However, the agreement mentions that any losses should be
claimed under my insurance. This sounds odd to me--
When entering into a consignment agreement, there’s the gallery’s
side and there’s the consignor’s side. The gallery owner tends to
want to lessen his/her liability as much as possible. This is the
primary reason for accepting consignors in the first place, i.e. no
capital investment for their inventory, other than store fixtures.
The consignor places items in good faith, without having the overhead
expenses and the bother of having and maintaining a storefront. I
have been on both ends of this stick.
The gallery owner gets paid generally from 25%-50%, and in some
cases 60% of the retail value of goods consigned. Yes, they do pay
the overhead and operating expenses, but for the privelege of
consigned goods, they are not paying for the costs of the goods or
the labor. The consignor gives up a fee for providing inventory for
the gallery owner, and while the goods are placed in the gallery,
those goods are not available to them for selling in any venue. In
addition, they have paid for shipping and insurance to and from the
place of consignment.
If you borrow money to buy a car, you are expected to buy enough
insurance to cover the loan until the loan is paid off, regardless of
how much value the car retains. This insurance often comes at a
premium (comprehensive plus liability). Why should it be expected
less for jewelry that is on loan?
There are times when I may not be the brightest bulb in the pack,
but I do understand if a bank won’t accept those kinds of risks, then
neither should I. Besides, if you ‘loan’ someone something, and you
tell them if any damage should occur, they will not be responsible
for it, do you think they will lovingly take care of it as if it’s
As far as how much they should be liable for, it needs to be for the
full price less the commission. Otherwise, if you only receive the
bare minimum to cover your costs and possibly labor, a lot of stuff
gets sold, then is claimed as being pilfered. They have the
opportunity to buy at wholesale costs and retain a higher markup,
rather than carrying consignment, but the decision should be made up
front, not somewhere down the line. If you have proven to be a good
seller, then it will be in the interests of the gallery owner to pay
less by choosing the wholesale route.
Just my humble, but painfully educated opinion.