These are some of the issues related to this subject. As is the case with all material at this site, you should not consider this legal advice. This is intended only as an example of some of the many serious general issues to consider with such a matter. Expert local, legal and financial advice should be obtained in all such matters.
VISUAL ARTIST BUSINESS
COMMON LEGAL SERVICES CHECKLIST
COMPLIMENTS OF THE LAW OFFICE OF STUART L. ADAMS, P.S.C.
PREPARED BY JENNIFER M. BLACK
This information is not a substitute for an attorney. Do not try to use this as a do-it-yourself guide. This information may not be appropriate for your particular situation.
Based on our firm's experience with small businesses, we have the background to offer legal services catered to the special needs of commercial visual artists, gallery owners and other entrepreneurs in the visual art market. Although legal issues that accompany a visual art business are the least creative aspect of such a venture, these issues must be addressed from the beginning to avoid the complicated pitfalls that hinder success.
BUSINESS ENTITY PACKAGES
Our firm offers several basic business entity start-up packages and other legal services that help our clients with general business issues from the start-up of a new venture to reorganizing, selling or dissolving a business. Gallery owners and commercial artists that are operating as sole proprietorships may want to consider a corporate entity that offers possible tax advantages and protects the owner from individual liability. A list of typical legal services and a description of basic packages is available at this Web site for your reference.
In addition, the following is a partial list of some common legal issues for visual artists, agents and gallery owners:
Federal, state and international laws offer protection to creators of original works of authorship, including pictorial, graphic and sculptural works. For artists who avail themselves of this protection, the advantages include preserving the integrity of their work and insuring against the loss of present and future profitability.
A copyright is a bundle of rights created under the Copyright Act of 1976. The purpose is to vest to the copyright owner the exclusive rights to reproduce the work, create derivative works, distribute copies of the work, and perform or display the work publicly. Copyright law separates ownership of the copyright in a work from ownership of the work itself. An artist and/or agent can retain these exclusive rights even after sale. This copyright protection can extend through the artist's lifetime plus fifty years. Copyright interests may also be sold or transferred for value.
The requirements to create and protect a copyright interest include authorship, notice and, in some cases, deposit and registration.
COPYRIGHT OWNERSHIP is initially acquired by the person who creates the work--the author. Exceptions to this general rule include joint ownership and a work for hire. Generally, these exceptions depend on the intention of the parties.
A joint work is one that is created by two or more authors, the intention of whom is that their individual contributions merge into a single and inseparable work. Copyright ownership in the entire work is vested in each joint owner, and each joint owner has the right to use or transfer their interest in the copyright to the work.
A work for hire is the second exception to general copyright ownership. There are two forms of work for hire: (1) a work created during an employment relationship or (2) a work that is commissioned by agreement as a work for hire. In the first case, the employer is the author of the work and acquires ownership of the copyright interest. In the second case, if the work is commissioned and falls into one of nine categories defined by statute, then the party who commissioned the work acquires the copyright ownership if the parties have expressly agreed in writing that the commissioned work is a work for hire. The categories that may be commissioned as work for hire are: a contribution to a collective work; a part of a motion picture or audiovisual work; a translation; a supplementary work; a compilation; an instructional text; a test; answer material for a test; and an atlas. Note that commissioned portraits do not fall within these categories.
NOTICE is essential to the protection of a copyrightable work. Incomplete notices or failure to place any notice can lead to the loss of copyright ownership. The requirements for a correct notice under copyright law are:
(1) the copyright symbol (the letter C in a circle), or the word "Copyright," or the abbreviation "Copr.";
(2) the year of first publication of the work; and
(3) the name (in full or as a generally recognized abbreviation) of the owner of the copyright in the work.
Contributions to collective works can bear their own notice or the collective work can have a single notice for the whole.
DEPOSIT/REGISTRATION. Copyright law requires the owner of a copyright in a work published (not all works are published, even if sold or displayed) with notice of copyright to deposit with the Copyright Office, within three (3) months of publication, two copies of the best edition of the work. Although not every artist follows this requirement, the law is clear that the Register of Copyrights may demand proper deposit.
Although registration is not a prerequisite to copyright protection, it does give the artist a greater legal position for an infringement action. The benefits of registration and deposit include the presumption of validity of the copyright. This means that in an infringement action, it falls to the infringing party to prove the invalidity of the copyright. Otherwise, the validity of the artist's copyright is presumed as fact, absent other proof. Further, an artist who succeeds on an infringement action may be awarded statutory damages, obtain injunctions against further infringement and recover attorneys fees and costs for the action. Registration of a work simply involves the filing of a completed application form, deposits and a fee with the Copyright Office. Deposit and registration provide the most secure legal basis for protecting a copyright interest from infringement.
Our firm can assist you with all the legal requirements involved in establishing and protecting your copyright interests, including, but not limited to, helping you create a proper notice, guiding you through registration and deposit, and evaluating possible infringement claims. We can also assist you to create written agreements for joint works, commissioned works and works for hire. Written agreements in these special areas can evidence the intent of the parties and prevent future infringement claims and costly litigation.
Gallery owners may find it helpful to negotiate limited copyright permission from artists if they intend to incorporate formerly or presently featured works in marketing material for the gallery. We can create standard release forms or help you revise your gallery-artist agreement to include such a provision.
Galleries create contracts every day between their agreements with artists, their relationships with interior designers or other commercial purchasers, and their general business negotiations with customers and shipping agents. Often, these business arrangements are created with oral agreements. When these agreements are not created in writing and a conflict arises, a gallery owner or artist may confront legal problems and even breach of contract claims or liability for loss or damage to works. We can help you create written agreements for use by your business to avoid confusion and protect you in case of litigation. We can also assist you in reviewing agreements submitted by artists or their agents, and help you avoid the dreaded 'battle of the forms' that generally leads to misunderstanding about the final terms of the agreement, and may lead to no final contract at all.
CONSIGNMENT AGREEMENT: Most arrangements between artists and galleries are based on consignment--the artist remains the owner of the work, and the gallery, acting as a limited or exclusive agent, receives a commission on the sale or rental of the work. The most basic consignment agreement simply vests possession of the work or works in trust with the gallery to be sold at an agreed upon price. Upon sale, title passes from the artist to the purchaser, and the artist is paid the price of the work less the gallery's commission.
AGENCY AGREEMENT: Most galleries prefer an agreement that creates some form of agency, whereby the artist agrees to submit a body of work for sale, with some guarantee of exclusivity for the gallery. However, when an agency is created, a gallery owes duties of trust and an obligation of good faith, often including the duty to exercise best efforts to sell the works. Before entering into such an agreement, the parties should consider the following: the scope of the agency; is a solo exhibition guaranteed; how are costs divided; what is the gallery's commission; what are the retail prices for the works; does the gallery have a duty to record business transactions involving the artist's works and does the artist have a right to inspect said records; how are payments disbursed; who is responsible for damage, loss, theft and insurance; copyright; other general provisions, including those regarding arbitration, choice of law and modification. A sample gallery-artist agreement is provided for your review. This is only a sample and should not be used in lieu of consulting an attorney.
PRINT CONTRACT: Some galleries create prints of artists' work for sale by the gallery. To protect the gallery from copyright infringement claims, all such agreements should be in writing. Even a letter confirming the arrangement, including how many prints or reproductions are to be created, the retail price for each print or reproduction, and the financial arrangement between the gallery and artist, that is signed by the artist indicating his/her consent and agreement, can create an written agreement to protect the gallery. If a more formal contract is required, we can help you develop a standard form or a particular document for a one-time deal.
GALLERY AGREEMENTS WITH CUSTOMERS: In addition to agreements with artists, galleries often create agreements with interior designers, agreements regarding framing and agreements regarding purchase of works. Our office can help you develop standard forms for regularly conducted business transactions, or review your present forms if you have legal concerns. For special transactions, we can develop a specific agreement.
LIABILITY IN SHIPPING
Most galleries accept the responsibility and costs for shipping works back to the Artist or to the purchaser of the work. As a result, they may face liability issues for insurance against loss or damage of the work. Shipping companies and common mail carriers offer insurance, but often require certain packing prerequisites or other conditions. These negotiations can create binding agreements, and, if the shipping company or common carrier refuses to ship or refuses to insure against loss or damage at the last minute (or even after the work is in transit), a gallery may have an action for breach of contract. Our firm has experience in cases such as these, and would be happy to advise you if such a situation arises during negotiations with a shipping company or common carrier.
Further, galleries and artists should be aware that shipping obscene materials by the mail or common carrier is a federal crime. What is "obscene" is determined according to community standards. Therefore, before shipping artwork containing nudity or representations that could offend delicate moral sensibilities, you may want to determine the community standards for the location of the recipient.
SAMPLE GALLERY-ARTIST AGREEMENT
This agreement being made on this the _____ day of _____________, 199_, between _________________________ (hereinafter "the Gallery"), located at _____________________________________, and _______________________ (hereinafter "the Artist"), residing or whose studio is located at ________________;
WHEREAS, the Artist is a professional artist of good standing; and
WHEREAS, the Artist wishes to have his/her works represented and sold by the Gallery under the terms and conditions of this agreement,
THEREFORE, in consideration of the foregoing and the mutual covenants hereinafter set forth, and other valuable consideration, the parties agree as follows:
1. SCOPE OF AGENCY: The Artist appoints the Gallery to act as the Artist's exclusive agent and sole commercial representative in the Louisville Metropolitan Area for the exhibition, rental and sale of the Artist's works in the media of [sculpture, visual art, painting, other]. [Clause may permit private sales by artist from his/her studio, may be limited by artwork completed during term of agreement, may require record of consignment.]
2. TERM AND TERMINATION: This Agreement shall be in full force and effect for the term of ______, and may be terminated by either party upon giving 30 days written notice to the other party. Upon termination, all works subject to this agreement will be removed from the Gallery by the Artist within 30 days after notice. [Clause may provide automatic termination upon death of artist, upon death or termination of employment of person with gallery, upon gallery moving outside area, or upon bankruptcy or insolvency of gallery.]
3. EXHIBITIONS: The Gallery shall provide exhibition of the Artist's work in its gallery. The Gallery reserves the right to exhibit the Artist's work in a cooperative show in another gallery or venue upon prior notice to the Artist. The artist shall provide slides of additional work, resumes, exhibit record and other promotional material and other assistance as required by the Gallery for the promotion, exhibition and sale of the Artist's work. [Clause may guarantee a solo exhibition.] The expenses of exhibition shall be paid for by the parties in the respective percentages shown below:
EXHIBITION EXPENSES ARTIST GALLERY
Transport of work to gallery (including insurance and packing)
Party for opening/solo exhibition
Shipping to purchasers (including insurance and packing)
Transporting work back to artist (including insurance and packing)
After the exhibition of the Artist's work, the frames, photographs, negatives and any other tangible property created in the course of the exhibition shall be the property of _______________. In accordance with this agreement, the Gallery shall make every reasonable effort to promote and sell works by the Artist falling within this agreement.
4. COMMISSION: The Gallery shall receive a commission of forty percent (40%) of the retail price of each work sold. In the case of discount sales, the discount shall be deducted from the Gallery's commission. [Clause may provide for commission on studio sales, if covered by agency agreement.]
5. PRICES: The Gallery shall sell the works at the retail prices shown on the Record of Consignment, subject to the Gallery's right to make customary trade discounts to such purchasers as museums and designers, and to make discount sales at its discretion.
6. PAYMENTS, ACCOUNTING & INSPECTION: The Gallery reserves the right to determine the terms of payment (cash, bank card, deferred or installment). For cash or bank card sale, the Gallery shall pay the Artist all proceeds due the Artist within thirty (30) days of sale. In the case of deferred or installment purchase, payments of sixty percent (60%) of the installment payments shall be made to the Artist within thirty (30) days of sale. The Gallery shall furnish the Artist with an accounting every ________ months, or within thirty (30) days of a written request by the Artist. The Gallery shall maintain accurate records with respect to sales and transactions entered into on behalf of the Artist and the works. Upon the Artist's written request, the Gallery will permit the Artist (or the Artist's authorized representative) to examine these records during normal business hours of the Gallery.
7. LOSS OR DAMAGE; INSURANCE: The Artist shall be responsible for the delivery and/or shipping (including proper packing) of the work to the Gallery, including expenses and liability for loss or damage and insurance thereon. The Gallery shall be responsible for loss or damage of the work from the date of delivery to the Gallery's location until the work is returned to the Artist or delivered to a purchaser. The Gallery shall insure the work for ___ percent of the retail price shown in the Record of Consignment. [Clause as to damage, veto power on restoration.]
8. COPYRIGHT: The Gallery shall take steps necessary to insure that the Artist's notice of copyright is projected. The Artist agrees to permit the Gallery to use copies, photographs or other representations of his/her work, subject to the proper copyright notice being used, for the purpose of marketing efforts on behalf of the Gallery.
9. ASSIGNMENT: This Agreement shall not be assignable by either party, except the Artist may assign the right to money due him or her hereunder.
10. ARBITRATION: All disputes arising under this Agreement shall be submitted to binding arbitration before ______________ and the arbitration award may be entered for judgment in any court having jurisdiction thereof.
11. MODIFICATIONS: All modifications of this Agreement must be in writing and signed by both parties. This Agreement constitutes the entire understanding between the parties hereto.
12. GOVERNING LAW: This Agreement shall be governed by the laws of the State of Kentucky. [May indicate another State; note California and New York offer special statutory protections for artists].
13. A copy of this agreement and the Record of Consignment has been provided to each party.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the aforementioned date.
(Name and Title)
RECORD OF CONSIGNMENT
This is to acknowledge receipt of the following works of art on consignment for _______________________:
TITLE MEDIUM DESCRIPTION RETAIL PRICE
PROVIDED AS A PUBLIC SERVICE BY THE LAW OFFICE OF STUART L. ADAMS, P.S.C.
Lynnhurst Office Condominiums, Suite 1, 8009 New LaGrange Road, Louisville, Kentucky 40222-4791
(502) 587-7750, FAX (502) 587-7177
PREPARED BY JENNIFER M. BLACK
This document was prepared for the purposes of illustration only, to point out some, but not necessarily all, the provisions for this sort of agreement. It is not intended as legal advice nor as a fill in the blank legal document. The provisions may be conflicting, incomplete or inappropriate for your specific use. Consult your attorney for legal advice.