Caveat: Visual Artists and Agents: When is a commission payable?
The question of when a gallery is entitled to claim commission on artist sales is a frequent cause of confusion and contention. It is an issue that can, and should be, clarified at the outset of the artist-gallery relationship so that both the artist and the gallery are clear about when the gallery is entitled to a share of income from sales.
Get It In Writing
When negotiating the terms of the agreement between you and the gallery, consider carefully the circumstances in which the gallery is entitled to a commission. It is always advisable to get the agreement in writing to avoid confusion later on. Although an oral contract can be binding, its details can be both difficult to remember and to prove.
Where the agreement, whether it be oral or written, fails to address the issue of when the gallery is entitled to commission, standard industry practice applicable to the particular type of agency arrangement will be implied.
Full Gallery Representation
If you are entering into an exclusive representative relationship with a gallery, the gallery is generally going to want a share of profits from all sales made during the period of representation. In Australia the range of commission paid to agent galleries generally ranges from 30% - 40%, but the amount of commission should reflect the range and quality of services the gallery is providing.
The very nature of an exclusive agency arrangement is that the agent is the only person authorised to represent you and sell your work. This means that if a gallery has exclusive rights, nobody else, including you, may exercise those rights. If however, you want to retain certain sales rights and avoid having to pay the gallery commission on those sales, carve out those rights in the contract. For example, you may want the agent to be your exclusive agent in all states except your home state, giving you the right to sell your work locally without any obligation to pay commission to your agent. Or, you may grant the gallery exclusive rights in only one specified territory, giving you the right to have alternative representation in other locations. You may also agree with the gallery that certain types of sales, for example studio sales, will attract a lower amount of commission.
You may want to be able to enter into art competitions or festivals, which will want to offer your work for sale and possibly take their own share of sales income. If you haven't specifically excluded the agent's right to commission in this circumstance you could find yourself paying two commissions, one to the competition and one to your agent. Some commercial galleries will also require a commission percentage of any cash won as a prize. While the gallery may argue that it is entitled to a share of the prize on the basis it has contributed to your success through exhibition and promotion, you may feel that you should be the sole beneficiary of any prize awarded in recognition of your artistic merit.
Arts Law has a sample Artist-Gallery Agreement for sale which you can use as a basis for negotiating the agreement.
Single Exhibition Consignment Agreement
If you are negotiating with a gallery to exhibit and sell your work on consignment, it is important to clarify with the gallery when it will be entitled to a commission. Commission for traditional gallery consignment agreements is generally no more than 33.3%. One option is to agree in writing with the gallery that it will receive commission only on sales it makes of works it holds and not on other sales of your work during or after the period of the exhibition. This arrangement will avoid confusion about whether the gallery is entitled to commission in the following situations:
- You make sales during the period of the exhibition from your studio to customers in no way connected with the exhibition. No commission payable.
- Someone sees your work at the exhibition and then commissions you to create a new artwork. No commission payable.
- Two months after the exhibition you make a studio sale of a work that had formed part of the exhibition. No commission payable.
Arts Law has a sample Consignment Agreement for sale that may assist you in negotiating a consignment agreement with a gallery or exhibitor.
Think about what authority and rights you are comfortable giving to an agent gallery. It is an arrangement that will hopefully be beneficial to you and the gallery, and which may be the start of a long term relationship, so it is worth making sure that you are both clear about its terms. Agree with the gallery when a commission will be payable and when it will not and ensure that the contract clearly reflects this.
Alison Davis was a legal officer at Arts Law.