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Liability for Damage to Consigned Artworks

Michelle Borg is a volunteer and Alison Davis is a Legal Officer at Arts Law. Updated November 2006 by Ryan McConville, volunteer.

Arts Law is often contacted by artists whose works have been lost or damaged while being exhibited by a gallery, and who have been told by the gallery that it is not responsible. What rights does the artist have against the gallery in this situation?

Galleries' Duty of Care

A gallery has a general legal duty to take care of work it is exhibiting, however the extent of a gallery's liability will depend on the particular agreement between the artist and the gallery. If there has been no agreement about who is responsible for the work while it is being exhibited, and the gallery can show that it has taken reasonable care of the work, it will generally not be liable for damage to it.

Dealing with a Gallery

If you are providing your artwork for sale or exhibition to a gallery, you should negotiate with the gallery to include a term in the consignment or loan of artwork agreement, requiring the exhibitor to take reasonable care of your artwork, and specifying the level of care the gallery is required to take.
Following is an example of a 'duty of care clause', from Arts Law's sample Consignment Agreement:

The Gallery:

a) must handle each Work with special care to prevent damage, deterioration or both that is not a characteristic of the Work; and

b) must ensure the safe protection of the Work at all times including but not limited to protection from hazards of fire, flood, theft, dirt, food, drinks, smoking or handling by unauthorised or inexperienced personnel, including but not limited to members of the public. Without limiting this, the Gallery must store and install the Works only in a place that is equipped with adequate fire detection, protection and security monitoring systems.

Insurance

While galleries are not legally required to insure artists' works, the Code of Practice for the Australian Visual Arts & Crafts Sector recommends that they do. Many galleries insure works held on consignment as part of their general insurance. Artists should enquire about whether their work will be covered by the gallery's insurance while on display before it is displayed.

Following is a sample 'insurance and indemnity clause', which not only requires the gallery to insure the work, but requires it to compensate the artist for loss or damage to their artworks:

Insurance and indemnity

The Gallery must:

a) take out and maintain adequate insurance against loss, damage, theft and destruction of the Works for the Consignment Period and for a sum not less than the total of the retail price of each Work specified in the Schedule;

b) promptly notify the Artist in writing if a Work is lost, damaged, stolen or destroyed;

c) if a Work is lost, stolen, irreparably damaged or destroyed, promptly pay the Artist the retail price of the Work specified in the Schedule [less any commission payable under clause 2] (or, if the Work was discounted under this agreement, the discounted price [less this commission]); and

d) if a Work is damaged but can be repaired, promptly pay the Artist the reasonable costs of the repairs or, if the Artist consents to the Gallery making or arranging for the repair, ensure that the Work is repaired to the Artist's satisfaction.

If an exhibitor refuses to insure the consigned works, the artist may wish to insure the work themselves.

Limitation of a Gallery's Liability

Some galleries may try to limit their liability through contract. A clause seeking to limit the gallery's liability could look something like this: "The Gallery will not be liable for damage or theft, however caused, including as a result of negligence or breach of contract by the Gallery." Artists should be wary of agreeing to such a clause, as it may mean that if artworks are damaged, the gallery will avoid liability, even if it has been negligent.

Conclusion

Before providing works to a gallery for exhibition, artists should confirm with the gallery the terms on which they are doing so. The agreement should specify who is responsible for insuring the works, and what the gallery's responsibilities are in relation to care of the work. If both the artist and gallery are clear on their respective obligations, their relationship is more likely to stay intact, even if one of the artworks doesn't.

The Code of Practice for the Australian Visual Arts & Crafts Sector is available for sale at www.visualarts.net.au.

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