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Consignment Advice


#1

Hi All!

I’ve noticed several threads on this forum over the past year or so
regarding consignment arrangements. Well, now I’m beginning work on
an article on this very subject for AJM Magazine, and I’m looking for
jewelry designers willing to share their tales – the good, the bad,
and the really-got-ugly – with AJM’s readers.

Would any of you consider offering some personal advice on what to do
– and what not to do – for others in the same boat? I’ll be asking
questions like: What types of problems have you encountered in the
consignment arrangement? What advantages have you found? Do you use
your own contract, or rely on the store owner to provide one? What do
you look for in a good contract? What raises a red flag for you? What
key elements must be present for a consignment arrangement to work for
everybody?

You don’t have to be an expert on the subject, just willing to share
your personal experiences. If you’re willing to be interviewed,
please just drop me an e-mail at SuWade@ici.net, and we’ll arrange a
time for a telephone interview that would be convenient for you.

Thanks in advance!

Suzanne Wade
writer/editor
SuWade@ici.net
Phone/Fax 508-339-7366


#2

I am a commercial lawyer/amateur jewelry maker. If you send me a
summary of the key points you receive from the people on the list with
experience using the consignment form of transaction, I will try to
put together a sample form agreement that incorporates those concerns.

Vicki
Vicki Martin-Anderson
Senior Attorney Business & Finance Law
phone:517-496-5989
fax: 517-496-1709
email: @v.l.martinanderson


#3

Hi Suzanne, As a designer or manufacture we must remember that when
one does consignment it is as if one is loaning someone a chunk of
money with the understanding that you will be paid. It is important
to get references and to trust your intuition. Consignment or memo
has become a neccessity in today’s world for most designers. There
are however many retailers that take advantage of the situation by
abusing the jewelry or saying they have not sold the item when in
fact it has sold a long time ago. Sometimes the items magically sell
only when you ask for them to be sent back to you. For this reason I
have my jewelry sent back for a new grouping of pieces several times
a year. It is also an effective way to clear up the books so that
everyone is on the same page. Etienne perret


#4

Susan,

Thanks for bringing this very important issue to the forefront of
discussion. As a gallery owner, I relied on another store’s model
contract. We haven’t had any problems as yet, but wish to hear other
people’s concerns. Additionally, we are also metalsmiths who have
consignment work in other galleries. We treat our artists in the
manner in which we would like to be treated. I am happy to say that
our artists get paid on time, every month.

-k
Karen Christians
M E T A L W E R X
10 Walnut St.
Woburn, MA 01801
781/937-3532
http://www.metalwerx.com/
@metalart

Current Artwork:

https://www.ganoksin.com/orchid/karen1.htm


#5

Here is a rather complicated one:

Consignment Agreement

This agreement made this

BETWEEN:

        (your name and address)

AND:

        (Their name and address)

Recitals WHEREAS, the Gallery is engaged in the sale of works of art
and jewellery and WHEREAS, the Artist has created, expended time and
labour on and owns certain works ('Works) described in Exhibit A and
desires to sell same; THEREFORE, in consideration of mutual covenants
and conditions contained herein:

I. Covenants and Promises of the Gallery

Gallery covenants, promises, represents, agrees and acknowledges as
follows:

a) Receipt on consignment of the Works as described in Exhibit A and
the updated amendments thereto.

b) To make reasonable and bona fide efforts to sell each Work at the
retail prices set forth in Exhibit B. If sold the Gallery shall
receive 40% of the retail prices set forth in Exhibit B as it’s
commission for selling the Work. The Gallery may buy Works upon
receipt of same from the Artist and may remit 50% of the retail price
to the Artist instead of consignment. This option must exercised by
the Gallery within one (1) day of receipt of work from the Artist. If
the Artist accepts special order work from a Gallery referral the
Gallery shall be entitled to 20% of the Artist’s selling price to the
purchaser.

c) To display 5 or more of the said works within one week of receipt
of said Works and continuously thereafter, a combination of said Works
in that number for a period of 6 months after which this agreement
will be revalidated by both parties.

d) To exercise all due and reasonable care in the handling, display,
storage, packing and shipping and temporary delivery to other persons
of the Works until returned to the possession of the Artist. The
Gallery will be liable to the Artist for any injury, damage, loss,
theft or disappearance of or to the Works in an amount equal to 60% of
the retail price listed in Exhibit B unless the insurer to the Gallery
refunds the retail price in which case the Gallery is liable to the
Artist for the full Retail price as listed in Exhibit B. The Gallery
will insure the Works against the above hazards while in the
possession of the Gallery and while in transit being returned to the
Artist. The Gallery will pay all costs of returning Works to the
Artist.

e) After withholding from the purchase price such sum as is required
by law for sales tax and the Gallery’s compensation as set forth in
Section I (b), to remit the balance received to the Artist at the same
time as submitting the Statement (see Section I (f).

f) To deliver to Artist on or before the end of each month or before
(but not later than) according to the custom of the Gallery during the
term of this contract a full and complete statement of inventory and
account (‘Statement’) in approximately the form of Exhibit C which
shall set forth the following:

(1) the particular Works sold,
(2) the date of sale)s) and amount(s) thereof,
(3) the location of all unsold Works, and whether, if in the
	possession of the  Gallery, said unsold Works are, at the time of the
	statement, currently displayed, and
(4) the amount due the Gallery and amount due the Artist.

Gallery hereby represents that this Statement shall be accurate and
complete in all respects. The Artist shall have the right to inspect
the financial records of the Gallery pertaining to any transaction
involving the Artist’s Works during business hours after giving the
Gallery five (5) days written notice of the intent to examine said
written records. In the event the Artist discovers any deficiency
which exceeds 5% of the amount paid the Artist in any previous period
the Gallery shall pay such deficiency and all costs of inspection
including, but not limited to, the amount spent on any accountants,
attorneys, transportation or the like.

(g) In the event of sale of Works, to remit to the Artist at the same
time as submitting the Statement, the full amount of money received
and owed to the Artist. The use of Works in Barter, exchange or
partial payment is prohibited as payment methods for the Works unless
the Gallery remits the full amount owed the Artist as set out in
Section I (f) according to Exhibit B with the Statement that follows
the transaction regardless of whether the Gallery has yet been paid in
full by the purchaser. If the Gallery does not remit the Artist’s
payment within the prescribed period the Gallery will pay the Artist
interest at 9% per month on the unpaid balance. The Gallery assumes
full risk of non payment by the purchaser. However , if a Work is
returned in good condition by the purchaser for credit the Gallery
will make appropriate adjustments in future payments to the Artist.

h) To return to the Artist within 10 days after receipt of a written
demand therefor, all Works consigned under this Agreement to the
Gallery and remaining unsold at the time the request was made.

i) To refrain from attempting in any way to inhibit the Artist from
selling any Works other than those covered by the agreement. The
Gallery may define an area of exclusivity with the Artist as within
the city of (their city). If the Gallery should desire to enter any
of the Works covered by this agreement in any art or craft shows in
which awards are made, to obtain the written signature of the Artist
on any entry form used for the purpose or, in the event there is no
entry form, to obtain the written consent of the Artist prior to any
such show.

k) Not to permit any Work to remain in the possession of a customer
for the purpose of sale on approval for more than 2 days.

l) The Gallery shall guarantee full payment for Works not returned
to the Artist in the event of bankruptcy or other termination of this
agreement.

m) If the Gallery receives special order requests from purchasers, to
transmit promptly these requests to the Artist for written
acceptance. When the Gallery receives the Artist’s written acceptance
the Artist will deal directly with the purchaser. The Gallery shall
be entitled to its commission pursuant to section I(b) on all special
orders which the Artist accepts from Gallery referrals.

n) The Gallery shall send photocopies of any press coverage
involving the Artist’s Works to the Artist… The Gallery shall not
use an image of the Works for paid advertising without the written
permission of the artist… If a photo the Artist supplied is used the
Artist shall receive a photo credit and if used in paid advertising
the Gallery shall pay a fee of $25.00 for such use to the Artist.
Photos and images of the Works may be used freely by the Gallery for
Press Releases and other unpaid advertising purposes without any
payment due to the Artist.

II. Covenants and promises of the Artist

The Artist hereby covenants, promises, represents, agrees and acknowledges
as follows:

a) The Works are as described in Exhibit B and Artist is the creator
and sole owner of the Works and has full authority to enter into this
Agreement.

b) The Works do not violate or infringe upon the rights of any
party, including, but not limited to contractual rights, copyrights or
any rights of privacy to the best knowledge of the Artist.

c) The Gallery is authorized to deliver title to Works covered by
this Agreement to purchasers and to collect therefore a price no less
than the retail price set forth for the Work in Exhibit B. In all
cases the copyright of the Work remains with the Artist and is not
transferred by sale of the original Work.

d) During the term of this Agreement, not to make any agreements,
conditional or otherwise, to sell or to transfer at any time, the
Works contained in Exhibit A to this Agreement without the written
consent and confirmation of the Gallery.

e) Not to sell or seek to sell any Work consigned under this
Agreement and Produced by the Artist without the consent of the
Gallery.

f) To inform the Gallery at all times during the effectiveness of
this Agreement of any change in the the Artist’s present address from
that noted at the beginning of this Agreement.

g) To pay the Gallery’s commission in the case of refered work
according to Section I (b) within 10 days of receiving payment from
the purchaser.

h) The Artist shall pay the costs of shipping works from the
Artist’s studio to the Gallery.

i) The Artist shall repair free of charge any Work that is broken or
damaged due to faults in workmanship or material. If the damage is
due to the customer’s misuse of the Work then repairs will be done
upon request with a fair repair fee due the Artist. The fee is to be
defined by the Artist at the time of the requested repair.

III: Gallery Purchases

The Gallery may purchase the Works for 50% of the Retail price as
listed in Exhibit B providing that purchase is made within one (1) day
of receipt of the works from the Artist. The amount due will be
remitted to the Artist upon purchase by the Gallery. The transaction
will be noted on the Statement for the month in which the purchase of
the Work(s) was made and monies due the Artist for said purchase shall
be remitted by the Gallery to the Artist along with the Statement.

IV: Delivery

The Gallery will pay the costs of packing and shipping the Works to
the shipping address requested by the Artist. The Gallery will insure
the works while in transit.

V.Contract Term

Unless terminated sooner pursuant to Section VI, this Agreement shall
continue in force and effect from the date hereof until
and thereafter from month to month until terminated by written notice
given not less than 30 days prior to said termination date, or to the
end of any month thereafter. Upon termination of this Agreement, the
Gallery will purchase the Works as provided in Section III or will
return the unsold Works to the Craftsperson as well as any monies owed
for Works not returned.

VI. Termination

This Agreement may be terminated by either party in the event of a
breach by the other party of any covenant, promises, representation or
agreement herein. Termination shall be effective when either party
serves a written notice thereof on the other party to the appropriate
address noted in Section XIV hereof. In addition, this Agreement
shall terminate upon the death, bankruptcy or dissolution of either
party. Upon termination, all Works shall be returned to the Artist,
or his successors, heirs or assigns. a) Upon termination by the
Gallery , the Gallery shall return the Works consigned under this
agreement to the Artist (or shipping address as defined in Section IV)
within thirty (30) days of the postmark date of the Termination
notice.

VII.Copyright

The Artist shall retain the copyright in all Works consigned to the
Gallery. No Work may be reproduced by the Gallery without prior
approval of the Artist. If written permission to reproduce is granted
to the Gallery then all approved reproductions in catalogues,
brochures, advertisements and other promotional literature shall carry
the following notice: � by (your name), 19-- (see Exhibit A and
amendments thereto). The copyright is not transferrred to the
purchaser of the Work from the Artist upon purchase.

Artist authorizes the Gallery to make Artist a co-plaintif, at no
cost to the Artist with the Gallery in any litigation against a third
party for infringement of any copyright on any and all of Artist’s
Works sold by the Gallery. Any recovery from such litigation shall be
applied first to reimburse the Gallery for it’s expenses in connection
therewith and the balance shall be divided equally between the Artist
and the Gallery.

VIII. Security

The Works shall be held in trust for the benefit of the Artist and
shall not be subject to claim by a creditor of the Gallery. In the
event of any default by the Gallery, the Artist shall have all the
rights of a secured party under the commercial code.

IX. Nonassignability

This Agreement may not be assigned by the Gallery without the prior
written approval of the Artist. The Gallery shall notify the Artist
in advance of any change in personnel in charge of the Gallery or of
any change in the ownership of the Gallery. Any such change in
personnel or ownership shall be deemed a breach within the meaning of
Section VI and shall entitle the Artist to terminate this Agreement
immediately.

X. Sole and Entire Agreement

This written agreement contains the sole and entire Consignment
Agreement between the parties and shall supersede any and all other
agreements between the parties. the parties acknowledge and agree
that neither of them has made any representations, including the
execution and delivery hereof, except such representations as are
specifically set forth herein and each of the parties acknowledges
that he/she/it has relied on his/her/its own judgement in entering
into this agreement. The parties further acknowledge that any
statements or representations that may have been made to each other
prior to this Agreement are void and of no effect and that neither of
them has relied thereon in connection with his/her/its dealings with
the other.

XI. Modification

No modification of the Agreement or of any covenant, condition or
limitation herein contained shall be valid unless in writing and duly
executed by both parties to this Agreement.

XII. Waiver

A waiver of any breach of the provisions of the Agreement shall not
be considered to be a continuing waiver of other breaches of the same
or other provisions hereof.

XIII. Heirs and Assigns

This Agreement shall be binding upon the parties hereto, their heirs,
assigns and personal representatives.

XIV. Notices

Any notice required or permitted to be given under this Agreement
shall be sufficient, if in writing, and if sent by registered or
certified mail, return receipt requested to the following Addresses:

        (your name and address)

        (gallery name and address)

XV Choice of Law

This Agreement shall be construed in accordance with the laws of the
(your state or province) and all litigation shall be brought in the
courts of that state or province.

XVI. Attorney’s Fees

The prevailing party will be entitled to have the nonprevailing party
pay all costs and expenses, including reasonable attorneys fees, at
trial and on appeal, incurred by the prevailing party in enforcing
this Agreement.

XVII. Severability

If any section of this Agreement is held to be invalid the remaining
sections of this Agreement will not be affected.

XV111 Shipping Address

When Works are returned to the Artist the Gallery shall ship them to:

                        (your name and address)

or: To an address communicated to the Gallery for shipment of a
specific Work or Works.

Agreed to and accepted:

Artist:

Gallery:

Dated:

Exhibit A-List of Works
Description

  1.  (list of works)
    

Exhibit B-Commission Arrangement

Retail Price                                            Retail Price
  1.  (list of works with prices)
    

Exhibit C-Monthly Statement Example

Artist:
Gallery
Period from , 19 to 19 .
Item Numbers Description Date of Sale Price Amount due
Gallery
Amount due Artist Location displayed.

Charles Lewton-Brain
Box 1624, Ste M, Calgary, Alberta, T2P 2L7, Canada


#6

here is a simpler one:

ARTIST/GALLERY CONSIGNMENT AGREEMENT

ARTIST: GALLERY:

WHEREAS, ARTIST WISHES TO HAVE CERTAIN OF HER\HIS ARTWORKS
REPRESENTED BY GALLERY AND GALLERY WISHES TO REPRESENT ARTIST THE
PARTIES AGREE AS FOLLOWS:

  1. RECEIPT OF ARTWORK: GALLERY CONFIRMS RECEIPT OF ARTIST’S CONSIGNED
    ARTWORKS, IN PERFECT CONDITION UNLESS OTHERWISE NOTED.

  2. COPYRIGHT AND REPRODUCTION RIGHTS: ARTIST RESERVES THE COPYRIGHT
    AND ALL REPRODUCTION RIGHTS TO THESE CONSIGNED ARTWORKS. GALLERY WILL
    NOT PERMIT ANY OF THE ARTWORKS TO BE COPIED, PHOTOGRAPHED OR
    REPRODUCED WITHOUT ARTIST’S CONCENT. ALL APPROVED REPRODUCTIONS WILL
    CARRY ARTIST’S COPYRIGHT NOTICE WITH ARTIST’S NAME AND YEAR OF
    COPYRIGHT.

  3. SALES: UPON SALE OF ARTWORKS, THE RETAIL PRICE LESS GALLERY’S
    COMMISSION WILL BE REMITTED TO ARTIST WITHIN 30 DAYS. TITLE TO THESE
    ARTWORKS REMAINS WITH ARTIST UNTIL THE ARTWORKS ARE SOLD AND ARTIST IS
    PAID IN FULL, AT WHICH TIME TITLE PASSES DIRECTLY TO THE PURCHASER.
    GALLERY WILL PROVIDE ARTIST WITH A COPY OF THE SALES RECEIPT AND THE
    NAME AND ADDRESS OF PURCHASER.

  4. LOSS/REMOVAL: ARTIST CONSIGNS ARTWOK TO GALLERY AT ARTIST’S RISK
    AND GALLERY ASSUMES NO RESPONSIBILITY FOR ANY CONSIGNED ARTWORK
    STOLEN, OR DAMAGED WHILE IN GALLERY’S POSSESSION EXCEPT IN THE CASE
    OF GROSS NEGLIGENCE. GALLERY WILL TAKE NORMAL PRECAUSIONS TO PROTECT
    ARTWORK. CONSIGNED ARTWORKS MAY NOT BE REMOVED FROM GALLERY’S PREMISE
    FOR PURPOSES OF RENTAL, INSTALLMENT SALES, OR ON APPROVAL WITH ANY
    POTENTIAL PURCHASER WITHOUT ARTIST’S PERMISSION. ARTIST MAY WITHDRAW
    ARTWORK ANYTIME. GALLERY MAY RETURN TO ARTIST ANY OF THE CONSIGNED
    ARTWORK AT ANYTIME.

  5. TERMINATION: CONSIGNED ARTWORKS WILL BE HELD IN TRUST FOR ARTIST’S
    BENEFIT AND WILL NOT BE SUBJECTED TO CLAIM BY A CREDITOR OF GALLERY.

THIS AGREEMENT TERMINATES UPON THE RETURN OF LISTED ART WORKS IN TACT
AND ALL ACCOUNTS SETTLED.

ARTIST’S
SIGNATURE:_______________________________DATE:

GALLERY
REPRESENTATIVE’S
SIGNATURE:________________DATE:

Charles Lewton-Brain
Box 1624, Ste M, Calgary, Alberta, T2P 2L7, Canada


#7

Hi, I have had only two problems (so far) with consignment art in our
gallery. One of our artists (A) traded several of his pieces for
another artist’s (B) work. The values were equivelant, but, when it
came time to pay artist (B), what a mess. Tax and cash, who was going
to pay? ME! Ideally, a patron will buy artists (A)'s work. The second
problem deals with returns after the artist has been paid. In the one
case this happened to me. A close friend bought a piece, I paid the
artist, then the friend returned the piece (she traded up which was
O.K.). Pieces that move quickly are not a problem, so the issue then
is: How much money do I tie-up in inventory? Especially when operating
on a tight budget. I now have a separate return and trade policy for
consignment art? I am still working out the bugs.


#8

I agree. That’s been my experience. I had one guy kept my stuff for
a year or so. He was a friend, so I didn’t push. He started taking
advantage of me on some trade work so I had to finally sever the
working relationship. Yep, the stuff had sold “that very day”. . .
Point is, there are a lot of stores will take your work on
consignment just to keep the cases full. They’re going to sell the
stuff they’ve paid for first, then the stuff that’s on memo about to
have to be sent back, then finally yours. It’s not the easiest way to
sell. I think of it this way. If I’m accumulating inventory ,why
have it sitting in my shop waiting for me to get enough to open my
own storefront? Eventually, it’ll be time to call it all in and set
it up and then sell it for retail, making all the money for myself.


#9

Dear Karen,

Thank you for your comments. Would you be willing to be interviewed
for the article? I’d love to have your perspective as both a gallery
owner and an artist.

If you’d be willing to speak with me by telephone, please let me know
when would be most convenient for you. I am normally in my office
Monday, Wednesday, and Friday afternoons, but I can usually make
special arrangements if another time would be better. If you’re
available, perhaps next Wednesday would be good? If you’re willing to
speak with me for the article, please just drop me an e-mail and let
me know when is best for you.

Thank you again for your comments, and I look forward to hearing more
about your experiences.

Suzanne Wade
writer/editor
SuWade@ici.net
Phone/Fax 508-339-7366


#10

Hi Consignment? I got two retail shops and I manufacture.I got some
consignment outlets. They not too easy- what with servicing counters
and cleaning handled jewellery. They about 4% of my t/o. (nett) Now I
say to consignees that if an article sells, then with that money they
buy the replacment piece cash.They get to make a profit and my
investment is steadily reduced. I think of it as a ‘starter kit’ in
jewellery ware- and they got more interest to sell my stuff. - FWIW-
Hans

SEROL-WANA
Designer African Jewellery
P.O Box 266
Kasane
BOTSWANA
Tel:(+267)651011
Tel:(+267)650555
Fax:(+267)651168