CONSIGNMENT
Consignment is a very common method of selling arts and crafts. Basically, an artist or craftsperson takes his or her work to a store and lets the store keep it, and offer it for sale, with payment made only after a sale.
In New York, the Arts and Cultural Affairs Law contains the provisions that apply to such consignments. Following are the general rules.
First, the definition: “Whenever an artist or craftsperson, his heirs or personal representatives, delivers or causes to be delivered a work of fine art, craft or a print of his own creation to an art merchant for the purpose of exhibition and/or sale on a commission, fee or other basis of compensation, the delivery to and acceptance thereof by the art merchant establishes a consignor/consignee relationship as between such artist or craft-person and such art merchant with respect to the said work.”
There are a few notable points in this definition. First, the work delivered must be “of his own creation”. Bringing to a shop artwork which was made by someone else will not create the consignment covered by this law (unless the consignor is the artist’s heir). This law is for the protection of artists and their heirs, not the general art-owning public.
Second, the particular payment terms of the consignment do not matter. Any payment terms are covered.
Third, the person to whom the work is delivered must be an “art merchant”. The law will likely not apply to your local 7-11. However, “art merchant” is defined more broadly than might be expected: “Art merchant means a person who is in the business of dealing, exclusively or non-exclusively, in works of fine art or multiples, or a person who by his occupation holds himself out as having knowledge or skill peculiar to such works, or to whom such knowledge or skill may be attributed by his employment of an agent or other intermediary who by his occupation holds himself out as having such knowledge or skill. The term “art merchant” includes an auctioneer who sells such works at public auction, and except in the case of multiples, includes persons, not otherwise defined or treated as art merchants herein, who are consignors or principals of auctioneers.”
So, if your local 7-11 happens to be non-exclusively engaged in the business of dealing in artwork, then it might be covered by the law.
The phrase “On consignment” is also defined but I will spare you having to read it. The idea is that the consignee art merchant has the power to pass title to the artwork to a third party, by selling it, even though the consignee art merchant does not itself have such title. This differs from the customary situation in which you can sell something only if you own it.
What kinds of arts and crafts are covered? The definitions are broad.
“Fine art” means a painting, sculpture. drawing, or work of graphic art, and print, but not multiples.
“Craft” means a functional or non-functional work individually designed, and crafted by hand, in any medium including but not limited to textile, tile, paper, clay, glass, fiber, wood, metal or plastic; provided, however, that if produced in multiples, craft shall not include works mass produced or produced in other than a limited edition.
An important and valuable provision in the law is that the work of fine art or craft, in the hands of the merchant, is held “in trust”. This means the work is not owned by the art merchant. Or, more technically, the title remains with the consignor. The effect is that if the merchant goes bankrupt, and his creditors come to sell as his possessions, the consigned work is NOT one of those possessions, but still belongs to the consignor.
There is a similar provision with respect to the money collected when the work is sold. It is also held “in trust”, affording the same protections to the consignor. However, this particular provision can be waived by the consignor, but only “if such waiver is clear, conspicuous, in writing and subscribed by the consignor” (i.e., signed). There are some additional restrictions on the ability to waive the trust provisions, but still belongs to the consignor. For example, the waiver will not apply to the first $2,500 in sales proceeds.
Several vital issues are not addressed by this law. What is the price the consignee is permitted to sell the work for? What is the consignee’s compensation? When does the consignor get paid? How is sales tax handled? Will there be deductions for framing shipping or other costs? What documentation or information must the consignee provide to the consignor (many artists want to know their buyers). Can the consignor cancel the consignment at any time? What if the consignor finds a buyer? All this should be discussed and agreed to by the parties, and the agreement should be in writing, even if informally.
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