An Overview of Contracts Between Artists and Dealers

October 19, 2010   Steve Davis   Contracts   No Comments

An Overview of Artist-Dealer Contracts

An art dealer is anyone who buys, sells, or trades in works of art.  Artists who commercially sell their art typically do so by entering contracts with dealers.  But many artists, and even some dealers, often pay little attention to the contracts they sign.  That’s a mistake for both parties.  Understanding what sort of contracts they sign benefits both artists and dealers and assists both sides in knowing their rights and avoiding disputes.

Today’s blog entry provides a short overview of the two different kinds of artist-dealer contracts:  sale contracts and consignment contracts.  The next blog entry will highlight some of most important issues that arise in artist-dealer consignment contracts.

Is it a sale or a consignment?

Artist-dealer contracts, generally speaking, fall into two categories:  sale contracts and consignment contracts.  A sale contract is one in which the dealer buys the work of art outright.  Once the dealer buys the artwork, the relationship between artist and dealer ends.

In a consignment contract, on the other hand, the dealer (the “consignee”) accepts the artwork from the artist (the “consignor”) for the purpose of exhibiting or selling it for the benefit of both the artist and the dealer.  The artist remains the owner of the artwork.  The dealer becomes the artist’s agent, and as an agent the dealer has a number of duties to the artist.

Most contracts between artists and dealers are consignment, not sale, contracts.  The advantage of a consignment is that the dealer does not accept as great a risk by having to pay the full purchase price.  Under California law, a contract between an artist and a dealer is considered a consignment contract unless the dealer pays the artist the full purchase price for the artwork.

A dealer/consignee has fiduciary duties to the artist.

Once a dealer accepts an artwork under a consignment contract with an artist, the dealer has a fiduciary duty to the artist, which imposes a variety of specific duties on the dealer.  These duties include the following:

  • The dealer has the duty to care for the artist’s artwork.
  • The dealer has the duty to deal with the artist fairly and honestly.
  • The dealer has the duty to provide an accounting to the artist of any money received by the dealer for the purchase of the artist’s artwork.

A dealer/consignee cannot waive its duties under California law.

In contract negotiations, parties sometimes try to change or even waive the duties they otherwise would have under law.  But under California law, a dealer cannot waive the dealer’s duties.  Any attempt by the dealer to waive such duties is void — meaning of no effect — as a matter of law.  That means a dealer cannot avoid its fiduciary duties to the artist, even if the dealer wants to, and even if the dealer convinces the artist to sign a contract that appears to waive the artist’s rights.

In the next blog entry, we’ll deal with some of the specific key issues that arise in artist-dealer consignment contracts.

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