When artists and galleries split, what are the legal implications?

More than a handshake: having clear contracts in place is crucial between artists and galleries to avoid future disputes © Lucas

While the relationship between artists and their galleries is symbiotic—and often emotional—the legal relationship between them, in transactional terms, is generally one of buyer-seller or consignor-consignee. Under the buyer-seller model, the gallery buys a work from the artist outright and resells to its clients. In the consignment context, the artist consigns their works to the gallery on an exclusive or non-exclusive basis for the purposes of exhibition and sale. Additionally, in a consignment relationship, title usually remains with the artist until the gallery sells the work and the gallery assumes the role of an agent, following which it owes the artist fiduciary duties (e.g. duties of loyalty and transparency).

However, difficulty arises when parties do not share an understanding of the terms of their relationship, often because there is no written agreement between them or, if an agreement exists, it fails to reflect the parties actual relationship or the parties do not understand its legal implications.

Some themes recur in the recent case studies below, most notably that while galleries struggle with artist retention and securing exclusivity, artists must fight for transparency and timely payments.

Not all artist-gallery relationships are fraught with such tensions, but these examples highlight the importance of having a clear understanding of the parties relationship—and an agreement reflecting this can save considerable time and money.

I want a divorce

A UK contemporary artist instructed us to sever his decades-long exclusive relationship with his gallery, for both professional and personal reasons—he had lost faith in the gallerys management, it had repeatedly failed to make payments for sales of his works and his personal relationship with the gallerys directors, whom he deemed “family”, had deteriorated beyond repair. No written agreement existed between them, and exit negotiations became acrimonious and broke down rapidly.

We immediately demanded that the gallery produce an accounting of the money owed to the artist for historic sales and an inventory of his work, threatening legal action if they failed to comply. The gallery produced both, but argued the artist owed millions in damages under the UKs Commercial Agents (Council Directive) Regulations 1993. The Regulations entitle an agent, in specific circumstances, transacting on behalf of and in the name of their principal, to claim lost earnings when they are unilaterally terminated. Whether such regulations apply in the context of an artist-gallery relationship remains untested in English courts. We challenged their applicability on several grounds, including the fact that the gallery concluded the sales and produced invoices in its own name and not in our clients. Shortly after, the matter was settled out of court.

A written agreement outlining the terms of the parties relationship would undoubtedly have speeded up the protracted exit negotiations. Artist representation agreements do not offer bullet-proof solutions but can provide both sides with some certainty. Such agreements should contain terms on duration, geographic scope, exclusivity, how profits and costs are shared, title, risk of loss, intellectual property, representation and warranties, marketing, artistic control, termination etc.

Moving on to greener pastures

Conversely, we were instructed by an international gallery to help it navigate an award-winning artists decision to leave. The gallery was not under any illusions that it could compel the artist to stay but it wanted to protect the impending, multi-million-dollar sales of some of the artists works, agreed before the expiry of the artists notice Read More – Source