Get it in Writing! 9 Essential Elements of an Artist/Gallery Agreement

by Daniel Grant

Courtesy of Handmade Business

After a two-and-a-half year battle over the phone, followed by an exchange of letters, and eventually the filing of a lawsuit, in April, artist Dana Melamed was paid by her New York City gallery what it owed her for the sale of a number of her mixed-media works in 2009. In addition, her artwork that the gallery had held onto since the dispute began was returned to her. Shortly thereafter, the gallery closed its doors for good, which Melamed said "gave me a sense of justice."

The dispute between the artist and the gallery, Priska Juschka Fine Art, began in 2009 when the gallery sold a group of Melamed's works to a single buyer for $143,650, but informed her that the total came to just $98,000.

Melamed discovered the discrepancy when she visited the gallery at a time when its owners were out. Gallery assistants showed her sales receipts for her work that indicated very different prices than what she had been told. When she brought this up with the owners some time later, she was told that the gallery discounted her work without her authorization and deducted "consulting fees" for their efforts to sell the paintings. Her 2011 lawsuit charged the gallery with keeping two sets of books.

Melamed did everything right. She kept good documentation for all the artworks consigned to the gallery, checked actual sales receipts, made a good-faith effort to resolve the dispute short of going to court, and finally did hire a lawyer to enforce her rights when the disagreement could not be settled.

Getting it in writing
For too many artists, finding a dealer or gallery owner who will represent their work is the end of a process--actually, it is only the end of the first phase. As in another type of relationship, there is dating ("Wow! You're so cool!") and then there is marriage ("How are we going to make this work?"). There needs to be a frank discussion of how artist and dealer will work together; and artists must remember to get everything in writing. To this end, many artists write their prospective dealer a letter or email to clarify everything. When writing that letter there are 9 prominent issues that should be included and addressed:
  1. The term of the agreement: How long will we be bound by this contractual relationship? Initially, the term should be two or three years, which allows the dealer a reasonable amount of time to promote the artist and to see that investment pay off. An agreement of only six months may make the dealer reluctant to develop the market for an artist's work and may also lead to the dealer dropping the artist if works don't sell immediately. A longer agreement may keep an artist whose work begins to sell well in a disadvantageous position if the contract is weighted toward the dealer.

  2. The nature of the relationship: Exclusive or nonexclusive representation, for instance. The dealer may have the exclusive rights to sell all of the artist's work, or exclusive rights to sell only prints. However, another dealer may have exclusive rights to the sculpture and yet another may have the rights to the canvas paintings. Or, perhaps the dealer has the exclusive rights to market the artist's work in North America or just in New York City. The dealer may simply handle an artist's work without any claims to exclusivity. These situations should also be discussed directly with the art dealers involved since, in the very thin-skinned art world, hurt feelings and unhappy artist-dealer relationships may result from surprises. Possibly, dealers for the same artist will work together by coordinating exhibitions when in the same city or rotating an artist's works from one gallery to another, which makes it possible to keep artwork from sitting in the same gallery in perpetuity.

  3. An exact accounting of what is being consigned to the dealer: A paper trail should accompany every work that the dealer or gallery is sent. It should list the title of the piece, the medium and size, and a signed receipt should be in the artist's possession. Galleries often maintain a large inventory, and works may be misplaced; if the gallery owner cannot locate something that he or she acknowledged having received, it becomes that person's responsibility to find the work or pay the artist. There is little to be gained from an I-gave-you-that-work--No-you-didn't, disagreement.

  4. Price arrangements: Minimum amounts per work or prices for each work, as well as what sorts of discounts may be allowed. It is up to the artist, in consultation with the dealer, to determine the price of artworks. The dealer may have good reason to ask for flexibility in pricing by the artist--certain prestigious museums expect a 50 percent discount, and other prominent collectors may also seek more than the customary 5-10 percent discount--since placing a work well has long-term benefits for an artist. Still, an artist cannot abdicate the responsibility of setting prices.

  5. The percentage of the dealer's commission: 30, 40, 50, 60, 70 percent? The median is 50 percent, but artists and their dealers work out their particular financial arrangements, depending upon the prominence of the artists and the services rendered by the dealers; whatever the percentage, it should not come as a surprise to the artist.

  6. The responsibilities of both dealer and artist: How will promotional efforts for a show be handled? Where will advertisements be placed? Who will pay for framing and insurance? Will the artist be compensated for loss in the event of damage or theft?

  7. The frequency and nature of the exhibits: One person exhibits? Group shows? Once-a-year or less often? When in the year? How will the work be shown? In some galleries, it is very easy for an artist to get "lost" when shown only in group exhibitions at non-peak times of the year. Scheduling shows should be discussed at the outset of the relationship.

  8. A requirement for periodic accounting: Who has purchased the works? How much was paid for them? Where and when have works been loaned or sent out on approval? Artists have reason to know who their collectors are, not only to include on their curriculum vitae, but in the event that a retrospective of their artwork is planned and pieces need to be tracked down. For artists in California, where a state resale royalty law is in effect, subsequent sales of their work would likely result in a royalty payment based on the presumed increased value of the resold pieces.

  9. Prompt payment by the dealer: 60-90 days should be the absolute limit, 30 days is preferable. Some dealers will pay their artists as soon as the check clears, while others may receive payment from collectors on layaway and not send money to the artist until the last payment is received. The latter method is patently unfair to the artist; the dealer receives a 50 percent down payment for the work, representing the gallery's commission, leaving little incentive to hurry the buyer toward paying the remainder. Some dealers wait for the buyers to "live with" the work for a period of time in order to insure that the collectors are satisfied with it before requiring payment. The artist will be paid sometime after that. The owners of some marginally profitable galleries flat out tell their artists that they need to pay their rent, utility, and telephone bills first--the artists will be paid when money becomes less tight. In general, artists should not subsidize their dealers, allowing them to use the proceeds of sales for other purposes, although some are willing to be lenient towards honest gallery owners who are struggling. However, artists should never be in the dark about where their money is and when they will receive it.
While the artist automatically retains copyright (that is, reproduction rights) for his or her work even after a sale, some artists may want written contracts for the sale of each piece, including, for example, a provision for resale royalties requiring the buyer of the artwork to pay back some percentage of the profit when that person later sells the work.

Other provisions that might be discussed and formalized in a letter of agreement between artist and dealer include a mechanism for resolving disputes (such as presenting a disagreement before an arbitrator), protection of the artist's assets in the event that the gallery goes bankrupt in those states where artist-consignment laws do not exist. If the agreement requires that all attorneys' fees be paid by the person who is in breach of the contract, this will encourage the dealer to act ethically.

For Melamed, winning did come at some cost. Legal fees amounted to 35 percent of the settlement, and the dispute caused her and her family a great deal of stress. "First and foremost, I wasn't able to concentrate on my work," she said. She also lost her New York gallery and hasn't found another. She worries that the lawsuit may be the reason. Adding insult to injury, other artists represented by Priska Juschka blamed her for the gallery's demise.

Still, for Melamed, the upside is in knowing that had she not done everything right, she might have been cheated of her money and work without even knowing, or cheated without any legal recourse.