Reinier advises national and international companies
reinier.russell@russell.nl +31 20 301 55 55Paul is a highly experienced, creative and tenacious litigator
paul.russell@russell.nl +31 20 301 55 55If you take a work of art on consignment and it is sold, the owner is entitled to the proceeds. It is important that you also have the arrangements you made on paper in the form of a consignment agreement. This agreement contains the rights and duties of both parties.
For a seller who is not so familiar with the art trade, it is a good solution: consignment. He gives a painting to an art dealership who then tries to sell it for him. In this way, he benefits from the network and the public visibility that you have and he does not. This is an attractive option, especially for sellers who want to sell a work of art for which there is mostly a demand on the Dutch market. And you get a percentage of the return, without any risk of loss. A win-win situation, in other words. What can go wrong?
Quite a lot, as can be seen from a recent case before the Amsterdam Court of Appeal. In 2010, a collector had given several paintings, including two by Jan Sluijters and Dirk Smorenberg, on consignation to an art dealership. When she wanted the paintings back in 2018, it turned out that the Sluijters and the Smorenberg had already been sold in 2012 and 2014. However, nothing of the proceeds of € 35,000 had been remitted.
In order to get her money, the seller attached the art dealership and instituted proceedings. The art dealership tried in different ways to get out of payment.
When it was attached, the art dealership, a general partnership (v.o.f.), no longer existed, due to the death of one of the two partners. The claim was therefore null and void.
The remaining partner also stated that he had never interfered in the course of business and that the art dealership was a one-man business. Business had been made solely by the art dealership and not by the general partnership.
He also stated that the partners were only entitled to an amount of € 5,000. Therefore, the company could not be held liable for the commitment of € 30,000 which the deceased partner made when taking the Sluijters painting on consignment.
The court of appeal put an end to all these defences. The estate of the v.o.f. had not yet been settled, so the v.o.f. could still be addressed.
The existence of the art dealership as sole proprietorship was not plausible. All correspondence from the art dealership referred to the v.o.f.
With regard to the partners’ power of disposal, the court of appeal found that if it was accepted that someone could sell a painting for € 30,000, it also had to be accepted that he was authorised to enter into an agreement, which obliged him to pay this amount.
In short: The v.o.f. had to pay the sales proceeds of the paintings on consignment.
But how much did the art dealer have to pay? The seller did not succeed in clarifying which arrangements had been made about the compensation the art dealer should receive after the sale of the paintings. Therefore, the court looked at the percentage the art dealer had received from the proceeds of other paintings of the seller. And thus the art dealer was therefore allowed to keep 20%. The rest of the proceeds (€ 28,000) had to be paid as an advance. The final amount of the seller’s claim can be determined in the proceedings on the merits.
Three legal proceedings (preliminary relief proceedings, expedited appeal, and proceedings on the merits) means a lot of hassle. This could have been avoided if the arrangements had been put on paper when the paintings were taken on consignation.
Important elements of a consignment agreement are:
This will enable you, if necessary, to demonstrate that a consignor did not comply with the arrangements made.
Would you like to consign a work of art? We will be happy to draw up a consignment agreement which can help you avoid lengthy discussions. Or do you have any other questions about art and law? Please contact us:
Why is it so important to conclude a sound consignment agreement? In what cases can such an agreement be helpful?
A collector will sometimes sell artworks in order to be able to buy new objects. If this happens a lot, he can be regarded as a an art dealer rather than a consumer. When is that the case? And what are the consequences?
Expedited liquidation is a quick way to terminate a legal entity. However, the scheme was also abused, disadvantaging creditors. A new law should prevent this. What requirements does an expedited liquidation have to meet from now on? And what options do creditors have to collect their claims?
In his interview on “Hidden Gems – Treasured artwork adds to allure of Netherlands”, Reinier Russell talks about how artworks still reflect the spirit of the Golden Age and where they can be found.
Entrepreneurs may have various reasons for ending their businesses. Expected profits may be disappointing, retirement may be approaching or a partnership (joint venture) may be ending. What should entrepreneurs bear in mind when terminating a business?
A new EU regulation requires anyone wishing to import cultural goods into the EU to have an import license or submit an importer’s declaration. When is which type of document required? How does it affect art dealers, galleries, auction houses and collectors, both inside and outside the EU?
