Selling your artwork on consignment

Published Date: June 13, 2022

“One of the things I like about our contract is that you have relieved me of a great deal of personal interviewing and corresponding, among other things, which allows me a lot more time for painting” – E.J. Hughes

The South African art market has shown exponential growth over the last two decades and the value of art together with its demand is on an upward trajectory. There is however very little regulation in the art market which creates a conducive environment for abuse and exploitation of artists and the art market as a whole. Practice has shown that artists and art dealers, who act as the middleman between the artist and collectors, often enter into verbal agreements based on mutual trust to sell the artist’s artwork at an agreed commission rate.

Art dealers facilitate the “business side” of an artist’s practice which inter alia includes marketing the work, finding buyers and selling the work as well as storing the artworks to avoid any potential damage. The addition of an art dealer to an artist’s practice can be beneficial and profitable for an artist who may not have the time or capacity to create a network of buyers and run the business component of his or her practice.

What may seem like a straight-forward transaction between the artist and the art dealer, often results in disputes between the parties primarily because the relationship has not clearly been defined, there are issues in and around the art that has been sold and collecting unsold work from the art dealer can be a challenge – this therefore necessitates that artists and art dealers set out in writing how they wish to regulate their relationship.

Given the shortfalls in the law, artists are encouraged to be proactive in formalizing the terms of engagement with art dealers and the broader art industry. Although verbal agreements are binding in our law, they often create fertile ground for disputes between the parties which may be costly in instances where the matter turns litigious. The benefit of entering into a written agreement is to clearly set out the rights and obligations of each party and should there be an irretrievable breakdown of the relationship, the contract will be the document which informs the route to follow in respect of bringing a solve to the issues.

The relationship between the artist and the art dealer must therefore be well-defined in the contract, which may take the form of a consignment agreement. In governing this relationship, the terms in the contract must be clear to ascertain issues of liability for any acts or omissions that may be committed, establishing certainty on whether the parties are acting in their own names or not and including provisions which prohibit either party from creating any obligations in the name of the other. In addition to this, the contract will also regulate all things related to the handle and care of artworks, the commission the art dealer is entitled to and make provision for dispute resolution.

Obtaining legal advice for any arrangements and agreements entered into between the artist on the one hand and art dealers, art galleries and art fairs on the other hand, is imperative to ensuring the existence of a robust art market which is principled in fair dealing and is also to the benefit of all role players. Key art industry role players in the market, such as art galleries, museums and art fair organizers are also encouraged to seek legal advice before closing any deals and completing any sales of artworks.

Accordingly, the starting point should be to consult your legal practitioner to assist with reviewing and/or drafting agreements that are sound in law and comply with the laws applicable to commercial transactions.

Tuelo Mokoka
Associate | Commercial Attorney

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