determined by the artist (Paragraph 7). The location of the work is also restricted and the artist is given a right of access to the work (Paragraph 8). In the event of sale, the artist has continuing rights to borrow the work and repair the work while the purchaser agrees not to destroy or damage the work (Paragraph 12). A security interest retained by the artist allows the artist to file Uniform Commercial Code Form 1 with the Secretary of State or a local agency such as the County Clerk to gain priority over any creditors of the Renter that might try to seize the rented work (Paragraph 13). Since the artist is far more likely to have to sue than the renter, a provision regarding attorney’s fees is included (Paragraph 14).
Model Rental Agreement
Agreement dated as of the ________ day of _________, 20____, between ___________________ (the “Artist”), whose address is ____________________, and _________________________ (the “Renter”), whose address is ____________________________.
Whereas the Artist is a recognized professional artist who creates artworks for rental and sale; and
Whereas the Renter admires the work of the Artist; and
Whereas the Renter wishes to rent and have the option to purchase certain works by the Artist; and
Whereas the parties wish to have the rentals and any purchases governed by the mutual obligations, covenants, and conditions herein,
Now, Therefore, in consideration of the foregoing premises and the mutual covenants hereinafter set forth and other valuable considerations, the parties hereto agree as follows:
1. Creation and Title. The Artist hereby warrants that the Artist created and possesses unencumbered title to the works of art listed and described on the attached Schedule of Artworks (“the Schedule”).
2. Rental and Payments. The Artist hereby agrees to rent the works listed on the Schedule at the rental fees shown thereon and the Renter agrees to pay said rental fees as follows:________ ________________.
3. Delivery and Condition. The artist shall be responsible for delivery of the works listed on the Schedule to the Renter by the following date: _________________.
All costs of delivery (including transportation and insurance) shall be paid by _________________________. The Renter agrees to make an immediate written objection if the works upon delivery are not in good condition or appear in any way in need of repair. Further, the Renter agrees to return the works in the same good condition as received, subject to the provisions of Paragraph 4.
4. Loss or Damage and Insurance. The Renter shall be responsible for loss of or damage to the rented works from the date of delivery to the Renter until the date of delivery back to the Artist. The Renter shall insure each work for the benefit of the Artist up to ______ percent of the Sale Price shown in the Schedule.
5. Term. The term of this Agreement shall be for a period of _____________________ months, commencing as of the date of the signing of the Agreement.
6. Use of Work. The Renter hereby agrees that the rental under this Agreement is solely for personal use and that no other uses shall be made of the work, such other use including, but not limited to, public exhibition, entry in contests, and commercial exploitation.
7. Framing, Cleaning, Repairs. The Artist agrees to deliver each work ready for display. The Renter agrees not to remove any work from its frame or other mounting or in any way alter the framing or mounting. The Renter agrees that the Artist shall have sole authority to determine when cleaning or repairs are necessary and to choose who shall perform such cleaning or repairs.
8. Location and Access. The Renter hereby agrees to keep the works listed on the Schedule at the following address:______________________________________________, which may be changed only with the Artist’s written consent, and to permit the Artist to have reasonable access to said works for the purpose of taking photographs of same.
9. Copyright and Reproduction. The Artist reserves all reproduction rights, including the right to claim statutory copyright, on all works listed on the Schedule. No work may be photographed, sketched, painted, or reproduced in any manner whatsoever without the express, written consent of the Artist. All approved reproductions shall bear the following copyright notice: © by (Artist’s name) ______ (Year).
10. Termination. Either party may terminate, this Agreement upon fifteen (15) days’ written notice to the other party. This Agreement shall automatically terminate in the event of the Renter’s insolvency or bankruptcy. Upon termination, the Artist shall refund to the Renter a pro rata portion of any prepaid rental fees allocable to the unexpired rental term, said refund to be made after the works have been returned to the Artist in good condition.
11. Return of Works. The Renter shall be responsible for the return of all works upon termination of this Agreement. All costs of return (including transportation and insurance) shall be paid by
12. Option to Purchase. The Artist hereby agrees not to sell any works listed on the Schedule during the term of this Agreement. During the term the Renter shall have the option to purchase any work listed on the Schedule at the Sale Price shown thereon. This option to purchase shall be deemed waived by Renter if he or she fails to make timely payments pursuant to Paragraph 2. If the Renter chooses to purchase any work, all rental fees paid to rent that work shall be applied to reduce the Sale Price. Any purchase under this paragraph shall be subject to the following restrictions:________________________________________________.
(A) The Artist shall have the right to borrow any work purchased for up to sixty (60) days once every five years for exhibition at a nonprofit institution at no expense to the Renter-Purchaser, provided that the Artist gives 120 days’ advance notice in writing prior to the opening and offers satisfactory proof of insurance and prepaid transportation.
(B) The Renter-Purchaser agrees not to permit any intentional destruction, damage, or modification of any work.
(C) If any work is damaged, The Renter-Purchaser agrees to consult with the Artist before restoration is undertaken and must give the Artist the first opportunity to restore the work, if practicable.
(D) The Renter-Purchaser agrees to pay the Artist any sales or other transfer tax due on the full Sale Price.
(E) The Renter agrees to make full payments of all sums due on account of the purchase within fifteen days after notifying the Artist of the Renter’s intention to purchase.
13. Security Interest. Title to, and a security interest in, any works rented or sold under this Agreement is reserved in the Artist. In the event of any default by the Renter, the Artist shall have all the rights of a secured party under the Uniform Commercial Code and the works shall not be subject to claims by the Renter’s creditors. In the event of purchase of any work pursuant to Paragraph 12, title shall pass to the Renter only upon full payment to the Artist of all sums due hereunder. The Renter agrees not to pledge or encumber any works in his or her possession, nor to incur any charge or obligation in connection therewith for which the Artist may be liable.
14. Attorney’s Fees. In any proceeding to enforce any part of this Agreement, the aggrieved party shall be entitled to reasonable attorney’s fees in addition to any available remedy.
15. Non-Assignability. Neither party hereto shall have the right to assign this Agreement without the prior written consent of the other party. The Artist shall, however, retain the right to assign monies due to him or her under the terms of this Agreement.
16. Heirs and Assigns. This Agreement shall be binding upon the parties hereto, their heirs, successors, assigns, and personal representatives, and references to the Artist and the Renter shall include their heirs, successors, assigns, and personal representatives.
17. Integration. This Agreement constitutes the entire understanding between the parties. Its terms can be modified only by an instrument in writing signed by both parties.
18. Waivers. A waiver of any breach of any of the provisions of this Agreement shall not be construed as a continuing waiver of other breaches of the same or other provisions hereof.
19. Notices and Changes of Address. All notices shall be sent to the Artist at the following address:_________________________________________, and to the Renter at the following address: ____________________________________________________________. Each party shall give written notification of any change of address prior to the date of said change.20. Governing Law. This Agreement shall be governed by the laws of the State of ______________________.
Schedule of Artworks Rental Sale
Title |
Medium |
Size |
Fee |
Price |
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4. [Etc.] |
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