An art consignment agreement is a contract between an artist and gallery where the artist provides the gallery with the artwork and the gallery agrees to sell the artwork for a commission in return.
Art consignment is a business transaction with inherent risks. For example, if the artwork could not be sold, the artist might be invoiced for shipping or other costs incurred by the dealer, gallery, or auction house. The market and sentiment for the artwork could well be influenced by the economy, the style or genre of the artist. It is important for the artist to understand the market before engaging in a consignment relationship.
Typical Considerations for an Art Consignment Contract
1. Duration and Exclusivity of the Consignment
Does the gallery have exclusive right for the consignment ? Or the artist can contract with another gallery for the same artwork?
2. Payment Terms
How would the gallery be remunerated. How would the expenses be paid?
3. Title and Ownership of the Artwork
The contract should expressly stipulate the ownership of artwork, in particular when the gallery goes into liquidation or the buyer of the artwork has defaulted in payment for the artwork.
4. Copyright and Moral Rights
Ownership of the copyright and provisions for moral rights of the artwork should be clearly stated in the contract.
5. Insurance Arrangement
There should be insurance arrangement in place to cover the loss or damage of the artwork during the consignment period.
Parties should make agreement on whether the insurance is to cover replacement cost of the artwork or the wholesale price or expected total profit.
6. Termination
This is particularly important when the relationship between the gallery and the artist has broken down for one reason or the other. Disputes often arise when the gallery has failed to return unsold artwork and the artist would have to consider the termination of the contract.
7. Governing Law and Disputes Resolution Clause
In case of disputes, what is the applicable law for the resolution of the disputes? This is particular important when the parties to the contract are from different jurisdictions. For example, the artist is from the EU, and the gallery is incorporated and situated in Hong Kong.
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