After Sales

The last two articles in this series have dealt with selling work: the use of some written form of agreement was shown to be essential and of considerable advantage to artists and buyers.

If the suggested Artist's Contract of Sale were to be used, there are three important matters it would not cover and it is difficult to see how any form of contract of sale could adequately deal with them: the artist's re-sale royalty right; the binding of subsequent buyers of the work to the terms of the contract made with the first buyer; and deterioration of work.

Deterioration of work
Deterioration of work is always the artist's responsibility. According to the Sale of Goods Act 1893 (as amended in 1973), the seller of goods (i.e. the artist, even if selling through a gallery) is legally liable to the buyer if the work is not of 'merchantable quality' and 'reasonably fit for the purpose for which it was required'. That is the strict letter of the law, which regards artists as professionals with high standards to maintain, but in practice it may be very difficult for a buyer to prove that the work was sold in an unmerchantable and unfit state – particularly when the buyers must be expected to have examined the 'goods' very closely at the time of purchase. Other difficulties may arise: can standards of 'merchantable quality' and 'fitness for purpose' be applied to art and, if so, what criteria are to be used to determine them?

This law was designed to protect the consumers of shoddy motor cars, washing machines and so on; not buyers of artworks. Unfortunately, it must also be applied to artworks because the Act says that any agreement by seller (artist) and buyer to exclude or limit the seller's legal responsibility for deterioration shall be of no effect. This is why the suggested Artist's Contract of Sale makes no mention of it. Unless and until this law is clarified or amended for artists, they and their buyers should be aware of the artist's legal responsibility, however vague it appears to be in practice.

Re-sale royalty
It is possible to include the artist's re-sale royalty right in a contract of sale – as a condition of sale – but this was tried and failed completely when it was introduced in the USA some years ago by Bob Projansky, a New York City lawyer. He created the Agreement of Original Transfer of Work of Art, which dealt with all the matters covered by the suggested Artist's Contract of Sale, but went on to give the artist, for life plus 21 years, a right to be paid 15% of the profit on any re-sale of the work and 50% of the fees from any hiring of the work; furthermore, it sought to bind subsequent buyers of the work to the terms of the agreement, as well as binding the artist's heirs. This bold document was signed by very few buyers. Another New York City lawyer, Charles Jurrist, re-worked Projansky's Agreement and created a less ambitious contract, gentler in tone, which sought to bind only the artist and first buyer to the re-sale royalty right. This was a more diplomatic document which few buyers signed.

The presence of the re-sale royalty right appears to be the main reason for the failure of these contracts of sale. This being so, the most appropriate way of introducing it would appear to be through legislation – a much more satisfactory method of creating, enforcing and collecting a re-sale royalty, nationally and internationally. (This was discussed more fully, in issue 5, in the light of California's new Re-Sale Royalty Act.) It is for this reason that the suggested Artist's Contract of Sale does not include a re-sale royalty provision.

Binding subsequent buyers
Supposing the buyer signs the suggested Artist's Contract of Sale and so agrees to be bound by all its conditions, how can the artist ensure that the buyer's obligations are carried out by a second buyer? The law will not allow the artist to sue a second buyer because there is no contract between them. The Projansky Agreement tried to solve this problem by using complicated legal machinery which meant that the first buyer did not really 'buy' the work, but simply bought rights to use it (like leasing a flat); this was totally unacceptable to buyers, and is another reason why the Agreement failed. The Jurrist Contract recognised this as a reason for failure and left such machinery out of its terms in the hope that buyers would be more inclined to sign; but many artists could see no point in using such a contract when buyers could escape its obligations by selling the work to someone else. A simple solution acceptable to artists and buyers is essential if the use of an Artist's Contract of Sale is to succeed.

Perhaps the answer lies, again, in legislation. It would be a simple matter for a statute to provide that whenever an Artist's Contract of Sale is signed, its terms and conditions shall bind subsequent buyers of the work provided they know of the existence of the ACS; (in which case artists should put a notice in a convenient place on the work saying 'Notice: sale of this work is subject to a contract of sale dated … between A and B'). Alternatively, a statute could provide that whenever an ACS is sighed, its terms and conditions shall bind subsequent buyers provided the ACS has been registered in the national registry; (in which case buyers should check in the registry before buying, and there would be no need for notices on works – and this would require the establishment of a national registry of work which could also, perhaps, enforce and collect an artist's re-sale royalty). Both these solutions would still leave artists and buyers free to decide whether to sign a contract at all and, if so, to agree its conditions.

Of course, these are merely suggestions: it is for artists and buyers to decide what is mutually acceptable and in the best interests of the artwork. However, it is of fundamental importance that artists and buyers make their respective positions absolutely clear at the time of sale by using a written contract; this will at least protect the work in the hands of the first buyer and, when the use of such contracts has become widely accepted, legislation could be enacted to bind subsequent buyers and protect the work in their hands as well.

Commissions for artists to design, create and sell artworks are not contracts of sale, they are contracts for skill and labour: the law treats them in a different way, and they will be discussed in the next issue.

© Henry Lydiate 1977.

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This article is from the Artlaw Archive of Henry Lydiate's columns published in Art Monthly since 1976, and may contain out of date material. The article is for information only, and not for the purpose of providing legal advice. Readers should consult a solicitor for legal advice on specific matters. Artists can get free online legal information from Artquest.