Doing a Deal: Part 1
Selling work is the primary source of income for most commercially successful artists, and is the strongest aspiration of most of those for whom a market place is not established. It is no surprise that most artlaw problems relate to artists dealing with galleries, with copyright issues following a close second.
This column has not visited this subject for some time, despite the numerous continuous enquiries and correspondence on the subject, and calls for an extensive exploration. Our response will be at length, divided into three parts starting this month.
Contracts: the basics
Whatever the artist wants from a deal, and whatever the gallery is able to offer, it is vital that both parties have a basic understanding of how legally binding and enforceable agreements are made under UK law. In our experience over the past 25 years of dealing with artlaw issues it is true and fair to say that the vast majority of problems between artists and galleries stem from one or both party’s ignorance, recklessness or carelessness in relation to the basics of commercial dealings. There still prevails in the UK today a sentimental attachment, by both galleries and artists, to the notion of having only a ‘gentleman’s agreement’ with each other. This attitude is not only arcane but also wholly unprofessional and unrealistic for both parties. Nor is it good for business. The single roost ridiculous and prevalent practice is that neither gallery nor artist puts into writing every thing they have discussed and agreed. In the USA and Continental Europe very few, if any, artists or galleries would dream of entering into a commercial deal without doing so. In the UK, musicians, writers, actors and other performers regard it as normal professional practice for all commercial deals to be recorded in writing.
In UK law, a commercial deal is not generally required to be made in writing or in any other prescribed way for it to be legally binding and enforceable (notable exception includes deals transferring ownership of land or buildings, and ownership of intellectual property rights – dealt with later). This leaves the parties free to arrive at their agreements by whatever method they chose: a self-service petrol pump standing on the forecourt is making a commercial offer which is accepted when the petrol is transferred to the customer’s car. An offer, once accepted, seals a commercial deal. It is dangerous, therefore, for complex commercial offers to be made and accepted verbally. One or both parties may not appreciate that they have made a legally binding commercial agreement; they may not have discussed and settled all of its details, and either or both of them may well forget precisely what they said – several years later when things go wrong. It follows, therefore, that although UK law does not generally require a written record of the terms and conditions of a commercial deal (if necessary, the parties’ evidence on oath in court can be sufficient to prove or defend a case) it is common sense and best practice to do so.
Moreover, commercial deals involving the transfer of ownership of copyright (and other intellectual property rights) have to be made in writing and signed by the owner, if they are to be legally valid. Gallery deals will nearly always require the parties to clarify copyright ownership and use of works and, for this reason alone, they need to be made in writing.
Contracts: good practice
Most commercial deals can be successfully achieved without resort to the expense of lawyers, if both parties follow five basic good practices: hesitate; negotiate; rotate; indelibly communicate; duplicate.
Hesitation is not an obvious first stop, but experience teaches that parties contemplating a contractual negotiation are well advised not to jump in firing from the hip, but to prepare themselves for a careful, considered and structured negotiation. Artists are particularly vulnerable in this respect – the less experienced, the more so – and need to prepare themselves thoroughly beforehand. Preparation sensibly includes researching as much hard information as possible about the prospective gallery (its owners, track record, successes and failures, and its artists) as well as working through a checklist of items they will need to discuss and settle with the gallery in the negotiations.
Negotiations may take the form of meetings. phone calls, faxes, email and letters – all of these things, singly or in combination, will form the basis of the eventual agreement. Experience teaches which items are essential or secondary, and artists especially need to ask themselves, and decide, where the bottom line is for them in each respect. It is perfectly normal and good professional practice to take a list of prepared items – an agenda – into all such meetings for these purposes. (Possible contents of a gallery deal checklist are dealt with in the second part of this exploration.)
Contemporaneous notes should be made of the essential elements of any conversation held between the gallery and artist at any time. These can be used as an aide memoire for later negotiations and, in the worst case scenario, in a court to assist a party giving evidence to remember events that took place several months, probably years, earlier. It is sensible, therefore, always to date, time and sign such contemporaneous notes when completed.
Communication to the other party of the details of any dialogue, once completed, is essential. In other words, after a relevant conversation (face to face or by phone) between the parties, each should use their contemporaneous notes to write to the other confirming what transpired. Usually, at the end of such a conversation, the parties will agree who writes first to whom: shall I write to you or you to me? This practice generates further indelible evidence for future use, if necessary.
Keeping a copy of all letters sent, especially of the kind under discussion, is a golden rule of any business – so often honoured in the breach rather than in the observance. Faxes can be very helpful, but the technological hiccups that can afflict the use of email or other IT transmissions, cause most commercial negotiators to make and keep hard copy.
If the negotiations are lengthy and detailed or involve substantial obligations including the payment of large sums of money, it is good practice to consider ending a negotiation with both parties finally agreeing that their agreement will only come into effect after it has been recorded in a single document signed by both, with each having a copy. That is where lawyers can be a useful, sometimes essential, mutual expense.
The second part of this piece will consider the nature of gallery deals and their essential elements; the third part will explore some of the problems that can and do arise and how to avoid them.
© Henry Lydiate 1998