Lazy Nerd Explainer: Art Consignment Agreements for Emerging Artists

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By Toby Leon

What Should Artists Include in a Consignment Agreement with Galleries?

One of the most important documents an artist will ever come across is the consignment agreement with a gallery. In this article, we'll take a deep dive into the essential terms and clauses that artists should include in a consignment agreement.

Contact Details

The contact details of the consignor/artist and consignee/gallery are included in an artist's consignment agreement to establish a clear and professional relationship between the two parties involved in the consignment process. This information is essential for communication, documentation, and legal purposes.In a consignment agreement, the consignor (artist) delivers their artwork to the consignee (gallery) for exhibition and sale. The agreement outlines the terms and conditions of the relationship, including the responsibilities and rights of both parties, the duration of the consignment, the commission structure, and other important provisions.

Including the contact details of both the artist and the gallery helps ensure that both parties can communicate effectively and resolve any issues that may arise during the consignment process. It also provides a record of the parties involved in the agreement, which can be useful in case of disputes or legal matters.

Moreover, having the contact details of both parties in the agreement allows for proper documentation and record-keeping, which is essential for tracking sales, payments, and other aspects of the consignment process.

Duration of Consignment

The consignment duration clause in an artist's consignment agreement is an essential component that outlines the length of time during which the consignor (artist) entrusts their artwork to the consignee (gallery) for exhibition and sale. This clause helps both parties understand their commitments and expectations during the consignment process.

Duration Length:
The duration of the consignment can vary depending on the agreement between the artist and the gallery. It can range from a few months to a year or more. The duration should be clearly specified in the agreement to avoid any confusion or disputes later on.

Renewal Options:
Renewal options in a consignment agreement allow the artist and gallery to extend the consignment period if the artwork has not been sold during the initial term. The renewal options can be at the discretion of the gallery or mutually agreed upon by both parties. It is essential to include the renewal options in the agreement to provide flexibility and ensure that both parties have a clear understanding of their rights and obligations in case the artwork remains unsold during the initial consignment period.

Artworks Being Consigned

Every artist consignment agreement must include a list of all the artworks being consigned, along with their full details, such as image, title, year, medium, dimensions, and insurance values, to ensure both parties have a clear understanding of which artworks are being consigned. This is important for several reasons:

Clarity and transparency: Providing detailed information about each artwork helps both the artist and the gallery understand exactly what is being consigned. This prevents misunderstandings and disputes that may arise due to miscommunication or lack of information.
Legal protection: In case of disputes or legal matters, having a comprehensive list of consigned artworks with their details serves as evidence of the agreement between the artist and the gallery.
Record-keeping and documentation: A detailed list of consigned artworks helps both parties maintain accurate records of the artworks in the gallery's possession. This is essential for tracking sales, payments, and other aspects of the consignment process.
Insurance and valuation: Including insurance values for each artwork in the agreement helps determine the appropriate coverage for the artworks while they are in the gallery's possession. This protects both the artist and the gallery in case of damage, theft, or other incidents.

Sales Price and Discount

The consignment agreement should also mention the sales price of each artwork and the maximum discount that the gallery can offer VIPs, which is usually 20%. This clause ensures that the artist is aware of the sales price and that there is no confusion regarding discounts.

Clear understanding of sales price: Including the sales price of each artwork in the agreement ensures that both the artist and the gallery have a clear understanding of the value of the artworks being consigned. This helps to avoid misunderstandings and disputes related to pricing.
Avoid confusion regarding discounts: Specifying the maximum discount that the gallery can offer VIPs helps to prevent confusion and disagreements about the extent to which the gallery can reduce the price of an artwork for special clients. This ensures that both parties are aware of the limits on discounts and can manage their expectations accordingly.

Commission Split

The commission split is an important clause in an artist's consignment agreement because it outlines the financial arrangement between the artist (consignor) and the gallery (consignee) regarding the sale of the consigned artworks. The commission split determines how the proceeds from the sale of the artworks will be divided between the artist and the gallery, ensuring that both parties are fairly compensated for their efforts and contributions to the sales process. Here are several reasons why the commission split is a crucial aspect of a consignment agreement:

Financial transparency: Clearly specifying the commission split in the agreement ensures that both the artist and the gallery have a transparent understanding of their respective shares of the sales proceeds. This helps to avoid misunderstandings and disputes related to financial matters.
Incentive for the gallery: The commission split provides an incentive for the gallery to actively promote and sell the artist's work. A fair commission split ensures that the gallery is motivated to invest time, effort, and resources in marketing and selling the consigned artworks.
Fair compensation for the artist: The commission split ensures that the artist receives a fair share of the sales proceeds, acknowledging their creative efforts and contributions to the artwork. This helps to maintain a positive and mutually beneficial relationship between the artist and the gallery.
Customization and negotiation: The commission split can be negotiated and customized based on the specific needs and preferences of the artist and the gallery. Allowing both parties to reach an agreement that best suits their individual requirements and expectations. But this is not the norm. Most galleries have clear commission splits in place already, with negotiation reserved for artists who have proven themselves to be successful and saleable over time.
Legal protection: Including the commission split in the consignment agreement serves as a legally binding document that outlines the financial arrangement between the artist and the gallery. In case of disputes or legal matters, the commission split clause provides evidence of the agreed-upon terms and can help protect the interests of both parties.

Payment Timeline

A payment timeline clause in an artist consignment agreement is essential because it establishes a clear and mutually agreed-upon schedule for when the artist will receive payment for the sale of their artwork. This clause helps to ensure that both the artist and the gallery have a transparent understanding of their financial obligations and expectations, preventing misunderstandings and disputes related to payment matters. Some specific details of a payment timeline clause may include:

Payment due date: The payment timeline clause should specify when the gallery is required to pay the artist after the sale of an artwork. For example, the gallery may be required to pay the artist within 30 days of the sale.
Installment payments: If the artwork is sold on an installment basis, the payment timeline clause should outline how the artist will be paid in relation to the installment payments received by the gallery. For instance, the artist could receive their share of the payment as each installment is paid by the collector.
Sales on approval or credit: The payment timeline clause should address situations where the artwork is sold on approval or credit. In such cases, the gallery may be required to pay the artist only after the artwork has been fully paid for by the buyer.
Termination and payment: If the consignment agreement is terminated, the payment timeline clause should specify when the gallery is required to pay the artist for any outstanding sales proceeds.

Shipping and Insurance

Shipping and Insurance clauses in artist consignment agreements with galleries are essential for protecting both the artist and the gallery during the transportation, exhibition, and storage of the consigned artworks. These clauses address the responsibilities and liabilities of both parties concerning the handling and care of the artworks, as well as the insurance coverage for potential damages or losses.

Some galleries may ask artists to split shipping costs, but usually, it's a cost borne by the gallery. Additionally, the gallery should cover insurance, both while in transit and while in the gallery's possession. The artist should also be provided with a Certificate of Insurance (COI) to verify coverage.

Here are some key aspects of Shipping and Insurance clauses in artist consignment agreements:

Shipping and handling responsibilities: The agreement should clearly outline the responsibilities of both the artist and the gallery regarding the packing, shipping, and handling of the artworks. This may include specifying who is responsible for the costs associated with shipping and handling, as well as any special requirements for packing materials or methods.
Risk of loss during transit: The agreement should address the risk of loss or damage to the artworks during transit. This may involve specifying which party is responsible for insuring the artworks during transportation and determining the extent of liability for any damages that occur during shipping.
Insurance coverage: The agreement should include details about the insurance coverage for the consigned artworks while they are in the gallery's possession. This may involve specifying the type of insurance policy (e.g., fine arts insurance), the coverage limits, and the deductible amount. The artist may also be required to provide their own insurance coverage for their artworks.
Liability for loss or damage: The agreement should clearly state the extent of the gallery's liability for any loss or damage to the consigned artworks while they are in the gallery's care. This may involve specifying the gallery's responsibility for reimbursing the artist for the full value of the artwork in case of loss or damage, or outlining any limitations on the gallery's liability.
Notification of damage or loss: The agreement should include a clause requiring the gallery to promptly notify the artist in case of any damage or loss to the consigned artworks. This allows the artist to take appropriate action, such as filing an insurance claim or seeking legal recourse.

Marketing Efforts

In an artist's consignment agreement, the marketing clause outlines the gallery's responsibilities and efforts to promote and sell the consigned artworks. This clause matters because it ensures that the gallery actively markets the artist's work, increasing its visibility and potential for sales. Some common marketing efforts mentioned in consignment agreements include social media promotion, email newsletters, press releases, and online advertising. Here's what you can expect from galleries' marketing clauses:

Marketing channels: The clause should specify the marketing channels the gallery will use to promote the artist's work, such as social media platforms, email newsletters, press releases, and online advertising.
Marketing efforts: The clause should detail the gallery's marketing efforts, including the frequency of promotional activities, the type of content to be shared, and any specific campaigns or events planned to showcase the artist's work.
Collaboration with the artist: The clause may also outline the extent to which the artist is expected to collaborate with the gallery in marketing efforts, such as providing images, artist statements, or participating in interviews and events.
Reporting and communication: The clause should establish a communication plan between the artist and the gallery, including regular updates on marketing activities and their results, as well as any adjustments to the marketing strategy based on performance.

To work with galleries to get better marketing efforts allocated for your artwork, consider the following steps:

Research and negotiation: Research the gallery's marketing efforts for other artists and use this information to negotiate a comprehensive marketing clause in your consignment agreement.
Provide high-quality materials: Supply the gallery with high-quality images, artist statements, and other promotional materials to help them effectively market your work.
Collaborate and communicate: Maintain open communication with the gallery to discuss marketing strategies, share ideas, and provide feedback on their efforts.
Monitor and evaluate: Regularly evaluate the gallery's marketing efforts and their impact on your artwork's visibility and sales. If necessary, discuss adjustments to the marketing strategy with the gallery to improve results. Remembering that they have their own way of doing things, so your suggestions for adjustments need to be respectful of their brand identity as much as your reputation.

Reading the Fine Print

It's also essential to read all the fine print in a consignment agreement. Red flags in a consignment agreement include statements like "Gallery will take ownership of the artwork if it is not picked up by the artist within 30 days." A signature on a consignment agreement makes it a binding legal contract, so never sign anything before carefully reading it first.

Negotiations

Don't be afraid to go back to the gallery and politely ask for certain language in the consignment agreement to be revised or removed prior to signing. Negotiations are a part of all business partnerships, and the art world is no exception, so make sure to speak up if a consignment agreement includes terms that make you uncomfortable.

Keep Copies of Consignment Agreements

Lastly, always keep copies of your consignment agreements for quick reference. This ensures that you have a record of the agreement and can refer back to it in case of any disputes.

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A consignment agreement is a vital document for artists and galleries alike. It ensures that both parties have a clear understanding of their obligations, rights, and expectations. However, it's important to read the fine print and negotiate terms that make you comfortable before signing anything. Remember, a consignment agreement is a legal contract that should be taken seriously.

As an artist, it's crucial to have a playful and creative approach to your work, but when it comes to consignment agreements, taking an analytical approach can save you a lot of headache down the road. By understanding the essential terms and clauses that should be included in a consignment agreement, you can protect yourself and your artwork and ensure a successful partnership with a gallery.

Now that you have a good understanding of what should be included in a consignment agreement, you can confidently approach galleries and negotiate terms that work for you. So, go forth and create, knowing that you have the paperwork side of things covered.

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Frequently Asked Questions

How does selling art on consignment work?

Selling art on consignment is a process where an artist (consignor) provides their artwork to a gallery or retailer (consignee) with the intention of selling it. The artist retains ownership of the artwork until it is sold, at which point the gallery or retailer receives a percentage of the sale proceeds as commission. This arrangement allows artists to showcase and sell their work without the expense of a large brick-and-mortar store, while galleries can have inventory without purchasing large quantities of goods that may never sell.

In a consignment agreement, both parties should clearly outline their responsibilities, such as shipping and handling, insurance coverage, and payment terms. The agreement should also include details about the artwork, such as title, year, medium, dimensions, and insurance values, as well as the sales price and maximum discount that the gallery can offer.

The marketing clause in a consignment agreement is crucial, as it outlines the gallery's responsibilities and efforts to promote and sell the consigned artworks. This ensures that the gallery actively markets the artist's work, increasing its visibility and potential for sales.

Artists can benefit from consignment sales by receiving a higher percentage of the sale proceeds compared to selling their work outright to a dealer. However, there are risks involved, such as not getting paid until the artwork is sold, and the possibility of incurring additional costs if the artwork does not sell.

To successfully sell art on consignment, artists should research potential galleries or retailers, negotiate a fair consignment agreement, provide high-quality promotional materials, and maintain open communication with the gallery throughout the process.

Who provides the consignment agreement?

In most cases, the gallery provides the consignment agreement, as they typically have a standard agreement that they use for all their consignments. However, both the artist and the gallery should review and negotiate the terms of the agreement to ensure that it meets their individual needs and expectations.

It is essential for both parties to be involved in the process and to reach a mutually beneficial agreement that outlines their respective rights, responsibilities, and expectations.

If necessary, the artist can consult with an attorney or seek professional advice to ensure that the consignment agreement is fair and protects their interests.

What should I do if I don't understand a term in the consignment agreement?

If you don't understand a term in the consignment agreement, it is important to seek clarification before signing the agreement. Here are some steps you can take to better understand the terms:

Ask the gallery: Reach out to the gallery or the person who provided the agreement and ask for clarification on the specific term you don't understand. They should be able to explain the term and its implications in the context of the agreement.
Conduct research: Look up the term online or in legal resources to gain a better understanding of its meaning and how it applies to consignment agreements.
Consult with peers: Reach out to fellow artists or individuals who have experience with consignment agreements to get their perspective and understanding of the term.
Seek professional advice: If you are still unsure about the term or its implications, consider consulting with an attorney or a legal expert who specializes in art law or contract law. They can help you understand the term and advise you on whether it is fair and appropriate for your situation.

Remember, it is crucial to fully understand the terms of a consignment agreement before signing it, as it is a legally binding document that outlines the rights, responsibilities, and expectations of both the artist and the gallery. Ensuring that you understand all the terms will help protect your interests and avoid potential misunderstandings or disputes in the future.

Should I split shipping costs with the gallery?

If your art is on consignment at a gallery and you have a consignment agreement with the gallery, the allocation of shipping costs should be outlined in the agreement. In many cases, the artist (consignor) is responsible for the shipping costs when sending the artwork to the gallery, while the gallery may cover the costs when shipping the artwork to the buyer. However, this can vary depending on the specific terms of your consignment agreement.

It is essential to review your agreement to determine the exact allocation of shipping costs between you and the gallery. If the agreement does not clearly address this issue, consider discussing it with the gallery to reach a mutual understanding and potentially amend the agreement to include this information.

Can I create my own consignment agreement?

Yes, you can create your own consignment agreement. While galleries often provide a standard consignment agreement, you can create your own if you prefer. To create a consignment agreement, you can use templates available online or consult with an attorney or legal expert who specializes in art law or contract law to help you draft a customized agreement that meets your needs and protects your interests.

When creating a consignment agreement, make sure to include essential elements such as the description of the artwork, consignment terms, payment terms, shipping and insurance clauses, marketing efforts, and any other relevant terms and conditions.

It is crucial to ensure that the agreement is comprehensive and clearly outlines the rights, responsibilities, and expectations of both the artist and the gallery.

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