Many artists rely on consignment arrangements to display and sell their work while they focus on what they do best — create art. Under this type of arrangement someone other than the artist — a professional dealer or gallery, a local restaurant, a coffee shop, a bank, even a small retail shop — takes temporary possession of the work and displays and sells it to customers, usually in exchange for a commission when and if the piece is sold. Deceptively simple, consignment deals contain a host of traps if things go pear-shaped, particularly for the artists. Recognizing this, Oregon law provides artists with a number of automatic, guaranteed rights in any consignment deal — along with imposing certain obligations on any “dealer” who takes art on consignment, and penalties for failing to meet those obligations (intentionally or not).
WHO AND WHAT IS COVERED?
Art and Artists - Although the law speaks in terms of “fine art,” the law covers most forms of original, tangible art, including paintings, photographs, sculptures, calligraphy, graphic arts such as lithographs, crafts and mixed media art such as collages. It also specifically protects the artist, meaning the creator of the work, or his or her estate if the artist is deceased.
“Art Dealers” — The law applies to much more than traditional art dealers and galleries. By definition, any individual or company that agrees to sell a work of art on behalf of the artist is included, provided they do so on “consignment” (meaning the art is delivered to the “dealer” for sale or exhibition to the public). So the law covers not just galleries, but restaurants, coffee shops, local stores, etc. that arrange to display art and sell it in exchange for any compensation — a commission, flat fee, etc. (arguably, the benefit of getting to display the art work for free is itself a form of compensation, even if the “dealer” doesn’t collect a fee, though I’m unaware of any case in which the definition was stretched this far).
WHAT ARE THE ARTIST’S RIGHTS, AND WHAT ARE THE “DEALER’S” OBLIGATIONS?
Assuming that the arrangement meets the definitions above (and again, these definitions are very broad), Oregon law creates a whole host of automatic protections for the artist:
RIGHT TO A WRITTEN CONTRACT
First and foremost, the deal must be in writing (no handshake agreements), and the written contract must include:
(1) The retail value of the work;
(2) How quickly the artist will be paid once the work is sold;
(3) The minimum price for which the dealer can sell the work; and
(4) The fee, commission rate or other compensation that the dealer will receive for selling the work.
The “written contract” does not necessarily need to be a formal, lengthy document, but it does need to be in writing, it must include at least the four items listed above, and it should be signed or acknowledged by both parties.
The burden of making sure that there is a written contract falls squarely on the dealer. If, for whatever reason, there isn’t a written contract in place before the dealer accepts the art work, then the dealer must pay the artist a $100 penalty plus any damages that the lack of contract caused. Moreover, the artist has the right to void the deal entirely — meaning that the artist has complete discretion to either enforce the deal or walk away, whichever the artist prefers.
COMPENSATION IN CASE OF LOSS OR DAMAGE
If a work is damaged or lost while in the dealer’s possession, the dealer is responsible for that loss, unless he or she used the “highest degree of care” to protect the art — a significantly high bar to meet. Assuming the dealer failed to use the “highest degree of care,” the dealer must reimburse the artist for the value of the work, which is the retail value specified in the parties’ written agreement. If there is no written contract, then the artist is entitled to his or her portion of the fair market value of the work, which the artist may argue is significantly higher than the dealer was expecting — another way that the statute subtly punishes dealers for not having written contracts.
PROTECTION IN CASE OF BANKRUPTCY
Something that many artists may not consider when they put their work out on consignment is the danger that, if the dealer goes into bankruptcy or becomes subject to liens, creditors may be able to seize anything in the dealer’s possession — including the artist’s work — and use it to pay off the dealer’s debts. Oregon law specifically prevents this by confirming that creditors of the dealer do not have rights to consigned art, and that title remains with the artist.
TIMELY PAYMENT
As I mentioned above, one of the requirements in the written contract is specifying how quickly the artist gets paid once a piece sells. But in case there is no written contract or the contract fails to include this item, the law has a default setting, requiring the dealer to pay the artist within 30 days of receipt of the money from the purchaser. If the dealer sells a piece on installment, all of the installment payments first go to paying the artist, and only once the artist is fully paid does the dealer get to keep the remaining installment(s) for its commission or fee — again, unless the parties agreed otherwise (yet another incentive for dealers to have written contracts that ensure both sides are on the same page).
PURCHASER INFORMATION
For any sale of art over $100, the artist has the right to know the name and address of the purchaser (meaning that the dealer has an obligation to record this information for all such sales). If the artist makes a written request for this information and the dealer fails to provide it, the artist is entitled to both a court order compelling the dealer to provide the information and a penalty equal to three times the artist’s portion of the retail value of the work.
NO WAIVER, AND ATTORNEYS’ FEES
Unless the statute explicitly says so (like the flexibility to agree on a time for payment other than 30 days), none of these rights can be waived, even if the artist agrees. So a dealer cannot try to include a clause in the consignment contract that says the dealer isn't liable for any damage or loss, or that it has no obligation to provide purchaser names (more accurately, a dealer can, but the provision is void and unenforceable). The law also tries to make it as easy as possible for artists to enforce these rights by providing that, if an artist files a lawsuit to recover what it is owed from the dealer and wins, the artist is entitled to have the dealer pay for his or her attorneys’ fees and costs (and vice-versa if a dealer has to defend itself against a non-meritorious lawsuit).
NO SECRETING OR MISAPPROPRIATING WORK
Finally, it is not only improper, it is criminally illegal for a dealer to willfully and knowingly secrete, withhold or take a consigned work or the proceeds of a sale for the dealer’s own use or for someone else’s — meaning that the dealer cannot take a piece on consignment and then keep it in a closet, hang it in their office, take it home, or give it to a friend. Doing so (at least intentionally) is a Class C felony, subject to up to five years in prison and a maximum $125,000 fine.
As you can see, Oregon laws go a long way towards protecting artists who entrust their work, and in some cases their livelihood, to others to display and sell. At the same time, the law imposes several obligations — and in some cases, significant potential penalties — on those who accept these works.