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Art Dealer Ethics . . . Artist Responsibility

by Gary John Gresl

Recently an art dealer from Milwaukee, having a national profile, had some very negative publicity concerning the sale of two paintings by Helen Frankenthaler. These had been consigned to him by a corporate owner who decided to remove them from inventory after owning them for a couple of decades.

It came to the attention of the corporate consignor, and soon the media, that while the dealer reported that he had sold these paintings for $100,000, they had actually been sold for $200,000. Where had the extra $100,000 gone? Was there a cash flow problem here, or something more sinister? Why was the original valuation for these paintings in excess of $600,000?

And, then there is the case of a prominent artist (at least regionally) who in 2001 arrived on the door step of another long time Milwaukee art dealer as she attempted to retrieve her art after a solo show. There was trouble and unpleasantries, and the police were called in. After some heated conversation, she was not allowed to remove her work. It appears that this woman had not signed a contract for this particular show, and the dealer believed she owed him money for framing and perhaps other expenses. So, now after months of wasted time and money, lawyers are still battling it out.
The reader should learn before going any further that the humble author of this article has been involved in the selling of objects, including antiques, collectibles and art, for over 35 years. During that time I have seen just about every kind of scam and slight of hand business tactic that probably exists, though I don’t rank high in terms of money strata. I am a little guy without great means, a visual artist participating with several artist organizations, and while successfully exhibiting, not expecting to make a living from my work.

I gradually have been introduced into the difficult world of art gallery operations. Having slowly learned about business needs and practices, one of the first things that impressed me about the gallery business was the limited amount of art buying patrons. Art for many potential buyers is a luxury, not the necessity that it is for the producing artist. Everyone needs food, clothing, shelter, but few feel the need to purchase art for their homes. It is also difficult to accept the lack of sophistication of people buying the art, wealthy or not. Sadly, there are plenty of mass produced prints and faux art to satisfy them...and they don’t have the experience or time devoted to develop thoughtful philosophies
It is also the case that there are plenty of people, art dealers, artists, art consultants, all in competition attempting to locate the popular artist and sell to the small percentage of art patrons. This is being done in the capitalist marketplace, in which competition, supply and demand, publicity and prestige, determine who is to be successful.

Artists have often questioned the need for galleries to charge 40 or 50 percent commissions. Some artist’s believe that because they themselves have used great time, skill and knowledge for the creation of the art object that they deserve a greater portion of any sales. They may have the limited view that the gallery operator merely takes in the object and hangs it on the wall. These artists have likely never had to commit to a lease, advertising, employees, utilities, phone, other office and business expenses required to run an open high quality gallery. Nor have they had to deal with the competition from other galleries for the relatively small group of buying collectors, the need to have a large capital reserve, and the governmental taxes, forms and officials that are part of this game. We have all seen art galleries naively start up, only to quickly close.

Art dealers believe they must exert some controls over the artists they carry, especially if the sales by these artists provide a stable income for the gallery. Because of this the dealers will often require some sort of contract between gallery and artist demanding that the artist not exhibit within a prescribed radius of the gallery site, and/or requiring the artist to pay a commission to the gallery even if the client buys a work as a result of a studio visit. There may be other requirements, all aimed at protecting the gallery and better insuring its longevity.

The artist should get something important in return. Such an arrangement includes the exposure in a quality space, the chance to find a stable consistent market in a given area, the efforts and promotion of a trusted professional, advertising that may come from the gallery’s efforts, and some prestige by the association. It is expected that the dealer will be working for the artist. These arrangements are supposed to be partnerships doing good for artist and gallery operator.

OK...That’s the theory...

In both cases mentioned at the start of this article, one gallery dealing with a consigning art owner, and one with a consigning artist, some degree of trust was broken. Need it be more evident that the artist/consignor must be vigilant and get the terms of consignment and sale in writing? Need it be more evident that the gallery operator bears responsibility for making such terms absolutely clear, informing the artist about the business reasons for terms involved.

Artists are often at the mercy of gallery owners. Artists need to get their work exposed, out there for potential recognition and sale. The gallery operators can stack the work in a bin, put it in the back room, and ignore it for months or years. On the other hand, the gallery owner might offer a solo show or otherwise exhibit and promote the work prominently and consistently.

One thing that is absolutely necessary in this give and take is knowledge of just what rights and duties both parties have regarding the art work. Is there an agreement, a contract in writing, regarding terms of display? What about extra charges or discounts because of sales to decorators or other dealers? What are terms if framing is necessary? Is there a requirement that work must remain in the hands of the dealer for a prescribed period, or can the artist remove work if certain notice is given? Is the work covered by insurance if there is damage to it or its frame or display elements? How soon after a sale will an artist be paid?

One gripe that is often repeated by artists concerns the long period of time between the sale of their work and the payment from the gallery selling it. Often galleries and other types of consignment shops only pay their consignors once a month for the previous month’s sales. When a month ends the dealer must get the paperwork to their bookkeepers/accountants, and hopefully have a check issued to the artist, minus expenses and commission charges in a timely manner. Delays in this process are not uncommon, and often exist for good reasons.

For example, sometimes buyers of art are not exactly timely in their payments either. Galleries will sometimes be generous, if only for business reasons, in extending extra payment time to clients...and then the galleries will not pay the artist until the last payment is received. This is a sort of layaway plan. It is also the case that payments made by check must clear before artists are paid, and sometimes this sort of delay can cause a payment to be held back for an extra month. Certainly there may be other legitimate reasons why payments are slow in reaching the artist.

However, it is entirely possible that a dealer might not pay an artist in a timely manner because of “cash flow” difficulties. Here are cases when the gallery operator’s expenses are larger than the available funds. These are the cases when galleries might refrain from paying all their artists because they need to use the artist portion of the sale to meet their expenses at any particular moment. This happens when the gallery owner does not have the capital reserve, or a line of credit from a bank, to dip into during lean times. Such periods might be unpredictable and entirely normal, but is it right to use the artists as the source of funding during cash flow problems. No...

On that front two notable auction houses in Milwaukee have relatively recently gone out of business because of cash flow difficulties. They were dipping into consignor portions in order to meet the monthly expenses, and the court system eventually judged their methods to be illegal. Of course, despite legal action, the consignors whose monies were used to help keep the auctions afloat from one month to another did not get the money due them. There just wasn’t enough to go around.
So, fellow artists...get it in writing! Learn what are your duties and responsibilities! Read the fine print! Before entering into unfamiliar agreements, engage the services of a lawyer, or at least someone experienced in consignment matters. Unfortunately assumptions and ignorance don’t help when legal options must be exercised.

There are ethical responsibilities which work both ways. The gallery owners have have yours. If a gallery operator provides you with a legitimate service and assistance in the sale of your work, you owe that person allegiance. If you have a contract with any dealer expecting your honesty, follow the rules. It is sometimes too easy to make a sale, keep it secret and never pay the dealer what he/she has coming. This is no different than a dealer keeping more money from an artist than what is due.

When art making becomes a business, like all other businesses looking for money and profits, you must treat it like one. That requires vigilance and communication. It also requires knowledge and understanding of the real world...not just the idealized world of art motivation and theory.

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