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Galleries and consignment agreements


#1

Hello,

if I give my works to galleries on consignment, there should be
a consignment agreement, that is signed by both the gallery and
me. But what should be written in that contract? There are
probably some musts, without which I shouldn’t be giving my
jewelry away. Since my first experience with a gallery, wasn’t
that good (they didn’t have any prepared contract, just signed
the acknowledge receipt of the goods and we put down in writing
which part of the retail price in case of sale is paid over to
me), I’d like to work out my own consignment agreement. Any hints
on what is absolutely essential are highly appreciated.

Sabine

sabineas virtual gallery
metal design, jewelry & silverwork
http://www.sabinea.com/


#2

Hello Sabine,

I am both a gallery owner and consign my own work to other
galleries. I feel you are quite right to want a written
contract. While a nasty person can be nasty no matter what is in
writing, the very act of setting down terms helps reduce that
likelihood. Actually, you’ll get so you can ‘sense’ ahead of
time who will be good to work with and who might not be, written
agreement or not. And it is important to trust your intuition.

Some of the terms to consider in a Consignment agreement:

–who sets the retail price and

–can the gallery change the retail price (either up or down)
without consulting artist --the percentage split

–the payment schedule (“within 10 days of the end of the month
during which the sale took place” or some such)

–if your work is high end, it can be good to have a provision
about what happens if the Gallery allows a person to set a work
aside to pay later. Two wrinkles to that, one being when the
work remains at the gallery until paid in full, the other if the
gallery lets the customer take the work but pay on time
(sometimes happens with ‘good’ clients.) In my place, I will
only hold a work back for 30 days; if not paid for by then it
goes back on display. If the work physically leaves my gallery,
I feel that I am taking the risk so I pay the artist the entire
amount due them. --shipping costs: who is responsible both to
the Gallery or back to you. --a statement about possible % cuts on
direct commissions --insurance: whose responsibility is it when
in shipment either direction, and in the gallery’s possession. -
-circumstances under which work can normally be removed (10
working days?) Goes without saying (I think?!) that if there is a
breach of contract you can pull your work immediately.
–exclusivity, if appropriate --a statement that at least a
certain amount of your work will be displayed at any given time.
(not all tucked away in a drawer) --I also include that the
artist will provide the gallery with promotional materials (CV,
photo, copies of reviews of their work, etc) --the termination
date of the contract.

I’m always looking for other ideas, better wording, or better
(fair to both parties) terms. Hope some more folks chime in.

Colleen


#3

Hello,

–insurance: whose responsibility is it when
in shipment either direction, and in the gallery’s possession. -

This point seems to be little difficult. I thought that my
pieces were insured when they are in the gallery. But they said
that there’s no such thing as a insurance against shoplifting
(burglary of course is insured). “Things like this (consignment)
only work on foundation of trust.” I did not have a good feeling
when hearing that, but left my jewelry in the gallery though.
But my thoughts are, that they could sell my pieces and tell me
"Sorry they were stolen. You don’t get any money." So next time
I’ll insist upon writing down who’s responsible for loss and
damage. For now I just can hope that nothing happens and that the
gallery owner is a nice person.

And another thing concerning galleries: If I give them my
jewelry, when can I expect them to put it into the display case
and present it to customers? Well, after two weeks I went to that
gallery to ask how business is going and to look how they
arranged my pieces and… nothing! They looked at me as if I were
from Mars and said I’d come back in about ten days. Maybe it’s
okay if the gallery takes some time to put consignment works
into display cases, but all in all more than three weeks now seem
to be a little long from my point of view.

Sabine

sabineas virtual gallery
metal design, jewelry & silverwork
http://www.sabinea.com/


#4

Have in contract that you retain ownership until sold in case
something happens to the person that will attempt to sell it for
you. We had many of our pieces on consignment and then the
fellow was killed in an auto accident. We learned the hard way.
We will never be able to get them ack - or get paid for them.

Judy


#5

You can buy a great book called "Contracts (in plain English)
for Craftspeople and its companion book, “The Law (in plain
English) for Craftspeople.” The first has a sample consignment
agreement you can retype and use. It explains what all the
clauses mean. They’re book great books.

I just used the first one a few weeks ago when I hired a
bookbinding instructor for a children’s group. She wanted a
contract (despite the fact that we signed it right before the
class and she got paid right after the class), so I used the one
right out of the book.

But of course you need a consignment agreement. Some places
will want to use their own agreement, others won’t have one and
you’ll be ready with yours.

Elaine


#6
 arranged my pieces and... nothing! They looked at me as if I
were from Mars and said I'd come back in about ten days. Maybe
it's okay if the gallery takes some time to put consignment
works into display cases, but all in all more than three weeks
now seem to be a little long from my point of view. 

Hello

I belonged to a co-op gallery for a couple of years, and in a
co-op I might understand things not going very smooth as there
are “20 or thirty chefs” and a rotating staff. But even so we
had a contract for consignments, insurance that was specially
for galleries and covered all casual/incidental loss,(we never
used it and the one time something was missing we opted to just
pay it out)

And any new consignments were handled within a week or less.
The only thing that was put on a “list” was new artwork of the 2
dimensional type because we only could exhibit 2 or three
artists at one time for lack of more space. And these artist
were aware of the time they would be scheduled to exhibit.

John g


#7

Hi Sabina,

--insurance:  whose responsibility is it when > in shipment
either direction, and in the gallery's possession. - 

The artist pays to ship work to me and is responsible for
insuring it in transit. Their work is “insured” while it is in
my position and while I am return-shipping it to them. The
reason I put quotes around insured is that yes, insurance to
cover shoplifting is prohibitively expensive and I don’t have it.
BUT, while the work is in my custody I feel responsible for it
and if it isn’t returned to them I treat it as sold and they are
paid. Seems only fair to me. And it keeps me vigilant on the
floor.

   And another thing concerning galleries: If I give them my
jewelry, when can I expect them to put it into the display
case and present it to customers? 

That is a toughie. There can be extenuating circumstances, of
course, but I would think 2 weeks is a reasonable time for the
Gallery to check the inventory sheets, get price tags on, get
work in the case … . Assuming the work isn’t for a special
show or something like that … .

Colleen


#8
   I thought that my pieces were insured when they are in the
gallery. But they said that there's no such thing as a
insurance against shoplifting (burglary of course is insured).
"Things like this (consignment) only work on foundation of
trust." 

In my opinion this is not a very responsible position for a
gallery owner to take. “Trust” is great until there’s a
disagreement. I don’t know what state you’re in, but many states
have statutes from the Uniform Commercial Code which spell out
merchants’ responsibilities for work in their possession while
on consignment. For example, in California, gallery owners are
completely responsible for any loss or damage to consigned work
while it’s in their possession. If your state doesn’t have a
statute spelling this out, I wouldn’t do business with a gallery
owner who refused to insure the work against all kinds of loss.
They are supposed to carry insurance to cover them if anything
happens to the work.

Rene Roberts


#9

Hello Sabine, and everyone!

I totally agree with everything that has been said about this
subject so far! It is very important to have something in
writing…not just to protect you, the artist, but, to protect
all parties involved.

My consignment contract is pretty straight forward (no
"legal-ese"). I cover everything from the payment date (1st,
15th, or 30th of each month), responsibility for loss (galleries’
responsibility!), upkeep of items while in their gallery
(something that is sometimes overlooks and is very important,
esp. when dealing with jewelry), ownership of the items (items
should remain the artist’s property until the item is paid for),
termination of contract (2 weeks unless another arrangement is
agreed upon by both parties), condition of items returned (must
be returned in “resaleable” condition - any items not returned in
good condition will be subject to a “restocking fee” of 5% of
the wholesale price), set retail price (contracted at keystone
unless another amount is agreed upon by both parties), and a
statement that has the store agree to abide by all the terms
stated. Both you and they should then sign and date the contract.
(I probably left something out, but, most of it was covered in
other responses)

Some other things you should consider before committing to
consignment - Be certain that a large percentage of the items the
gallery are on consignment. If they don’t have a lot of
experience with consignment, it could be too much of a risk. Find
out how they keep track of their sales. Make sure you get a list
of all of the items sold in the previous month. Ask the gallery
to do a physical inventory periodically. If they say they don’t
have the time, send them a pre-made list of inventory so they can
just check off the items they still have. (I figure, why not make
it easy for them to take good care of your work? Besides, it is
still legally “your inventory” and you’ll need to know where your
inventory stands at least quarterly!)

You can find sample consignment contracts in books that talk
about the “business of being an artist” in the arts section and
small business section of larger book stores. I also found a
pretty good consignment contract in a comprehensive book in the
"legal forms" section of my local Office Max…hmm…I forgot the
name of the book. It was pretty big and had all kinds of
contracts for a small business.

Anyway, bottom line…follow your instincts, ask for artist
references if necessary, and understand that the gallery isn’t
thinking about your work as much as you are.

Good Luck!
Marlo M.
Seattle, WA


#10

Hi Folks,

When I’ve had work on consignment in a gallery, I have the
gallery owner or manager sign my consignment agreement. My
agreement stipulates (among other things) that they are
financially accountable to me for any loss or damage of goods
while in their possession, regardless of reason. If they can’t
agree to this, I don’t want to deal with them. I have not had a
gallery refuse my agreement.

I have never seen anything in a gallery’s consignment agreement
that caused me alarm, other than percentages. They just don’t go
far enough to define the terms of the relationship, from the
artisans’ perspective.

My two cents,

Dave

Dave Sebaste
Sebaste Studio
Charlotte, NC (USA)
dave@sebaste.com
http://www.sebaste.com


#11

Sebinea, the “Legal Guide for the Visual Artist” is a good place
to start. The book contains example forms for consignment with
plenty of written advice and explanations. My book is about three
years old and there is probably a new edition. It is published by
Allworth Press 1-800-289-0963. I was referred to it through the
American Council for the Arts.

George Hebner


#12

Sometimes in addition to filling out the “consignment” sheet and
assigning the code letters and/or numbers, I photocopy the
pieces I send and write the codes on the photocopy below the
pieces. I send a photocopy along with the consignment sheet
(and jewelry) and keep one copy for myself. This way both the
gallery and I have a “visual” list as well.


#13

I have an agreement with my banker. He doesn’t make jewelry and
I don’t make loans (consignment). How can we expect to be treated
like professionals if we do not act like one, including expecting
our work to be purchased up front. None of my suppliers are
willing to give me consignment terms on materials, supplies, and
equipment (net 30 yes, consignment no).

I have made a large investment to be able to produce jewelry and
I expect any merchant that wants to sell jewelry to do the same.
If there were not so many willing to do consignment then it would
not be expected.

I for one cannot afford to hassle with consignment accounts. All
merchants will purchase it they have to and most do.

Just my two cents worth (paid up front)

Kenneth Gastineau


#14
, ownership of the items (items should remain the artist's
property until the item is paid for),  

I am not sure how consigned properties are handled but you all
should be aware that gemstones on memo are considered a part of a
store’s inventory in the event of a bankruptcy, even if they have
not been purchased by the company going bankrupt. This law was
upheld by the courts in a few cases the IRS brought a number of
years ago.


#15

I agree up to a point. I do limited consignment – only at our
state artisans shop. A craftsperson in another media has had
stuff in that shop for 12 years and said it had resulted in lots
of paying gigs and contacts.

So I signed up with that ulterior motive. One of the two store
locations has sold my work on a regular basis, so I send them
more. It works out.

Consignment can be done professionally, when the craftsperson
is vigilant and professional, and the gallery is responsible and
ethical. For some people starting out, consignment is a good
option.

Elaine


#16
 I am not sure how consigned properties are handled but you
all should be aware that gemstones on memo are considered a
part of a store's inventory in the event of a bankruptcy, even
if they have not been purchased by the company going bankrupt.
This law was upheld  by the courts in a few cases the IRS
brought a number of years ago. 

I’ve heard lots of stories about stores going bankrupt and
artists not getting back their consigned goods. I guess this is
where some real legal advice would come in handy. Has anyone ever
talked to a lawyer about this kind of thing? I would think that
liability is defined in the way you write up your contract…but,
that’s just an assumption.

Marlo M.


#17
Consignment _can_ be done professionally, when the craftsperson
is vigilant and professional, and the gallery is responsible and
ethical.  For some people starting out, consignment is a good
option.
Yes, and for many people starting out, this is their ONLY

option. From my own experience, and being relatively new to
marketing my work, I don’t yet have the money to do wholesale
shows, even though I am working in that direction. I have also
discovered many of the galleries I contact “love” my work but
want me to come back when I have a name for myself (i.e. get
published). And I suppose it’s riskier for a gallery to purchase
from a total unknown. With consignment, it gives me the control
to rotate work from gallery to gallery. It also keeps things
fresh because I generally move things around after 6 months and
this also gives me a good idea of what sells in what type of
gallery. I have gotten good advice about consignment agreements
from books like: “Crafting as a Business” by Wendy Rosen and “How
to Survive and Prosper as an Artist” by Carol Michels. It’s
important to learn how to protect yourself whether you consign or
sell outright.

Amy O’Connell
http://www.ezmo.com/amy


#18

Hello Fellow Jewelers,

I agree with Kenneth Gastineau about providing jewelry on 30-day
terms versus consignment. I believe that if all my accounts
worked strictly on consignment, I’d go bankrupt! I’m new to this
industry, and I’m willing to work with a new account on
consignment terms for the first order only to prove that my
product has strong sell-through, however, 30-day terms after the
first order!

I find consignment very common, even with profitable jewelry
stores. I believe that Kenneth makes a good point; we have
established a common acceptance by both the store owner and the
jewelry artist to allow this “loan” exchange. We front the
costs, risks, and inventory with little commitment from the store
owner. Not to mention, the pieces become shop-worn and the store
owner is not anxious to “turn” the pieces since he/she has no
investment risk. Therefore, as one Orchid artist described, the
pieces can sit behind the case for 3 weeks!!! It is up to all
of us to establish the professional terms and respect we
deserve–sell out-right only!

Under out-right selling terms, your purchase order will outline
the terms of your agreement. The terms and conditions will
include, payment terms (net 30 or COD), shipping (prepaid or
other), conditions for returns and cancellations, and 1 1/2%
monthly service charge on late payments. Boy, that felt great!
Thanks for the platform Kenneth.

Rebecca

San Diego,CA


#19
    I have an agreement with my banker. He doesn't make
jewelry and I don't make loans (consignment). How can we expect
to be treated like professionals if we do not act like one,
including expecting our work to be purchased up front. None of
my suppliers are willing to give me consignment terms on
materials, supplies, and equipment (net 30 yes, consignment
no). 

It is very professional to maintain a consignment agreement with
a store or gallery. It is a very real part of the business and
how many of the most successful artists got their start.

Consignment gives artists an opportunity to show their work to a
larger audience in a time where hand crafted work is not a high
priority on the “gotta buy” list of the average consumer.
Consignment gives store owners an opportunity to have high
quality pieces in their galleries to educate their customers,
support artists and hopefully make both of them some money.

    I have made a large investment to be able to produce
jewelry and I expect any merchant that wants to sell jewelry to
do the same.  If there were not so many willing to do
consignment then it would not be expected. 

In a perfect world, retail customers would buy high quality work
all the time. They would know “why that piece is so expensive”.
Store owners would have huge amounts of capitol at their disposal
and would buy everything up front. They wouldn’t buy lesser
quality (cheaper) work from far away countries as a substitute
for artists work in their area. Everyone would know that art and
the expression of creativity is a valid way to make living.

Artists would never need to risk lending their work to galleries
for the opportunity to show their work in a creative environment.
They would be happy with their inventory sitting in their studios
not being seen, and not being sold.

     I for one cannot afford to hassle with consignment
accounts. All  merchants will purchase it they have to
and most do. Just my two cents worth (paid up front) 

After many years of dealing with consignment accounts (from both
sides of the counter), I agree that it is a hassle. It’s a lot of
work for both parties. But, sometimes, it is the only option for
emerging artists. Sometimes it gives seasoned artists the
opportunity to take risks they could never take in a wholesale
atmosphere.

There’s no reason to insinuate that consignment artists are not
"professional". There is a place for it and it works. Maybe not
for you, but, for many others out there making a living with
their talent and ambition.

just my opinion,
Marlo M.


#20

If I recall correctly, you can file UCC paperwork for
consigned/memo goods that allow you to retain ownership in all
such cases. In essence, you’re filing notice that the goods in
the business are yours, and cannot be used as collateral for
loans or be considered as inventory by the business. This is a
royal pain, though, since that paperwork must be filed
seperately for each and every shipment.

And in some states, the laws get even stickier. If you’ve got
work on consignment, get it back from the shop and then, shortly
afterwards, the shop goes bankrupt, in some instances, the bank
and other creditors can actually come back to you and demand you
turn over those consigment goods to them, or their full value, to
be added to the other assets of the bankrupt establishment, and
then you become one of the creditors. This is based on
situations where, while your goods were in possesion of the
store, the store took out new loans, or otherwise established
their worth/collateral value, with the value of your your goods
included. If you’ve not already filed paperwork preventing this
from being done, then you can be in a position of being
considered to have recieved preferential treatment in the payment
of your loans to the store, and you then have to return that
payment. Can be nasty. Now, I should mention, it’s been a
number of years since I payed attention to this issue. At that
time, as I recall, there were movements afoot to change laws in
this regard, and I think some states did so. Not sure.

Peter Rowe