Sale Proceeds of Artwork Consignment

Art consignment generally refers to the delivery of the artwork by its owner (consignor) to the art vendor (the consignee) for the purpose of being sold at some time in the future.

Typical consignees include art dealers and auction houses which may have extensive client list of possible customers and better publicity and distribution system than owners could typically have. Consignees usually take a certain of commission for the artwork sold.

The consignee acts as an agent for the consignor (the principal) in the receipt of sale proceeds for the artwork sold on consignment.

The consignee owes fiduciary duties towards the consignor, and cannot use the sale proceeds for own use without the prior consent of the consignor.  Some of the fiduciary duties are listed below:

• To account to the principal for the principal's property and money.
• Not to act in a way that is outside the scope of its authority as granted by the principal
• To act in its principal's best interests
• To keep its principal fully informed of the sale proceeds received or the commission earned for such sale
• Not use its position as an agent to make a profit, unless the agent fully informs the principal and the principal expressly agrees.

Any misuse of the sale proceeds of the artwork by the consignee without the prior consent or permission from the consignor would result in breach of fiduciary duties on the part of the consignee.

 

For Hong Kong Art Law Services, please contact CHOW & CHEUNG [Tel: +852 2856 3799 or Email: cac@ccsn.hk]

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