14 SALES BY GALLERIES AND AGENTS
The artist will often seek professional assistance in selling work. Relationships with galleries and other agents can take numerous forms. Arrangements are frequently oral, although the artist should insist on written agreements whenever possible. This chapter details many of the considerations involved in such agreements, but the artist should, as always, consult a lawyer for individual advice when such agreements are being negotiated. Helpful books include The Artist-Gallery Partnership by Tad Crawford and Susan Mellon and The Law (in Plain English)® for Galleries by Leonard DuBoff (Allworth Press).
Consignment or Sale
The usual agreements in the United States involve work consigned to a gallery that has either a limited agency to represent only that particular work or an exclusive agency to represent all of the artist’s work. The artist remains the owner of the work, and the gallery receives a commission on sale or rental.
If agreements are informal and unwritten, questions can arise whether a work has been consigned or sold to a gallery. New York, California, and a majority of the other states have enacted statutes providing that any fine art left with an art gallery or dealer is held on consignment in trust for the artist. Generally, the gallery will hold any money from sales of such work in trust for the artist. Even if a the gallery subsequently purchases consigned work, the work remains trust property held for the artist until full payment has been made. The gallery’s creditors have no right to make claims against the work or funds held in trust for the artist, even if the artist’s rights to the work or funds have not been protected from creditors by filings of the financing statements required under the Uniform Commercial Code. Any waiver of these favorable rights by the artist will be invalid. The New York statute does allow the artist to give up his or her rights to have sale proceeds considered trust funds. This applies only to sales proceeds greater than $2,500 per year. The waiver must be written and, in any case, will not apply to works initially on consignment that are purchased by the gallery. The California statute requires first payment of the trust funds to the artist unless the artist agrees otherwise in writing.
Other jurisdictions with statutes governing consignments are Alaska, Arizona, Arkansas, Colorado, Connecticut, District of Columbia, Florida, Georgia, Idaho, Illinois, Iowa, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, New Hampshire, New Jersey, New Mexico, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Washington, and Wisconsin. The Artist-Gallery Partnership by Tad Crawford and Susan Mellon (Allworth Press) has a helpful appendix offering details about the coverage of these statutes.
The artist must consider the wide variations in the specific coverage and provisions of these statutes. What types of art are covered, whether the art or funds created by the sale of the art are trust funds, whether any rights can be waived by the artist, and whether the art and proceeds from sales are protected against the claims of creditors of the gallery are among the many issues on which the statutes vary. To take one example, California defines the fine art protected under the law as including “a painting, sculpture, drawing, work of graphic art (including an etching, lithograph, offset print, silk screen, or a work of graphic art of like nature), a work of calligraphy, or a work in mixed media (including a college, assemblage, or any combination of the foregoing art media)” while the New York law protects, “a work of fine art, craft or a print of [the artist’s] own creation,” each of which terms has its own definition. The way to find out if a particular state has enacted such a law—and, if so, the provisions of the law—is to contact the state legislature or an attorney in that state.
Artists should take warning if their states do not have such statutes. Written consignment agreements are a necessity to protect the artist by showing the artist’s ownership of the work.
A simple consignment agreement, in which the gallery’s agency is only for the sale of a given work or works, would specify the gallery’s receipt on consignment of certain works, which would be listed by title, medium, size, retail selling price, and the gallery’s commission percentage on each work. The agreement would also state when payment must be made to the artist and indicate that the artist remains owner of the work until title passes to a purchaser. The agreement should provide for the return of the work upon the artist’s request. Also, it would be specified that the agreement was not a general agency and that the artist would have no responsibility to pay commissions on works other than those consigned.
Model Consignment Agreement
[Artist’s Letterhead]
[Date]
Dear ________________:
You hereby confirm receipt on consignment of my artworks as follows:
Title Medium Size Retail Price Commission 1.
I reserve title to the works until sale, at which time title shall pass directly to the purchaser. You shall remit to me the retail price of each work less your commission within thirty days after sale. This consignment applies only to works consigned under this agreement and does not make you a general agent for any works not so consigned.
At any time before sale of the works you will return the works to me immediately upon my request.
Sincerely yours,
Artist
Consented and Agreed to:
XYZ Gallery
By: ______________________________
A simple consignment agreement appears above, but this agreement could encompass many more aspects of the relationship between the artist and dealer. This chapter will focus on agreements under which the gallery represents all or most of an artist’s output over a period specified in the contract. But many of the provisions relevant to such representation agreements can be used in the simple consignment as dictated by the given transaction.
The less common arrangement of outright purchase by the gallery might involve a situation in which the gallery would wish to be the exclusive seller of the artist’s work. Alternatively, the gallery might require either a given portion of the artist’s output or a right of first refusal on all work. The gallery might also want to fix the prices at which the artist could make private sales. The outright purchase arrangement is rare, however, and this chapter will concentrate on representation agreements in which work is consigned in an ongoing relationship of representation between the artist and the gallery.
A model form of artist-gallery agreement appears on pages 147–148 and its provisions are referred to in order to illustrate points covered in the text.
Parties to the Agreement
When a gallery serves as agent for an artist, the representation agreement creates a bond of trust and an obligation of good faith dealing on the part of the gallery. Often the gallery will be required to exercise best efforts to sell the artist’s work, although this clause is difficult to enforce. In addition to assurance of certainty that the gallery deals only for the artist’s interest, the artist will also want the gallery to keep confidential any information about its business dealings for the artist.
The artist will be especially reassured that the gallery will live up to this fiduciary role, however, when the artist personally knows and trusts the gallery personnel. The artist might well wish to provide for termination of the agreement in the event of the death of a trusted dealer, a change of personnel, a transfer of ownership of the gallery, or even a change in the legal form of the gallery (model agreement, Article 2). The model agreement also deals with this by prohibiting assignment by the gallery of the agreement (Article 12). The artist might also want to be certain that the location of the gallery would remain the same and, perhaps, that all artwork consigned would be kept at that location.
The gallery may in turn request certain assurances of fair dealing by the artist. These might be in the form of warranties that the artist is the creator of the work and has title to the work.
Scope of the Agency
The artist may choose, in a number of ways, to circumscribe the gallery’s authority as agent.
The geographic extent of the agency could be limited to a single city or country, instead of the entire world (model agreement, Article 1).
The duration of the contract should be limited and provision made for the return of work and costs of return at the end of the term (model agreement, Article 2). The artist should probably hesitate to enter into an agreement for more than two years, unless the contract provides the artist with a right of termination—for example, on thirty or sixty days’ notice (model agreement, Article 2). A shorter term could also be extended by options to renew.
The provision describing the kinds of work covered is important (model agreement, Article 1). The gallery may want to receive a commission even on work the artist sells (model agreement, Article 4). If the gallery sells only the artist’s paintings, it must be resolved whether the gallery will receive commissions on the artist’s sales of work in other media, such as drawings or graphics. Also, will the gallery be entitled to a percentage when the artist is commissioned for a work (model agreement, Article 4), gives away a work either to a family member or to a charity, or barters a work to pay dentist’s or accountant’s bills? The gallery may demand a right to a percentage when the artist sells work created before the agency relationship was established or after the agency terminates. One possible resolution would be to exempt a certain number of works or dollar value of sales by the artist from the requirement of the gallery’s commission. This approach is particularly feasible when the artist is not located closely enough to the gallery to be competitive. Or the artist might simply wish to limit the proportion of output that the gallery would have a right to demand. This raises a related issue of the gallery’s right to inspect the artist’s studio to see work, but, in fact, the artist would normally welcome such interest on the part of the gallery.
Few contracts will provide for all the possible contingencies discussed, yet the artist must be aware of the different limitations that can be placed upon the gallery’s authority as agent.
Exhibitions
The artist will want to be guaranteed an exhibition each year (model agreement, Article 3). The dates (during the exhibition season), duration, space, and location of the exhibition should all be specified. Also, the costs of the opening, advertisements, catalogs, announcements, frames (and ownership of the frames after the exhibition), photographs of the work, shipping either to purchasers or for return to the artist, storage, and any other costs should all be detailed as either the gallery’s or the artist’s responsibility (model agreement, Article 3).
The artist may demand a specific budget, especially for publicity and advertising. The artist should avoid any situation in which the gallery might later seek to place a lien on the work, perhaps refusing to return it, for costs incurred under the agreement. The artist may also wish a specific provision ensuring the confidentiality of the artist’s personal mailing list. The artist will usually be required, and want, to consent to the use of the artist’s name, biography, and picture in the publicizing of the exhibition. The artist might also want the gallery to use best efforts in seeking museum exhibitions for the artist. In return, the gallery might request complimentary credit on any loan by the artist to museums or in any magazine articles displaying the artist’s work.
Another important consideration in exhibitions is artistic control (model agreement, Article 3). The artist will wish to avoid inclusion in a group exhibition without the power to prevent inappropriate work being shown in the same exhibition. Also, the artist should control the choice of work in either a solo or group exhibition. At the same time, the protection of the artist’s reputation may require control over the publicity and advertising relating to the exhibition. An extreme form of control would be the power to prevent any given purchaser from buying a work. Or the artist might simply insist by an appropriate clause in the representation agreement that a contract specified by the artist (such as the Projansky contract) be used for all sales.
Gallery’s Commission
There are two ways in which a gallery may take compensation on the sale of consigned work. The net price method specifies an amount—for example, $1,000—that will be paid to the artist in the event of sale. The gallery may then sell the work at any price, $1,500 or $4,000, and pay the artist the $1,000 originally agreed to. The net price method is not common, especially if the artist lacks control over the gallery’s selling price, because of its possible unfairness.
The commission method, in which the gallery takes a percentage of the sale price, is much more common (model agreement, Article 4). The percentage varies greatly, but 25 to 50 percent would be the usual limits of the range. A relatively high commission rate may be justified by the gallery’s expenses and effort on behalf of an artist, such as extensive promotion, travel abroad to sell work, and expensive gallery installations. Each situation must be evaluated on its own special facts.
If the gallery’s commission is one third, a sale of a $3,000 work will yield the artist $2,000. A risk that the artist faces here is the computation of the value to be assigned a given work when a global invoice—that is, an invoice including many works—is used. If ten paintings are sold for $20,000, the artist who owned one of the works might find the value assigned that work—$1,000 or $2,000, or $3,000—is arbitrary. The artist can prevent this problem by specifying a sale price in advance.
An artist whose work is expensive to construct might request that the cost of materials be subtracted from the sale price before the commission of the gallery is taken. Or the artist might request different commission rates for works done in different media. A sliding scale based on the amount of sales would be another possible commission arrangement. Also, the problem of double commissions, when one gallery consigns a work to a second gallery, must be resolved.
The right of the gallery to rent work to potential purchasers will be determined by the agreement. If this is permitted, a commission rate against such rental income must be specified. Also, the agreement will then need certain additional articles detailing rental rates, copying restrictions, and, especially, insurance. The representation agreement should also indicate whether the gallery will receive any commission on lecture fees, copyright royalties, or similar income received by the artist.
Pricing
Both gallery and artist will generally wish to control prices (see model agreement, Article 5). The gallery may wish to sell more cheaply to maintain a volume of sales, while the artist may wish to keep prices higher for the enhancement of reputation that accompanies steadily rising values for an artist’s work. Usually, prices are set by consultation between the artist and the gallery. The agreed-upon prices may then be set forth in a schedule attached to the agreement (model agreement, Record of Consignment). The agreement may well give the gallery the power to vary prices slightly—for example, 10 percent—for flexibility. Also, the agreement will have to provide for the discounts customarily given to certain purchasers, such as museums. If the gallery has complete power to set prices, the artist should beware of sales at low prices to dummies, people who seem to buy the work when, in reality, they are holding the work for the gallery to sell later at higher prices.
The artist may want to restrict the gallery as to the prices placed on works of the artist to be sold by the gallery for its own account or for other galleries or collectors. Also, if the gallery has the right to sell works at auction, the artist may want the gallery to guarantee receipt of an acceptable fair market price at auction. If the gallery sells through other galleries, the artist should require that the other galleries maintain the prices set in the agreement with the original gallery.
Accounting
The artist will want the gallery to regularly record all business transactions in books that the artist may inspect. Periodically, perhaps every three or six months, statements of account indicating sales, commissions, and proceeds due the artist should be sent out by the gallery (model agreement, Article 7). The artist will wish to receive the names and addresses of all purchasers, which most galleries will be willing to provide. If the gallery objects, a compromise might be to have a list of purchasers held by a third party so the artist will not be cut off from the work, but the gallery will have its market protected.
Payments
The artist must feel confident that the gallery will meet payment obligations with reasonable promptness (model agreement, Article 6). The gallery may want corresponding assurances as to payments of commissions based on sales made by the artist. If credit is extended to a purchaser, the risk of loss should be the gallery’s. The artist should be paid even if the purchaser defaults or, at least, have a right to the first proceeds received by the gallery from the purchaser (model agreement, Article 6). If the gallery has the right to accept works in payment for the artist’s works sold, a fair method of valuation must be agreed to. The respective percentages for the artist and gallery would then be applied to this valuation instead of to a sales price. When work may be sold in foreign countries, the artist would be well advised to require payment in U.S. dollars. A provision regarding losses due to delays in converting foreign currencies might also be included in the agreement.
Payments are sometimes made to artists in the form of a monthly stipend. This is an advance given by the gallery regardless of whether or not sales have been made. The artist should insist that such advances are nonrefundable. Often the gallery will have the right, if the advance is nonrefundable, to purchase at year-end that amount of the artist’s work that will pay off the artist’s debt to the gallery. The artist must be certain that the work will be purchased at fair prices, such as the prices set forth in the model agreement’s Record of Consignment. The gallery would receive a discount, of course, equal to its normal commission.
Purchases of a substantial amount of an artist’s work by a gallery can create an unfortunate tension in the relationship between gallery and artist. While the gallery is an agent, bound to deal in good faith for the interest of the artist, the gallery may promote and sell its own inventory instead of those works the artist has given on consignment. The artist may find the gallery has become an alter ego, competing with the artist instead of remaining a loyal agent. But this risk will have to be balanced in each case with the advantages of the regular income provided by a monthly stipend.
Copyright
The artist should require that the gallery reserve all copyrights to the artist upon sale and also take steps to protect the artist’s copyrights (model agreement, Article 11).
Creditors of the Gallery
The statutes of New York, California, and a number of other states (see page 141) protect the artist from claims by creditors of the gallery against works on consignment. Title to art is transferred directly from the artist to any purchaser. The funds received by the gallery become trust funds and must be paid first to the artist regardless of creditors’ claims.
The absence of such provisions in the laws of many states should alert artists to the complex legal entanglements that may occur if a gallery’s creditors claim rights to consigned works after the gallery has become bankrupt. For this reason, the artist should try to establish the financial stability of any gallery prior to consigning works. However, an agreement might also provide for termination in the event the gallery’s financial condition becomes untenable, as shown by bankruptcy, insolvency, an assignment of assets for the benefits of creditors, a lien or attachment against the gallery not vacated within reasonable time, or appointment of a receiver or trustee for the gallery or its assets (model agreement, Article 2). The gallery would be required in such circumstances to return immediately all work as well as money held for the artist. The agreement might also specify that the work and any proceeds from sales would be held in trust for the artist and not subject to the claims of creditors of the gallery, but the legal efficacy of these provisions is questionable.
The Uniform Commercial Code states that creditors have rights against consigned goods. These rights can be cut off if the person consigning the goods, such as an artist, complies with certain filing provisions to gain a secured interest in the consigned work. The filing of Uniform Commercial Code Form 1, discussed on page 000, is not difficult. Compliance with these provisions, however, is a problem for the artist who finds galleries rarely willing to agree to such a filing. This approach should certainly be considered, however, as the safest alternative where works of great value are being consigned.
The creditor’s rights are also cut off if the artist could prove the gallery was known to its creditors as being substantially engaged in the sale of goods of others. This raises a burden of proof that may be difficult for the artist to satisfy. For artists in states lacking special consignment protection laws, the safest course may be simply to make a close examination of the financial stability of the gallery before consigning any work.
Damage, Loss, Theft, Insurance
The Uniform Commercial Code requires return of consigned work to be at the gallery’s “risk and expense.” This imposes a far higher standard on the gallery than a bailment would. The artist should still require a provision stating that the gallery is responsible for the safekeeping of the work and, in the event of loss, damage, or theft, will pay the artist as if the work had been sold (model agreement, Article 9). In case of damage the artist might seek either the right to compensation for any restoration done by the artist or control over restoration done by any other party.
The gallery should be required to insure the work so there will definitely be money to pay the artist in the event of loss, damage, or theft (model agreement, Article 10). The artist should, if possible, be named as a beneficiary of the insurance policy. The insurance may not be for the retail value of the work, but must be sufficient to pay what the artist would normally receive upon sale. The artist might wish to take a separate policy to increase coverage on the work to 100 percent of retail value. Also, the work should be insured while in the artist’s possession or in transit to the gallery if not covered by the gallery policy. The artist whose works may be dangerous to either people or property may want insurance for injuries or damages caused by the work itself. The artist and gallery should agree as to the payment of the premiums in such a case.
Customs
If the gallery will be selling work abroad, the artist will want to be certain the gallery complies with customs regulations. Many countries place no duty on original works of art but require a bond to be posted upon entry to the country in case the work is sold. Upon sale, the bond will guarantee payment of a value added tax, but otherwise the bond is returned when the works are taken from the country. When countries do place duties on original works, the work may have to be declared valueless and shipped without insurance to avoid paying duties. In such cases, the artist would want the gallery to take responsibility for loss, damage, or theft of the work. The consulates of each country can provide assistance to both the gallery and the artist seeking to comply with customs regulations.
Arbitration
The parties will often agree to arbitrate disagreements (model agreement, Article 14). The arbitration provision in the model agreement allows the parties to select a suitable arbitrator who has familiarity with the art world. The model agreement also provides that either party may refuse to arbitrate if the dispute is less than a specified dollar amount. This amount should be the maximum acceptable in the local small claims court, since this may be an even easier forum for settling disputes than arbitration. The disadvantage of small claims court might be a lack of knowledge regarding the special trade customs in the visual arts field.
Other Provisions
The artist will have to decide whether the artist’s death should terminate the agreement or whether the gallery should continue to sell the consigned work and pay the proceeds to the artist’s estate (model agreement, Article 2). This provision will have to correspond to the plan developed for the artist’s overall estate. If a crucial person at the gallery dies or the gallery goes out of business, the agreement should require an accounting, payment to the artist for all funds due, and a return of all works (model agreement, Articles 2 and 7).
The agreement will provide for modification to be in writing (model agreement, Article 14), that a waiver of a right is not permanent and affects no other rights under the agreement, that if one provision of the contract is invalid the rest of the agreement will remain in effect and that the law of a specific state will govern the agreement (model agreement, Article 15).
No agreement between an artist and a gallery is likely to contain all these possible provisions, but the artist’s familiarity with the potential scope and details of such an agreement will enable the artist to forge more effectively the artist’s relationship to a gallery.
Model Artist-Gallery Agreement
Agreement entered into this ______ day of ______, 20 ______, between______________________(hereinafter referred to as the “Artist”), residing at ____________________________, and ____________ (hereinafter referred to as the “Gallery”), located at ______________________________.
Whereas, the Artist is a professional artist of good standing; and
Whereas, the Artist wishes to have certain artworks represented by the Gallery; and
Whereas, the Gallery wishes to represent the Artist under the terms and conditions of this Agreement;
Now, therefore, in consideration of the foregoing premises and the mutual covenants hereinafter set forth and other valuable consideration, the parties hereto agree as follows:
1. Scope of Agency. The Artist appoints the Gallery to act as Artist’s exclusive agent in the following geographic area:_____________________________________ for the exhibition and sales of artworks in the following media:__________________________________________________. This agency shall cover only artwork completed by the Artist while this Agreement is in force. The Gallery shall document receipt of all works consigned hereunder by signing and returning to the Artist a Record of Consignment in the form annexed to this contract as Appendix A.
2. Term and Termination. This Agreement shall have a term of two years and may be terminated by either party giving sixty days’ written notice to the other party. The Agreement shall automatically terminate with the death of the Artist; the death or termination of employment of ____________ with the Gallery; if the Gallery moves outside of the area of _____________; or if the Gallery becomes bankrupt or insolvent. On termination, all works consigned hereunder shall immediately be returned to the Artist at the expense of the Gallery.
3. Exhibitions. The gallery shall provide a solo exhibition for the Artist of ______ days between September and May in the exhibition space located at _______________ which shall be exclusively devoted to the Artist’s exhibition for the specified time period. The Artist shall have artistic control over the exhibition of his or her work and the quality of reproduction of such work for promotional or advertising purposes. The expenses of the exhibition shall be paid for in the respective percentages shown below:
Exhibition Expenses |
Artist |
Gallery |
Transport work to gallery (including insurance and packing) . . .. . .. . .. . .. . .. . .. . .. . . |
_______ |
_______ |
Advertising. . .. . .. . .. . .. . .. . .. . .. . . |
_______ |
_______ |
Catalogs. . .. . .. . .. . .. . .. . .. . .. . .. . . |
_______ |
_______ |
Announcements. . .. . .. . .. . .. . .. . .. |
_______ |
_______ |
Frames. . .. . .. . .. . .. . .. . .. . .. . .. . ... |
_______ |
_______ |
Special installations. . .. . .. . .. . .. |
_______ |
_______ |
Photographing work. . .. . .. . .. . . |
_______ |
_______ |
Party for opening. . .. . .. . .. . .. . ... |
_______ |
_______ |
Shipping to purchasers. . .. . ... |
_______ |
_______ |
Transporting work back to artist (including insurance and packing) . . .. . .. . .. . .. . .. . .. . . |
_______ |
_______ |
All other expenses arising from the exhibition. . .. . .. . .. . .. |
_______ |
_______ |
After the exhibition, the frames, photographs, negatives, and any other tangible property created in the course of the exhibition shall be the property of____________________________.
4. Commissions. The Gallery shall receive a commission of ______ percent of the retail price of each work sold. In the case of discount sales, the discount shall be deducted from the Gallery’s commission. In the event of studio sales by the Artist that fall within the scope of the Gallery’s exclusive agency, the Gallery shall receive a commission of ______ percent of the retail price for each work sold. Works done on a commissioned basis by the Artist shall/shall not be considered studio sales on which then Gallery may be entitled to a commission.
5. Prices. The Gallery shall sell the works at the retail prices shown on the Record of Consignment, subject to the Gallery’s right to make customary trade discounts to such purchasers as museums and designers.
6. Payments. The Gallery shall pay the Artist all proceeds due to the Artist within thirty days of sale. No sales on approval or credit shall be made without the written consent of the Artist and, in such cases, the first proceeds received by the Gallery shall be paid to the Artist until the Artist has been paid all proceeds due.
7. Accounting. The Gallery shall furnish the Artist with an accounting every six months, the first such accounting to be given on the ______ day of ______, 20 ______ . Each accounting shall state for each work sold during the accounting period the following information: the title of the work, the date of sale, the sale price, the name and address of the purchaser, the amounts due the Gallery and the Artist, and the location of all works consigned to the Gallery that have not been sold. An accounting shall be provided in the event of termination of this Agreement.
8. Inspection of Books. The Gallery shall maintain accurate books and documentation with respect to all transactions entered into for the Artist. On the Artist’s written request, the Gallery will permit the Artist or the Artist’s authorized representative to examine these books and documentation during normal business hours of the Gallery.
9. Loss or Damage. The Gallery shall be responsible for loss or damage to any consigned artwork from the date of delivery to the Gallery until the work is returned to the Artist or delivered to a purchaser. In the event of loss or damage that cannot be restored, the Artist shall receive the same amount as if the work had been sold at the retail price listed in the Record of Consignment. If restoration is undertaken, the Artist shall have a veto power over the choice of the restorer.
10. Insurance. The Gallery shall insure the work for ______ percent of the retail price shown in the Record of Consignment.
11. Copyright. The Gallery shall take all steps necessary to insure that the Artist’s copyright in the consigned works is protected, including but not limited to requiring copyright notices on all reproductions of the works used for any purpose whatsoever.
12. Assignment. This Agreement shall not be assignable by either party hereto, provided, however, that the Artist shall have the right to assign money due him or her hereunder.
13. Arbitration. All disputes arising under this Agreement shall be submitted to binding arbitration before ________________ [specify a suitable arbitrator] and the arbitration award may be entered for judgment in any court having jurisdiction thereof. Notwithstanding the foregoing, either party may refuse to arbitrate when the dispute is for a sum of less than ______ dollars. [Note: Insert the jurisdictional amount of the local small claims court. This will provide an even easier forum than arbitration for settling disputes.]
14. Modifications. All modifications of this Agreement must be in writing and signed by both parties. This Agreement constitutes the entire understanding between the parties hereto.
15. Governing Law. This Agreement shall be governed by the laws of the State of ______.
In Witness Whereof, the parties hereto have executed this Agreement on the day and year above set forth.
Record of Consignment (Appendix A)
This is to acknowledge receipt of the following works of art on consignment:
Title |
Medium |
Description |
Retail |
Price |
1._________ |
______ |
_________ |
______ |
|
2._________ |
______ |
_________ |
______ |
|
3._________ |
______ |
_________ |
______ |
|
4._________ |
______ |
_________ |
______ |
|
5._________ |
______ |
_________ |
______ |
|
6._________ |
______ |
_________ |
______ |
|
Cooperative Galleries
Cooperative galleries often provide a welcome outlet for the artist who has difficulty in establishing a relationship with a commercial gallery. A group of artists normally contribute funds to establish and maintain the gallery in which their own work will be shown.
Some cooperative galleries have sought status as federal tax-exempt organizations by making their primary function the service of the public through educational activities such as lectures, workshops, employment information, and exhibitions of the work of both members and nonmembers without offering the work for sale. If the work of members was offered for sale, however, the cooperative gallery would probably not qualify for tax exemption. Such exemption was denied where “the cooperative gallery… engaged in showing and selling only the works of its own members and is a vehicle for advancing their careers and promoting the sale of their work. It serves the private purpose of its members, even though the exhibition and sale of paintings may be an educational activity in other respects” (Rev. Rul. 71-395, 1971-2 Cum. Bull. 228; Rev. Rul. 76-152, I.R.B.4 1976-17). But, regardless of tax status, many artists would value the promotion.
It is important, however, to remember that the cooperative gallery is a legal entity separate from the artists who compose its membership. Thus, the artist should anticipate that nearly all the problems of dealing with commercial galleries may arise when the artist joins a cooperative gallery.
Agents
Photographers and illustrators may use agents for sales of work. Most illustrators’ agents represent the illustrator individually in selling work and seeking assignments. Photographers may be represented individually and also use a stock agency maintaining exclusive sales rights over the photographs submitted to the agency by many photographers. Conceptually, the concerns of the illustrator or photographer with respect to agents are much the same as those of the fine artist. The parties to the agreement, scope of the agency, promotion of the work, commission rates for the agent, prices, accountings, payment, risks of loss or theft or damage, insurance, and responsibilities for expenses incurred will have to be considered and specified in the agreement. A good sample agreement to consult is the Graphic Artists Guild’s Artist-Agent Agreement that appears on pages 150–152. Both the American Society of Media Photographers and the Society of Photographer and Artist Representatives (abbreviated as “SPAR”) also have model agreements worth comparing to the Guild’s version.
One good source for finding an agent for both illustrators and photographers is the list of agent-members of SPAR. SPAR’s address appears on page 000; its Web site is at www.spar.org/. Along with the list of agents who are members, artists might also request SPAR’s “Policy Statement to Clarify Urgent Problems and Stem Growing Abuses.” In most cases artist and agent are on the same side in seeking fair industry practices for the creators of artwork that will be reproduced. The model contract shown here favors the artist, but is not unreasonable in view of current practices between agents and artists.
The gallery is selling a finished work of art, while the agent is usually obtaining an assignment for the illustrator or photographer to undertake. The Guild’s agreement requires the agent to use best efforts to secure assignments, but allows the artist to reject assignments with unacceptable terms (Article 1). The artist and agent share the cost of promotions (Article 2). This is often shared equally or in proportion to how proceeds are divided, but varies with the specific situation. Since the agent probably has reproductions for samples, loss or damage is not as serious as in the case of original art. The agreement states that the agent will be liable only if he or she is negligent in causing loss or damage. If valuable original art or transparencies are to be in the hands of the agent, this provision should be reconsidered. In such an event, it would be wise to provide a valuation for the original work and require insurance coverage sufficient to protect the artist.
The standard commission rate is 25 percent (Article 4). Some agents charge a slightly higher rate for out-of-town assignments. House accounts are those the artist brings to the agent. The house accounts should be listed, as in Schedule A, to avoid confusion. The commission rate on house accounts is 10 percent. The agreement provides that the commission shall be payable on the artist’s actual profit from the assignment, so expenses are excluded for that computation. The agent usually handles billing, but in some cases the artist may do so (Article 5). In any case, payment should be made immediately on receipt of payments from the client (Article 6). Accountings and the inspection of books and records should also be covered (Articles 7 and 8).
The term and termination provisions are among the most important in the agreement (Articles 3 and 9). The artist doesn’t want to be bound to an agent who isn’t selling; the agent doesn’t want to build an artist’s career only to have the artist find another agent. The result is that the agent will want commissions for assignments obtained by the artist after termination from clients originally secured by the agent. The duration of this after-termination right to commissions, the commission percentage, and whether house accounts are included are all subject to negotiation. If the after-termination right continues for too long a period, it will be both costly to the artist and make finding a new agent more difficult.
Each party relies on the other party to render personal services, so the agreement is not assignable. However, sums of money due under the contract would be assignable.
Textile designers might seek the following special restrictions on the scope of the agency and the agent’s right to employ or represent other designers:
The Agent agrees to represent no more than _________ designers.
The Agent agrees not to represent conflicting hands, such hands being designers who work in a similar style to that of the Designer.
The Agent agrees to have no designers as salaried employees.
The Agent agrees not to sell designs from his or her own collection of designs in competition with the Designer’s work.
The Agent agrees to employ ______ full time and ______ part time salespeople.
I drafted the following contract for the Graphic Artists Guild. It is reproduced here with their permission.
Model Artist-Agent Agreement
Agreement, this ______ day of ____________, 20 ______, between _______________________ (hereinafter referred to as the “Artist”), residing at ____________________, and ________________ ____________________ (hereinafter refened to as the “Agent”), residing at ______________________.
Whereas, the Artist is an established artist of proven talents; and
Whereas, the Artist wishes to have an agent represent him or her in marketing certain rights enumerated herein; and
Whereas, the Agent is capable of marketing the artwork produced by the Artist; and
Whereas, the Agent wishes to represent the Artist.
Now, Therefore, in consideration of the foregoing premises and the mutual covenants hereinafter set forth and other valuable consideration, the parties hereto agree as follows:
1. Agency. The Artist appoints the Agent to act as his or her exclusive representative:
(A) in the following geographical area: ______________________________.
(B) for the markets listed here (specify publishing, advertising, etc.): _____________________________.
The Agent agrees to use his or her best efforts in submitting the Artist’s work for the purpose of securing assignments for the Artist. The Agent shall negotiate the terms of any assignment that is offered, but the Artist shall have the right to reject any assignment if he or she finds the terms thereof unacceptable.
2. Promotion. The Artist shall provide the Agent with such samples of work as are from time to time necessary for the purpose of securing assignments. These samples shall remain the property of the Artist and be returned on termination of this Agreement. The Agent shall take reasonable efforts to protect the work from loss or damage, but shall be liable for such loss or damage only if caused by the Agent’s negligence. Promotional expenses, including, but not limited to, promotional mailings and paid advertising, shall be paid ______ percent by the Agent and ______ percent by the Artist. The Agent shall bear the expenses of shipping, insurance, and similar marketing expenses.
3. Term. This Agreement shall take effect on the ______ day of ______, 20 ______, and remain in full force and effect for a term of one year, unless terminated as provided in Paragraph 9.
4. Commissions. The Agent shall be entitled to the following commissions:
(A) On assignments obtained by the Agent during the term of this Agreement, twenty-five (25%) percent of the billing; and (B) On house accounts, ten (10%) percent of the billing. For purposes of this Agreement, house accounts are defined as accounts obtained by the Artist at any time, or obtained by another agent representing the Artist prior to the commencement of this Agreement, and are listed in Schedule A attached to this Agreement.
Both parties understand that no commissions shall be paid on assignments rejected by the Artist or for which the Artist fails to receive payment, regardless of the reason payment is not made. Further, no commissions shall be payable in either (A) or (B) above for any part of the billing that is due to expenses incurred by the Artist in performing the assignment, whether or not such expenses are reimbursed by the client. In the event that a flat fee is paid by the client, it shall be reduced by the amount of expenses incurred by the Artist in performing the assignment, and the Agent’s commission shall be payable only on the fee as reduced for expenses.
5. Billing. The ______ Artist ______ Agent shall be responsible for all billings.
6. Payments. The Party responsible for billing shall make all payments due within ten (10) days of receipt of any fees covered by this Agreement. Late payments shall be accompanied by interest calculated at the rate of _______ percent per month thereafter.
7. Accountings. The party responsible for billing shall send copies of invoices to the other party when rendered. If requested, that party shall also provide the other party with semi-annual accountings showing all assignments for the period, the clients’ names, the fees paid, expenses incurred by the Artist, the dates of payment, the amounts on which the Agent’s commissions are to be calculated, and the sums due less those amounts already paid.
8. Inspection of the Books and Records. The party responsible for the billing shall keep the books and records with respect to commissions due at his or her place of business and permit the other party to inspect these books and records during normal business hours on the giving of reasonable notice.
9. Termination. Either party may terminate this Agreement by giving thirty (30) days’ written notice to the other party. If the Artist receives assignments after the termination date from clients originally obtained by the Agent during the term of this Agreement, the commission specified in Paragraph 4(A) shall be payable to the Agent under the following circumstances. If the Agent has represented the Artist for six months or less, the Agent shall receive a commission on such assignments received by the Artist within ninety (90) days of the date of termination. This period shall increase by thirty (30) days for each additional six months that the Agent has represented the Artist, but in no event shall such period exceed one hundred eighty (180) days.
10. Assignment. This Agreement shall not be assigned by either the parties hereto. It shall be binding on and inure to the benefit of the successors, administrators, executors, or heirs of the Agent and Artist.
11. Arbitration. Any disputes in excess of $ ______ (maximum limit for small claims court) arising under this Agreement shall be submitted to binding arbitration before the American Arbitration Association or other mutually agreed upon arbitrator pursuant to the rules of the American Arbitration Association. The arbitrator’s award shall be final and judgment may be entered in any court having jurisdiction thereof. The Agent shall pay all arbitration and court costs, reasonable attorney’s fees, and legal interest on any award or judgment in favor of the Artist.
12. Notices. All notices shall be given to the parties at their respective addresses set forth above.
13. Independent Contractor Status. Both parties agree that the Agent is acting as an independent contractor. This Agreement is not an employment agreement, nor does it constitute a joint venture or partnership between the Artist and Agent.
Amendments and Merger. All amendments to this Agreement must be written. This Agreement incorporates the entire understanding of the parties.
15. Governing Law. This Agreement shall be governed by the laws of the State of ___________________.
In Witness Whereof, the parties have signed this Agreement as of the date set forth above.
House Accounts (Schedule A) Date:
