Artist-Gallery Consignment Statutes

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Courtesy of St. Louis Volunteer Lawyers and Accountants for the Arts (VLAA)

 

More than 30 states have statutes governing the business relationship between artists and art galleries. Most of the laws dictate that the art dealer owes a fiduciary duty to the artist, meaning that the gallery cannot take actions that are inconsistent with the artist’s financial well-being. This state-by-state summary highlights the unique provisions of the statutes. Please note that the links to the statutes are intended for informational purposes only.

 

TEXAS
V.T.C.A., Occupations Code § 2101.001 et seq. (2012).
Artist-gallery relationships are not considered consignment agreements in the state of Texas; however, artwork delivered to an art dealer is not subject to the claims of creditors until artist has been paid in full . . . read more at vlaa.org.

Art consignment comes with a lot of risks. Three types of laws protect consignors: the Uniform Commercial Code, state consignment laws, and written art consignment agreements.

Uniform Commercial Code

The Uniform Commercial Code (UCC) is a set of acts that tries to harmonize state laws. Many states have used the UCC to form laws that govern art consignments. The UCC states that if your artwork is damaged due to the gallery's negligence, the gallery must compensate you for your loss.

One of the more common issues in the art world concerns who is financial responsible in the event the gallery goes bankrupt. The UCC provides that the gallery's creditors can seize your consigned goods to pay for the gallery's debts. All of the gallery's creditors stand in line to collect before you. If there are funds left after the creditors are paid, the judge in bankruptcy court can award you compensation for your art. If the gallery has a lot of debts or there are too many artists to compensate, you may see little or no compensation for your art. The UCC protects artists in art consignment if the artists fulfill certain requirements:

  • File a UCC-1 form in the county where the gallery is located at the time of the art consignment. This creates a lien—a legal claim to the property—which will put you ahead in line to receive compensation in bankruptcy court. If and when your work is sold, you must remove the lien.
  • In some states, you can have the gallery post a sign notifying the public that the works are consigned and that the crafts in the gallery are sold under the terms of consignment agreements. This may seem awkward, but galleries usually cooperate.
  • Show that the creditors knew or had reason to know that the gallery sold consignment arts and crafts. Proving this can be difficult; so, many artists send the gallery's creditors a copy of the consignment agreement. Even this can be hard, since most artists do not know who the creditors are or even have a written consignment agreement.

State Consignment Laws

Many states have enacted their own art consignment laws to protect artists from creditors seizing consigned goods in the case of the gallery's bankruptcy: Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Florida, Georgia, Hawaii, Idaho, Illinois, Iowa, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Tennessee, Texas, Washington, and Wisconsin. Many of these states require that a written consignment agreement exists between the artist and the gallery for these protections to exist. Artists will probably need an attorney to help enforce these protections and filing claims in bankruptcy courts.

Not all pieces qualify as "art" under state consignment laws. Some states define "art" as only fine art, such as a painting, sculpture, graphic art drawing, or a print, but not multiples or duplicates. Other states also include crafts in their consignment laws. Crafts are works that are made from clay, metal, glass, wood, plastic, or fiber.

Written Art Consignment Agreements

Until recently, artists have traditionally used oral consignment agreements. However, as more state laws require written consignment agreements in order to protect the artists, it is important to establish consignment agreements in writing.

- See more at: http://smallbusiness.findlaw.com/intellectual-property/laws-governing-art-consignment.html#sthash.xFaIx9Yj.dpuf

Art consignment comes with a lot of risks. Three types of laws protect consignors: the Uniform Commercial Code, state consignment laws, and written art consignment agreements.

Uniform Commercial Code

The Uniform Commercial Code (UCC) is a set of acts that tries to harmonize state laws. Many states have used the UCC to form laws that govern art consignments. The UCC states that if your artwork is damaged due to the gallery's negligence, the gallery must compensate you for your loss.

One of the more common issues in the art world concerns who is financial responsible in the event the gallery goes bankrupt. The UCC provides that the gallery's creditors can seize your consigned goods to pay for the gallery's debts. All of the gallery's creditors stand in line to collect before you. If there are funds left after the creditors are paid, the judge in bankruptcy court can award you compensation for your art. If the gallery has a lot of debts or there are too many artists to compensate, you may see little or no compensation for your art. The UCC protects artists in art consignment if the artists fulfill certain requirements:

  • File a UCC-1 form in the county where the gallery is located at the time of the art consignment. This creates a lien—a legal claim to the property—which will put you ahead in line to receive compensation in bankruptcy court. If and when your work is sold, you must remove the lien.
  • In some states, you can have the gallery post a sign notifying the public that the works are consigned and that the crafts in the gallery are sold under the terms of consignment agreements. This may seem awkward, but galleries usually cooperate.
  • Show that the creditors knew or had reason to know that the gallery sold consignment arts and crafts. Proving this can be difficult; so, many artists send the gallery's creditors a copy of the consignment agreement. Even this can be hard, since most artists do not know who the creditors are or even have a written consignment agreement.

State Consignment Laws

Many states have enacted their own art consignment laws to protect artists from creditors seizing consigned goods in the case of the gallery's bankruptcy: Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Florida, Georgia, Hawaii, Idaho, Illinois, Iowa, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Tennessee, Texas, Washington, and Wisconsin. Many of these states require that a written consignment agreement exists between the artist and the gallery for these protections to exist. Artists will probably need an attorney to help enforce these protections and filing claims in bankruptcy courts.

Not all pieces qualify as "art" under state consignment laws. Some states define "art" as only fine art, such as a painting, sculpture, graphic art drawing, or a print, but not multiples or duplicates. Other states also include crafts in their consignment laws. Crafts are works that are made from clay, metal, glass, wood, plastic, or fiber.

Written Art Consignment Agreements

Until recently, artists have traditionally used oral consignment agreements. However, as more state laws require written consignment agreements in order to protect the artists, it is important to establish consignment agreements in writing.

- See more at: http://smallbusiness.findlaw.com/intellectual-property/laws-governing-art-consignment.html#sthash.xFaIx9Yj.dpuf

Art consignment comes with a lot of risks. Three types of laws protect consignors: the Uniform Commercial Code, state consignment laws, and written art consignment agreements.

Uniform Commercial Code

The Uniform Commercial Code (UCC) is a set of acts that tries to harmonize state laws. Many states have used the UCC to form laws that govern art consignments. The UCC states that if your artwork is damaged due to the gallery's negligence, the gallery must compensate you for your loss.

One of the more common issues in the art world concerns who is financial responsible in the event the gallery goes bankrupt. The UCC provides that the gallery's creditors can seize your consigned goods to pay for the gallery's debts. All of the gallery's creditors stand in line to collect before you. If there are funds left after the creditors are paid, the judge in bankruptcy court can award you compensation for your art. If the gallery has a lot of debts or there are too many artists to compensate, you may see little or no compensation for your art. The UCC protects artists in art consignment if the artists fulfill certain requirements:

  • File a UCC-1 form in the county where the gallery is located at the time of the art consignment. This creates a lien—a legal claim to the property—which will put you ahead in line to receive compensation in bankruptcy court. If and when your work is sold, you must remove the lien.
  • In some states, you can have the gallery post a sign notifying the public that the works are consigned and that the crafts in the gallery are sold under the terms of consignment agreements. This may seem awkward, but galleries usually cooperate.
  • Show that the creditors knew or had reason to know that the gallery sold consignment arts and crafts. Proving this can be difficult; so, many artists send the gallery's creditors a copy of the consignment agreement. Even this can be hard, since most artists do not know who the creditors are or even have a written consignment agreement.

State Consignment Laws

Many states have enacted their own art consignment laws to protect artists from creditors seizing consigned goods in the case of the gallery's bankruptcy: Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Florida, Georgia, Hawaii, Idaho, Illinois, Iowa, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Tennessee, Texas, Washington, and Wisconsin. Many of these states require that a written consignment agreement exists between the artist and the gallery for these protections to exist. Artists will probably need an attorney to help enforce these protections and filing claims in bankruptcy courts.

Not all pieces qualify as "art" under state consignment laws. Some states define "art" as only fine art, such as a painting, sculpture, graphic art drawing, or a print, but not multiples or duplicates. Other states also include crafts in their consignment laws. Crafts are works that are made from clay, metal, glass, wood, plastic, or fiber.

Written Art Consignment Agreements

Until recently, artists have traditionally used oral consignment agreements. However, as more state laws require written consignment agreements in order to protect the artists, it is important to establish consignment agreements in writing.

- See more at: http://smallbusiness.findlaw.com/intellectual-property/laws-governing-art-consignment.html#sthash.xFaIx9Yj.dpuf

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