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Art Market

Legal pitfalls that all emerging artists should watch out for

30 October 2017

Emerging artists have often found themselves trapped in contracts that hinder the progress of their careers. But, as a prominent art lawyer warns, this is but one of the legal pitfalls they need to navigate at a stage when administrative matters are unlikely to be their primary focus

As prices for contemporary art continue to climb, life has rarely been more complicated for the emerging artist. For the purpose of this article the emerging artist (the ‘artist’) is one with some critical acclaim, newly on the ascent and with a surge in demand for his work. The art market is notoriously difficult to navigate as it sits at the crossroads of old-world charm and new-world demands. It is slow to adopt the highly regulated practices of the financial markets, for obvious reasons. It is quick to take advantage of perfectly legal opportunities afforded to it by the unequal bargaining power it holds over the relative ingénue.

While immersed in the creative process the artist often discovers (too late) that he has unwittingly transferred ownership and/or copyright over a body of work which is then not promoted as he would desire. Inexperience makes him susceptible but so too does his mindset, dedicated to artistic freedom and eschewing rules. In many ways it is the antithesis of the legal mind. The promise of finance for the production of artworks from a seemingly gracious patriarch (a concept as ancient as Pope Julius II and Michelangelo) can be blinding. The cash-strapped artist is often so overcome by the imperative to transform burgeoning ideas into two- or three-dimensional form that administrative matters take second place. As such, he may miss career spikes lurking in contracts, carefully crafted by lawyers, and signs with enthusiasm but little attention to detail or future consequences.

Over the past 22 years, as a practising art lawyer, I have received numerous calls from beleaguered artists whose careers have been on the verge of extinction before they have had a chance to take off fully. The problems they have faced are wide-ranging. Many issues stem from draconian, one-sided contracts. These may be recently signed or concluded shortly after art school when an astute backer (be it gallery or otherwise) offers the lure of multiple shows, advances, guidance, and a whole host of other temptations.

Reality dawns only after a few years when the artist is shackled into an unsatisfactory business relationship in which the lines of ownership of works have become blurred. The artist’s control of his key body of work may have been ceded for cash advances, too large to repay within the timeframe the contract allows. With no sales in sight and scant attention to accounting (or a complete lack of accounting records), the artist falls easily into debt. The now frustrated backer, eager to recoup his outlay, assumes he owns the artworks. Losing patience, he may try to dispose of an entire body of work at one premature auction sale against the wishes of the artist.

The cry of ‘it’s not what they teach you in art school!’ resonates all too often. Legal wrangles almost always stymie creativity, so the stumbling blocks associated with art production and ownership, such as those above and those which follow – all based on true stories – are to be avoided where possible.
The artist needs to recognise potential pitfalls, starting with the studio space he occupies. Whether it is loaned or rented, it comes with a host of obligations of which the artist tenant can easily fall foul.

Just after finalising the shipping arrangements for an imminent museum opening, an artist returned to the studio lent to him by a wealthy collector friend he thought owned the property. To his bemusement he found that he couldn’t enter the building: the locks had been changed. His friend had vanished and the local estate agent told him that his artworks were being sold by the landlord to pay the outstanding rent. The artist had signed agreements for the upcoming show with the museum and the shipping company. It was a two-artist show and the museum, on the strength of the artist’s promises, had also entered into an agreement with the other artist. Without access to his artworks there was no show. It had been months in the planning and was a very costly production.

Besides the potential blight on his reputation, the artist faced legal claims for damages for breach of contract from both the shipper and the museum. To make matters worse, those contracts contained a clause guaranteeing that the artist had free access to his works. Another associated clause (the ‘indemnity clause’) made him liable to the shippers and the museum for an automatic full refund of all costs associated with any breach of the contracts. He could not fulfil the contracts without the artworks. What was he to do?

Fortunately for the artist, the landlord, who he did not know, had misunderstood his own legal position regarding the artworks, despite his vast experience in the property world. The artworks belonged to the artist and not to the tenant, who owed the landlord considerable unpaid rent. Even if the landlord had sold the artworks, in the UK, he would not have been able to transfer full legal ownership to the purchaser. The good faith purchaser, contrary to popular misconception, would not have acquired good title. The landlord would have opened himself up to legal claims from the artist and the purchaser.

Following advice on the transfer of ownership rights, the duties of custodians, and a carefully worded letter, the artist was able to convince the landlord to release the artworks in time for the show. By holding the artworks hostage, the landlord, as the possessor but not owner, had a legal duty not to interfere with the artist’s rights of ownership. On this occasion the artist avoided litigation and more importantly saved and even enhanced his reputation with a very successful show.

There was a less happy ending when a fire and flood at a studio space left an artist without access to 10 years’ worth of work. He could not afford his own insurance cover and had relied on the landlord’s insurance, which he had never seen. It did not cover his work and in any event the medium in which he worked was so fragile that no insurance policy would cover it. It is unlikely that an artist would consider the ‘inherent vice’ of materials (a well-known exclusion in art insurance contracts) as he pushes the boundaries of expression, using materials which decay: blood, excrement, or dead butterflies, for example. The artist was refused access to the premises for on-site restoration or even to salvage his records. Loss adjusters had already deemed the site a total loss, and health and safety inspectors were keen for it to be demolished – which it was, as soon as possible. The artist lost his space, his whole body of work and records. He received no financial compensation.

Other more extreme issues include the artist’s possible criminal conviction if, as has happened, a piece of public art causes death. When an outside art installation which had been unsatisfactorily tethered blew away in a gust of wind and killed two people, the artist was fined heavily for breach of health and safety regulations. He narrowly escaped a criminal conviction for involuntary manslaughter.

A common catastrophe to befall the artist is the loss of reproduction rights. Copyright resides with the creator unless it is assigned in writing. When advising young artists faced with ‘no assignment: no deal’ situations, the best guidance is not to sign or to propose a licence of copyright, to try to avoid giving away valuable reproduction rights. If rights have been unwittingly given away, the artist can use his ultimate weapon by denying authorship. It is the artist’s moral right to be recognised as the creator of a work, and his prerogative to deny it! Compromise is by far the better option.

While buyers of art are learning to beware, so too must the artist, or else he faces loss of control over an important body of work at the time he needs it most.

From the November 2017 issue of Apollo. Preview and subscribe here.