Contracts


Introduction

If you were to stop to consider how often you entered into a contract, you might be surprised. Much everyday activity involves the making of contracts: purchases of all kinds, from concert tickets to mobile phones; borrowing a video from the video shop; opening a bank account; obtaining a TV licence; engaging a plumber.

In their professional lives, artists enter into many contracts: they sell their works; they are commissioned to produce works; they exhibit in galleries; they give permission to reproduce their works for various purposes. All of these activities involve entering into contracts. In fact, virtually all professional dealings of the artist will involve the question of contract. And when something goes wrong in those dealings, and the artist seeks advice, the first issue that must be addressed is; “Was there a valid contract?”

What is a Contract?
A contract is a legally enforceable agreement between two or more people. But when is an agreement legally enforceable?  The basic rules of contract give us the essential elements of an enforceable contract. They are these:

  • Offer
  • Acceptance
  • Consideration
  • Intention to create legal relations
  • Capacity to contract, and
  • Terms that are legal and capable of performance


Offer:
An offer is a clear and unambiguous statement of the terms on which one party will enter into a contract, if the other party accepts.

Example: An art dealer offers to buy an unfinished painting from an artist for €2,000, if he likes it when it is completed.  This is not a valid offer. It is conditional and could not be enforced by the artist.


Acceptance:
Acceptance is a final and unequivocal expression of agreement to the terms of the offer.

Example: An artist offers to sell a painting for €10,000. The potential buyer agrees the price and sends a letter with a cheque for €2,000, promising to pay the balance in four further monthly instalments of €2,000. This acceptance is not valid and does not create an enforceable agreement. It does not match the offer.


Consideration:

The law does not recognise a bare promise. For a contract to be enforceable, there must be “consideration”. This is the payment of money, or performance of an act, which is either to the benefit, or the detriment of one of the parties.

Example: A hotel chain seeks permission from an artist to reproduce one of the artist’s works in an advertisement, and instead of payment, offers free accommodation for a week in one of its hotels. The free accommodation is the consideration.


Intention to Create Legal Relations:
There is no contract unless the parties intend to be legally bound.

Example: An artist receives an email saying, “What is your best price for the work entitled XXXX?”  The artist sends an email in reply saying “ My best price for XXXX would be €25,000”. A few days later, the artist receives an offer of €30,000 for the work from another party, and sells it. The first party sues, claiming that there was an agreement to sell the work for €25,000. Was there an intention to be legally bound? A court will look at the circumstances to try and establish the intention of the parties, but without further information it appears unlikely that there was an intention to be legally bound.  The artist was simply stating the price at which he or she would sell, if selling. There was no firm agreement to sell.


Capacity to contract:
In order for a contract to be valid, the parties must have the capacity to enter into a contract. Minors (under 18 years) and persons of unsound mind have a restricted capacity. A company is confined to acting within the boundaries of its constitution.


The terms must be legal and capable of performance:
The law will not uphold an agreement to commit a crime, or other legal wrong.

Example: An agreement to steal the Caravaggio from the National Gallery for an international crime syndicate. You guessed. Not enforceable.

Must a Contract be in Writing?
With some exceptions (e.g. a contract for the sale of land), contracts may be verbal.  Artists’ professional contracts can all be entered into verbally, provided the essential elements of a contract are present. However, there is a fundamental problem with all verbal agreements: it is often very difficult to say precisely what (if anything) was agreed. Without written evidence of the terms of a contract, legal action is usually fraught with uncertainty.


How Much Needs to be Written Down?
In every contractual situation, there should be good written evidence of the following: the names and addresses of the parties to the agreement; the date of the agreement; the subject matter of the agreement; the consideration for the transaction; and the terms of the agreement that are important to the parties and that they might later want to enforce.

Implied Terms
Whether or not there is a written agreement, a court may (and often must) try to interpret the intention of the parties, in order to give effect to a valid contract. The court will look at all the circumstances and enforce terms that it considers were implied in the dealings between the parties.

Example: A museum buys an important sculpture directly from the artist. The only written document consists of a letter confirming the price. Prior to payment, the artist arranges delivery of the work to the museum. When it arrives and is removed from the packing case, it is clear that owing to some incident en route, the work is seriously damaged.  Who suffers this loss?  Is it the gallery, or the artist?

If the artist were to sue for payment, it seems likely that unless there was some evidence available to suggest that the gallery was responsible for carriage, or for insurance of the work in transit, a court would find that it was an implied term of the agreement that the price would be paid on delivery of the work in good condition.

By statute, some terms are automatically implied into certain types of contract. For example, legislation relating to the sale of goods provides that goods must be fit for the purpose intended and be free from hidden defects.

When Things go Wrong……..
The law recognises that sometimes things occur that are beyond the power of the parties to anticipate or control.  For example:


Frustration:
A contract may be discharged if, after its formation, events occur that make its performance impossible.

Example: An artist agrees to sell a work. The purchaser pays a deposit and arranges to collect the work and pay the balance the following week. However, in the intervening period, the work is destroyed by an accidental fire in the artist’s studio.

Mistake:
A court may set aside a contract that was entered into on the basis of a genuine mistake.

Example: An artist agrees a sale with a purchaser. There is a genuine misunderstanding however, as to which work was the subject of the agreement.


Breach of Contract:
The principal way in which “things go wrong” is that there is a real or perceived breach of one or more of the terms of the contract by one of the parties. The law says that a breach of contract occurs when a party, without lawful excuse, fails or refuses to perform, or performs defectively, or incapacitates himself or herself from performing the contract.

A breach may entitle the injured party to claim damages, or specific performance of the contract. Specific performance is a court decree ordering a party to perform his or her duties under the contract.  A breach may also give the injured party the right to cancel the contract.  An action must be taken within six years of the breach, or two years if the claim includes a claim for personal injury.

Example: An artist is commissioned to produce a sculpture by a Local Authority. After a formal contract has been signed and work on the piece has commenced, the Arts Officer of the Local Authority seeks to re-negotiate the terms, due to cutbacks in the Local Authority budget. The artist is entitled to insist that the original terms are observed. Failing that, he or she may sue for specific performance, or damages for breach in lieu.

An issue, which is often overlooked until things go astray, is whether or not the other party to the contract is a “mark” for damages. If the party with whom you enter into a contract is a person with no assets, or a limited company without assets, then it may pointless to engage in legal action, because it will be impossible to recover either damages or legal costs. This fact sometimes protects impecunious artists from being sued, but it can also be the cause of significant loss to an artist who has invested time and expense in a project in anticipation of payment. This is an issue that should be considered at the beginning of any project. There may be ways of containing the risk.

A Contract for the Sale of an Artwork
A contract for the sale of an existing piece is rarely in writing.  The transaction is usually conducted verbally, with a price being agreed and paid to the artist, in return for handing over the piece to the purchaser.

There may be special circumstances that dictate the need to reflect the terms of the agreement in writing. For example:

  • The price is to be paid in instalments, and the artist will retain title to the work until payment has been made in full.
  • The artist wishes to have the right to borrow the piece for exhibition purposes.
  • In the event of damage to the work, the artist wishes to have the right to repair it (subject to payment for this work).

However, even if there are no special circumstances, there is still a case to be made for always confirming the sale in writing. In the first place, a letter or note can act as a written record of the date of the sale, the amount paid, and the name and address of the purchaser. This record can occasionally prove valuable long after the sale. Secondly, it gives the artist an opportunity to ensure that the purchaser understands that the copyright in the work does not pass with the original piece, and that the artist’s permission is needed for any reproduction of the work. Purchasers are often unaware of this fact.

Click to view a sample letter of confirmation_of_sale

 

A Contract to Commission a Work
Artworks are frequently commissioned by organisations such as local authorities and banks, for permanent public display.  The commissioner will often present the artist with a contract, drafted by its own solicitor. This raises a question for the artist. Does he or she go to the expense of engaging a solicitor to evaluate the contract, and to negotiate whatever changes might be advisable?

It is clearly preferable to have advice on the contract. Moreover, it is often easier for the artist to secure the removal of unfavourable terms – without feeling that the whole contract is being endangered – with the assistance of a solicitor. The larger the commission, and the more valuable it is to the artist, the more important it is for the artist to have legal representation.

Sometimes the artist has the opportunity to produce the draft contract. Must he or she engage a solicitor in that event?  Again, it is preferable to instruct a solicitor, ideally a solicitor with experience of arts-related contracts. However, if the artist simply cannot afford legal representation, or if the commission is not sufficiently valuable to justify legal fees, then it is certainly better that the artist drafts a document of some kind rather than rely on a verbal agreement.

You can download at sample artist-friendly agreement_to_commission a piece of sculpture here

A contract to commission a work is usually preceded by a period during which an artist is selected to produce the work.  Sometimes this is by competition, sometimes by straightforward invitation. This pre-contract period can involve a substantial amount of work on the part of the artist in producing detailed proposals; drawings; maquettes; meetings with the commissioner, making site visits, and so forth, depending on the circumstances. It is very important, from the artist’s perspective, that:

  • It should be clear at any given point in time whether or not the artist has actually been selected, or is still just one of a number of artists under consideration.
  • It should be clear whether or not preparatory pre-contract work and expenses will be remunerated by the commissioner.
  • There should be no significant delay between selection of the artist, and the production of a formal contract.  The artist cannot consider the commission to have been awarded until a contract is signed.

An Exhibition Contract
The period leading up to an exhibition may be an exciting time for an artist, but it can also be beset with practical problems. A satisfactory agreement between artist and gallery (or other exhibition host) put together at planning stage should provide a framework which will keep last minute problems to a minimum.

It would be unusual for this type of agreement to be drafted by a solicitor. The gallery will probably have a standard set of terms, which will be tailored to suit the individual circumstances. These typically will be incorporated in a letter rather than a formal contract, and the artist will be asked to confirm acceptance of the terms.

Below is a checklist of matters to be addressed, in setting out the terms of exhibiting

  • Confirmation that the Gallery agrees to mount the exhibition
  • The duration and dates of the exhibition.
  • The number of works to be exhibited, with a description in so far as possible, including dimensions, media, framing, and any other relevant details. These can be set out in a schedule to the letter or agreement.
  • The date for delivery of the works to the exhibition venue.
  • The party responsible for transit arrangements, and insurance while in transit.
  • Responsibility for hanging, and any special requirements of the artist.
  • Times and terms of access to the gallery for the artist, while the exhibition is being prepared.
  • The terms of sale of the works, or other remuneration for the artist, with date of payment by the gallery.
  • Gallery commission
  • Exhibition Payment Right – EPR (if applicable).
  • Workshop/lecture fee (if applicable).
  • Arrangements for opening reception, including publicity.
  • Arrangements relating to exhibition catalogue, including permission of the artist for reproduction of artworks in the catalogue.
  • Insurance of works by the Gallery for the duration of the exhibition.
  • Security and invigilation arrangements.
  • Procedure in case of damage to work.
  • Responsibility for delivery of sold works to purchasers; and for dismantling of unsold works; return of unsold works to the artist; responsibility for carriage and insurance in transit.
  • A procedure for handling any dispute, ideally by mediation.

When presented with a set of standard terms by a Gallery, the artist may find that not all pertinent matters are covered, or that they are not covered to the artist’s satisfaction.  Any issues arising should be settled by negotiation as early as possible and confirmed in supplementary correspondence, so that a proper paper-trail exists reflecting all matters that have been agreed.

It is essential that there is clarity about the party to bear the costs associated with matters such as framing; carriage; marketing and PR; catalogue; insurance.

A Licence to Reproduce an Artwork
This type of licence is a permission incorporated in a contract. The contents of reproduction licences vary widely, depending on the circumstances. The length can vary from two paragraphs to twenty pages. A licence may grant such a wide range of uses that the residual copyright vested in the artist is not capable of further exploitation.  At the other end of the spectrum, a licence can be tightly drawn so as to grant a very limited range of uses, for a short period of time. Neither is right, or wrong – it is entirely a matter of agreement between the parties.  What is important however from the perspective of the artist, is that the nature, extent and duration of the uses authorised by the licence be understood, and agreed.

Scroll down to view a checklist of issues to be covered in a licence to reproduce an original work of art.

Creative Commons Licences
Creative Commons Licences are occasionally used by artists. Creative Commons is a web-based corporation which promotes the use of simple forms of licence under which artists and others may make their works available free of charge, but subject to some very basic terms and conditions.

Their standard licences allow the creator of the work to specify that:

  • The work may be used without limit, provided authorship is attributed;
  • The work may be used without limit, provided that the uses are non-commercial;
  • The work may be used without limit provided it remains unaltered;
  • The work may be used without limit, provided all uses occur under a similar Creative Commons Licence.

A Creative Commons Licence is best seen as a way of securing some respect for work that an artist has already decided to make freely available on the Internet.

A CC attribution non-commercial Licence was held to be legally enforceable in a Dutch court, in March 2006.

Checklist of issues to be covered in a licence to reproduce an original work of art

A licence to reproduce an original work of art, granted by the artist, should deal with the following issues:

  • The names and addresses of the artist, and licensee.
  • The subject-matter of the licence (the artwork).
  • The nature of the licence, i.e. whether exclusive (only the licensee can exercise the rights); sole (the artist and the licensee can exercise the rights) or non-exclusive (the artists and other third parties licensed by the artist can exercise the rights)
  • The specific uses of the work that are licensed, including where appropriate the size of reproduction, the number of reproductions, the media in which the reproduction is authorised, and so forth.
  • Proofs to be authorised by the artist before printing, if appropriate.
  • Cropping or other manipulation to occur only with the consent of the artist, if appropriate.
  • Clarification that copyright ownership remains with the artist.
  • Clarification that any additional uses will require an additional permission, and fee.
  • Original material to be returned to the artist, if appropriate.
  • Licensee to observe the moral rights of the artist.
  • The purposes for which the reproductions may be used.
  • Whether or not the licensee can grant sub-licenses to others.
  • The duration of the licence.
  • The territory in which the licence can be exercised.
  • The fee/royalty payable by the licensee, and when payable.
  • A provision permitting termination for non-payment or other material breach of the agreement.
  • A procedure for dealing with disputes.

Click hereto download a sample licence_to_reproduce an artwork

Do you need help licensing your work ?

The Irish Visual Artists Rights Organisation (IVARO) can help you manage your copyright and deal with licence requests. IVARO acts as an intermediate between artists and copyright users to negotiate licenses, which allow for the reproduction of artists’ work. IVARO ensures appropriate payment, terms and conditions for artists. Copyright users can count on standardised fees and a reliable and professional licensing service. IVARO belongs to an international network of sister societies in 21 countries, and can represent you worldwide. See www.ivaro.ie for more information.