At the time of authoring this article Alison Patchett was a Solicitor at Arts Law.
A common theme in advice given by the Arts Law Centre of Australia is that artists need to be more aware of the importance of using written agreements to record deals that they do.
Two common business scenarios for visual artists include the sale and reproduction of their work in a magazine or book, or on a postcard or other merchandise.
Why are written agreements important?
There are certain types of agreements or contracts that must be in writing to be effective (see below), but agreements do notalways have to be in writing to be legally binding. This means that you are usually obliged to perform any agreement made verbally and that there could be legal consequences if you don't.
Problems arise when people have differing recollections of what was agreed verbally or if they just can't remember. If a person thinks that another has failed to perform their side of a deal they can take the other party to court. Where an agreement is only verbal, this often ends in situations where it is one person's word against another's.
As well as preventing disputes by providing clarity, written agreements are useful if something goes wrong to show as evidence.
Are there times when my agreement has to be in writing?
There are many circumstances where an oral agreement is binding but there are occasions where a contract mustbe in writing and signed to be legally enforceable: such as the sale of land.
Importantly, an assignment (sale of copyright) and an exclusive licence must be in writing. A licence is a permission to allow someone to use your copyright. An exclusive licence means that only the other party you are dealing with may do this specific thing with your work.
Sometimes the agreement in which you sell your artwork must be in writing as well. Contract law varies between the states and territories of Australia on this. Currently an artwork that is sold for more than $20 in Tasmania and Western Australia, and more than $50 in the Northern Territory must meet at least one of the following requirements:
- a document is signed by the purchaser containing all the material terms of the contract such as price, description, names of the parties, payment and delivery arrangements;
- the purchaser accepts the artwork in part performance of the contract, for example by taking delivery of it; or
- the purchaser pays a deposit.
Imagine a situation where an artist exhibits their work and on the opening night a purchaser says that they will buy all the artist's works in the exhibition. The artist exhibits their work for a further week, but knocks back all other offers. Once the exhibition closes the original purchaser notifies the artist that they have changed their mind and will not be buying the work.
Assuming each work was sold for more $50 the purchaser is not bound to perform the contract in Tasmania, Western Australia or the Northern Territory as there was no written document signed, the contract was not performed in anyway and the purchaser had not paid a deposit. In all other states and territories of Australia, the artist could probably argue that the purchaser had entered an oral contract and was bound by that.
Sale of Artwork Agreement
The following is an overview of the most common terms that parties to a sale of artwork agreement need to consider and agree on. Obviously circumstances vary greatly and sometimes different issues will need to be dealt with.
The basic rule is, if a promise or condition is important to you then put it in the written agreement so that the other person knows what they are obliged to do and what happens in the event that they break (breach) the contract.
The key issues that the artist and purchaser need to consider are:
The agreement should state how much is to be paid, how payment is to be made and when. If you are dealing with someone overseas ensure that you specify the currency.
Sometimes payment by instalments is appropriate. If this is the case, clearly state at what stage the installments will be paid and when the purchaser is entitled to possession of the work.
Goods and Service Tax (GST)
You should also consider the GST implications. Is the purchase price inclusive or exclusive of GST? If the artist is registered for GST and is selling the work directly, the purchaser must pay GST.
If a gallery acts as the artist's agent in selling the work, the purchase price is still only affected if the artist is registered for GST, not if the gallery is. The gallery's GST status is important for the payment of commission by the artist.
Often an artwork sale agreement will contain a statement that the artist promises that they own the work and that they have not sold it to someone else. Often this is coupled with an indemnity which means that the purchaser can sue the artist if these promises (warranties) are false.
Ownership of the Work
Sometimes it is not clear when the ownership (title) of the artwork is passed to the purchaser. This is particularly true when payment is by installments. To avoid doubt, state when the purchaser becomes the owner of the artwork. This can also be important for insurance reasons.
Transport and Insurance
Specify who is responsible for transporting the artwork to the purchaser. You also need to state when the risk of loss or damage to the works passes to the purchaser, so that they know when they should insure the work if they want to be covered for any loss.
Copyright ownership is distinct from ownership of the physical artwork. Usually when an artist sells an artwork they retain the copyright. This should be stated in the agreement as sometimes a purchaser is not aware that they are not automatically entitled to make copies of the work.
All creators of artwork have moral rights. In Australia artists have three moral rights:
- the right to be named as the creator (right of attribution);
- the right against false attribution; and
- the right of integrity, to protect their work from unauthorized alteration, distortion or other derogatory treatment that prejudices their honour or reputation.
Arts Law recommends that artists include a provision in their sale agreement that the purchaser must comply with these laws. This is the case anyway, but it doesn't hurt to draw the purchaser's attention to it.
Access to Work
Sometimes it may be important for an artist to be able to access their artwork for an exhibition or for documentation purposes. Details of any arrangement for borrowing the work from the purchaser or accessing the work should be included in your contract.
There are two ways that Indigenous Cultural and Intellectual Property (ICIP) can be relevant to a sale of artwork agreement. One is if the artwork itself contains material that includes or refers to Indigenous objects, knowledge or works. Part Two of this article will discuss this issue further.
Arts Law suggests that Indigenous artists include a term in all agreements which addresses possible future changes to the law in favour of Indigenous rights and ensures that the parties will comply with them.
Entire Agreement and Governing Law
In the interests of certainty it is always a good idea to include a statement in the written contract that the contract contains all the terms agreed between the parties and that it can only be amended in writing signed by the parties. This ensures that the other side can not argue that you agreed to verbal alterations to the agreement.
It is also important to state which law (state/territory or country) will govern the contract. As explained above sometimes the law varies between states. If you are dealing with someone in a different state or territory this can be confusing.
Don't forget to sign the agreement, date it and keep an original signed copy so that you know what the deal is.
For further information
The Arts Law Centre of Australia sells some sample agreements for low budget creators, including a Sale of Artwork Agreement and Image Reproduction for Publication Licence. Part two of this article dealing with the Image Reproduction for Publication Licence will be printed in the September edition of this newsletter.