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Some Legal Perspectives on Gallery Contracts

by Janet Steinman on 6/29/2011 9:57:48 AM

This post is by guest author, Janet Steinman. This article has been edited and published with the author's permission. You should submit an article and share your views as a guest author by clicking here.  This author's views are entirely her own and may not always reflect the views of BoldBrush, Inc.

 

I was heartened to read Lori Woodward’s excellent articles on gallery contracts.   In the past, business between artists and galleries has been conducted solely on a handshake, which can clearly be detrimental to the artists with less leverage than the gallery.  I have tried to set forth in this article some of the problems and solutions that I and my clients have encountered.  I am only addressing sales through galleries, not any other method.

 

GALLERIES

I had a wealthy, well known client who decided to go with a gallery on the recommendation of one person.  A thirty second Google search revealed that the gallery owners were under criminal investigation. 

 

Please check out galleries that you are considering as much as possible.  Check the Internet, the local Chamber of Commerce, Better Business Bureau, and the Department of Consumer Affairs to see if there have been any complaints about the gallery.  There are major limitations to all of these but it is worth looking. 

 

You should be able to find out if it has any building or fire code violations from the municipality where it is located.  Ask the gallery if they have property and theft insurance. 

 

If they are a corporation, check to see if there incorporation with the state is up to date. 

 

See if there are liens against the gallery; that indicates unpaid bills or artists; you should be able to find how to obtain this information on the state’s web site.  Lawsuits are public information.

 

LAWYERS

Please don’t do any legal transaction without a lawyer.  Please.  You wouldn’t take out your own appendix (I hope).

 

The best recommendation there is for a lawyer is from another lawyer.  Ask every lawyer you know - don’t worry if you don’t know any art lawyers; we tend to all know each other and are happy to refer clients to someone who practices in a different specialty.

 

Your state or local bar association or local law school may have a lawyers’ referral service.  Social networking sites are a great place to look.  You likely don’t need to be in the same location as you lawyer since so much business is conducted online, including through your web site.  Qualified art lawyers will not only be listed under “art law” but “media law”, “entertainment law”, “commercial”, “commercial transactions” and “intellectual property”.

 

Law schools all have clinics in particular areas of the law.  You are in luck if one near you has an art or media law clinic.  They are usually low or no cost, so you may have to qualify financially. While it might sound a little unnerving to have a law student represent you, remember that they are well supervised by professors. There is probably going to be a waiting list.

 

There may be private pro bono art clinics where you are.  These vary enormously in quality and it is not easy to find out how good they are.  Call them and ask how much training the volunteer lawyers get.  If it is only a few hours, that is not necessarily bad if the lawyer's regular practice is in an area related to art law (lawyers don’t always overlap the areas of their practice with their pro bono work).  There is likely to be a waiting list. Ask other artists if they used a private pro bono clinic you are considering.

 

Before you retain an attorney, you may ask where they are admitted to practice, how long they have been practicing, and how many gallery or other art related transactions they have handled. Do not ask if you can speak to one of their clients.  That is covered by attorney client privilege.  Sometimes a client will give their lawyer permission to use them as a reference so it is acceptable to ask “Have any of your clients given you permission to have them talk to prospective clients?”  If the lawyer says no, ask the next question. Do you ask a surgeon if you can talk to her other appendectomy patients?  No, you don’t.

 

The bad economy has hit artist’s sales and likewise it has hit law firms.  Many lawyers will be willing to work with you on their fee but you will have to put money down before she starts work, e.g. a retainer fee.  It is bad business to not take money upfront, whether you are a plumber, a baker or a lawyer.  Do you really want a lawyer who doesn’t take proper care of her own business? You will sign a retainer agreement.

 

CONTRACTS

So now you have a gallery (congratulations!), a lawyer (I hope) and now the next step is the contract.  The three cardinal rules of law are - put it in writing, put it in writing, put it in writing

 

There are two things you want to protect – your art and your money.  If you don’t have a lawyer (please get one), ask other artists to see if they will let you see what gallery contracts they have.  Write down what you want in a contract. To be enforceable, a contract needs to set forth the parties, what each party has to do and a start and end date that can be determined.  “Until the work is sold” is valid but you really should try to get a certain number of months or years.

 

There should be definite time by which the gallery has to pay you.  It can be once a month, a certain period of time after they received a check from the buyer and the check clears, just as long there is a set time to pay.  Make the gallery realize that you are serious – you want to have the contractual right to collect interest on late payments and have the gallery pay all costs you incur if you have to take further legal steps to collect your money.

 

If a contract says “exclusive”, it means just that.  You can’t show anywhere else.  Exclusivity is reasonable if it is limited to (1) a set length of time which is not necessarily the same as the length of the contract, (2) a geographic area or particular markets and venues or (3) combination of these.  The gallery does not want to be undercut by auctions or plein air events in the same geographic area. 

 

If the gallery has more than one location, you may be able to negotiate that you are only exclusive in certain areas.  While having a gallery that knows you in another city has its advantages, it does not automatically mean they can sell you in a different city or country.  Try to get an option to show in their other galleries if you are happy with the first gallery.

 

You will be responsible for your art’s safety and insurance while delivering it to the gallery.  Ideally you want the gallery to represent (promise that something is true at the time the contract is entered into) and warrant (promise that something will remain true throughout the term of the contract) that they are in compliance with all building and fire codes and have a commercially reasonable amount of property insurance.  You don’t want the gallery walls to fall down or the pipes burst with your art in it.  Or have the city close it down; at best, the gallery is then going to be fixing the violations rather than selling your art.  At worst, the gallery is going out of business.

 

Whether you want to have the right to see the insurance certificates – I hope your contract contains representations and warranties from the gallery that they have it – depends on what you perceive is your leverage with the gallery.

 

What happens if you are less than thrilled with what the gallery will agree to in a contract?  Put a reasonable time limitation on the contract.  One year is good if you are unsure about the gallery.

 

I would love to hear about artist’s experiences with gallery contracts, insurance, and other legal problems. Has anyone had the unfortunate experience of damage to their art in a gallery or the gallery going out of business? 

 

 

 

------------------------------------------------------------------

Editor's Note:  This article contains general information only and is not legal advice.  It does not create an attorney-client relationship and should not be relied on for any particular legal situation.


Janet Steinman is a prominent New York City attorney who represents clients in the arts and other fields.  Learn more about her at:

http://www.linkedin.com/in/janetsteinmanesq

facebook.com/janet.steinman

http://www.facebook.com/#!/pages/Janet-Steinman-JD-CIPP/142278289145155?sk=info

http://twitter.com/JanetSteinman



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Related Posts:

Negotiating with Art Galleries

Working With Galleries: Equitable Agreements

When to Break Gallery Ties

Working With Galleries: How Often is Your Work Displayed?

Working With Galleries: Limit The Consignment Period

Working With Galleries: Should They Limit Your Sales Venues?

Slow to Pay


Topics: art gallery tips | FineArtViews | Guest Posts 

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 17 Comments

jack white
via faso.com
Putting IT in writing will not help if the gallery goes bankrupt. We were in a Key West Gallery owned by a TV star living in N. Hollywood. His director cleaned out the bank account and took his young boyfriend to South America. They owned us $14,000. The gallery was broke. No amount of writing would have helped us get our money back. The owner lost about $150,000.

In Napa the owner of Generations Gallery stole thousands of dollars, mostly from out of the country artists. He would go to NY Art Expo and find artists from around the world. They would send him 40 to 50 pieces.He sold their work but never paid them. He paid us like a bank machine for years. We were earning over $100,000 a year from his gallery, then one day he vanished. Had anyone asked us we would have given him glowing reports. We had no idea he was stealing so much money. He paid us by Cashier Checks. A few years later the Napa Sheriff found him and he is now serving 5 years in jail. The Napa Police said he stole $500,000. Paper would not have helped us. He vanished because he ran out of money. You can check the Napa Sheriffs office to find the story.

I suggest you contact artists who are in the gallery you are considering. If they are not getting paid they will be happy to tell you.
All the contracts in the world won't prevent you from getting taken. Today a lot of galleries are filing for bankruptcy. About all a gallery has is some stands, an old computer and some light fixtures. Divide those by 75 artists and there is not much to go around. It's more important you know who you are dealing with. You cannot protect yourself from being scammed.

In my forty years I've never worried about a legal contract. They mean nothing if a gallery goes broke and there is a real chance that most galleries can go belly up these days. We had 4 very good galleries close this past year. All of them paid us in full.

jack

Peggy Guichu
via faso.com
Unfortunately, I did have a bad experience with a contractual agreement or I should say lack of with a gallery in Santa Fe, NM. The owner, after two years, requested that I pick up six watercolor paintings. I was fine with this as I looked forward to getting them back, but needed the paintings to be shipped. The gallery gave me a price for the shipping which I paid to the gallery not the shipper (also a big mistake)for the proper packing and shipping of my work.

When I received the first box which contained 5 of the watercolor paintings they were all destroyed. The packing consisted of brown paper wadded up on the top of the stacked paintings. The second box which contained by 36" x 48" watercolor never arrived. It was sent back to the gallery because of extensive damage.

Because the gallery owner was a glass artist it was only obvious that the bad packaging was done with the purpose of collecting the insurance money, which they did.

Because I had signed a contract agreeing to a portion of the selling price, wholesale, if my work was damaged in the gallery, I not only lost the paintings, but received a very small percentage for replacement costs. I was informed that the gallery had not insured my paintings with the shipper which they did say that I had paid prior to sending them. It was more complicated then what I'm stating here, no invoice or receipt for my shipping costs, etc. Absolutely no cooperation with the gallery before or after.

The gallery approached me for representation. This was a gallery that was highly recommended to me by other artists. It is so important to have a good binding contract which I didn't have. I accepted what they handed me to sign and I paid a huge price for my ignorance.



Carol McIntyre
via faso.com
Janet; Thank you for your thorough info and I am printing it out to put in my file for future reference.

Fortunately, I have not had the horrific experiences that jack or Peggy had, but one thing that is not usually in the contract is damaging of frames. Many galleries do not take care of our work if it is not up on the walls and i have retrieved paintings with frames all nicked up and essentially ruined. Galleries don't seem to care and shrug their shoulders. Has anyone else dealt with this problem, if so how?

Virginia Giordano
via faso.com
Early in my career in the entertainment business, a lawyer told me that a contract in this business was only as good as the paper it was written on. There are legions of stories about dishonest managers, promoters, etc like gallery owners. However, what a contact does is give the 'rules of the road' spelled out for everyone to understand. For that reason, if nothing else, I agree with Janet about the value of a contract. It may not save an artist from the ultimate demise of a gallery or a thieving owner, but for many other situations, commissions, time, return of work, insurance etc, etc I think it's wise to have a contract which a knowledgeable attorney has negotiated, and also be well informed on the issues when entering into a gallery contract.

Bonnie Samuel
via faso.com
Thanks for the very comprehensive guidelines, Janet. Most helpful.

Joanne Benson
via faso.com
Janet,
Thanks for this informative post. You brought up some excellent points which I had not considered previously. I don't think I would have thought about the building being up to fire code, etc.....I am filing this post for future reference.

Donna Robillard
via faso.com
There is a wealth of information here - both in the article and in the comments. Thank you all so much.

Sharon Weaver
via faso.com
Interesting to see the different points of view regarding this. Maybe a little of both is the answer. Ask other artists about the gallery, artist beware and get it in writing. With today's economy you can't do enough to protect your investments.

George De Chiara
via faso.com
I've wondered about the frames being damaged too. I can think of at least 2 galleries that I've been to with artwork stacked up against a wall and almost every frame being damaged. Some of them so bad that it's turned me off on the artwork. It looks cheap, like something I can find at a garage sale. Why do galleries let this happen is beyond me. Is it out of the question to put something in your contract about the condition of the frame?



Brian Sherwin
via faso.com
Jack -- I would have thought you would be able to go after personal property though depending on how the contract is written-- and if the gallery owner had not filed for br? If he stole $500,000 I assume he must have had some very expensive items. Still -- that divided between 75 artists, as you mentioned, would probably not add up to much.


Brian Sherwin
via faso.com
Also -- most art galleries... like any small business... go belly up by year 5. If they get past the fifth year mark they are not in the clear by any means-- but will likely stick around a tad longer. At least that is what I've always been told.

My point -- artists should pay attention to how long a gallery has been in operation. If the gallery has been around 4 years and is not a major player influence-wise... well, the artist might want to consider looking elsewhere. You might want to avoid being involved when that dreaded 5 year mark comes.

Brian Sherwin
via faso.com
Another thought -- the economy is still hurting. The plus side-- depending on how you look at it-- is that property values are down. It is the perfect time to find a building for a co-op gallery. Especially if you approach it with artists you have known for years-- ones that you know won't split once a property is purchased jointly. I've noticed this happening in smaller communities in Illinois and Missouri.

Dan Fear
via faso.com
Good article, information and the comments worth reading. It's important for artist to stay in touch and be active with their galleries and know where your art inventory is located. Galleries and Artists working together should think of it as a partnership, both parties helping each other to make sales and fully complete the transactions before providing additional art inventory. The website Art-Support.com provides useful information on the business of art http://art-support.com. Look for the section on "Organizations Helping Artists."

Marie Jonsson-Harrison
via faso.com
Great article and also great comments. I can so relate to all above. Over the years I have been owed lots of money, finally been paid in some instances and never seen a cent in others. Also had countless frames damaged, which is so annoying as the framing always costs a lot. I was very lucky once to get a large insurance payout when some paintings were damaged in Japan, so at least that time things finished well. Happy painting everyone! Love Marie xxx

Chuck
via faso.com
I like the thought of artists banding together to open their own gallery. The galleries I've been to represent 10 to 20 artists. 10 artists should be able to afford rent if they pull resources together.

Chuck
via faso.com
I like the thought of artists banding together to open their own gallery. The galleries I've been to represent 10 to 20 artists. 10 artists should be able to afford rent if they pull resources together.

jack white
via faso.com
Chuck,
They already have artists galleries. They are called Co-ops. The problem with these, no one knows how to sell. They survive on artists dues. The vast majority of artists don't have a clue how to sell art. That's why so many are not making a nice living marketing their work. Art is sold. Jack










 

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