By Louise Chevrier.
“L’Enseigne de Gersaint” (1720-21) by Jean-Antoine Watteau was intended to be a Paris art dealer’s shop sign and it gives an idealistic vision of a French art gallery in the 17th century.
Yet, this vision is still the same: France and, precisely, Paris are still among the favored places for art business. Starting from the famous Paris Salons that trace their history from the 17th century, the galleries of the city’s Left Bank, and Louise Weiss street, the majority of contemporary art galleries are now situated in the Parisian districts of the Marais and Belleville. Despite this romantic perception of French galleries, the realities of the relationship between artists, galleries, and dealers may not be so idyllic, as is proved by recent cases before the French courts, thereby shaping up the law of consignment contracts, most often used to formalize these relationships.
Consignment À La Française
Sending a work of art to a French gallery with the purpose of selling it means concluding a contract of a composite nature. Firstly, such a contract has to contain the terms of a deposit agreement (or contrat de dépôt). Secondly, the contract must also provide the dealer with the power of attorney to sell (contrat de mandat de vente).
The French law provides neither an official name, nor a standard-form for this compound agreement, commonly called contrat de dépôt-vente (hereinafter “the Contract”). As in many cases in French civil law, the parties have great freedom in determining its terms and conditions.
Nonetheless, it is possible to define the Contract in general terms. The owner of the work of art or his representative (consignor or déposant) transfers the possession of an artwork to a gallery (consignee or dépositaire). The latter is obliged to take good care of the received object and provide it with an insurance. Dépositaire also has to return the unsold objects after the end of the deposit period (as it is defined by the Contract) or at the demand of the consignor.
The consignor remains the work’s owner until an eventual sale by the consignee, in which case the two parties share the profit. The proportion of this share is to be stipulated in the Contract.
The French Civil Code regulates only general issues concerning the Contract. Although it does not have the same weight as in Common Law countries, jurisprudence completes statutory law and provides rules and exceptions applicable to the contrat de dépôt-vente.
Effective Date of the Contract
The best relations between an artist and a gallery may worsen anytime. And in case of a court litigation based on breach of contract it may be held that there was no contract at all. The Court of Appeals in Lyon provides the rule to be applied to determine the date of the contract, i.e. the day where the parties agree on all essential terms of the contract.
The case: Galerie Houg and the glass artist Vincent Breed had an unfailing experience of collaboration. In 2013, the gallery announced on its website and Facebook page the opening of its new office followed by a solo exhibition of the artist; this news was also confirmed by the National Center of Plastic Arts. A few periodicals advertised the artist’s “solo show” on the inauguration occasion. The parties had exchanged emails concerning the placement of the works of art in the new space, the design of the invitations, and the text of the presentation. Some time later “a violent quarrel” happened between the owner of the gallery and the artist. After the gallery refused to expose the works of the latter, the artist claimed damages for breach of contract.
The Court of Appeals ruled that there was no proof of consent about the essential terms of the contract, namely the nature and number of the works of art consigned, the conditions of the exhibition, the transportation responsibility, the terms of sale, and the remuneration of the gallery.
Additionally, considering that written contracts were the usual practice of the parties, the court held that the present relations between the parties were still at the stage of negotiations and no contract had been entered into.
Conclusion: A consignment contract, being a mix of a few agreements and involving the transfer of possession of an artwork, is a complex deal. To be sure that such agreement is legally binding and enforceable by law, the parties have to consent to all the essential terms of the consignment. A written form of such a contract is considered the most appropriate.
Effective Date of the Sale Contract Resulting from the Consignment Deal
Paris Court of Appeals, decision number 20/16314, 23rd of September 2016.
The unilateral written commitment of an art gallery’s owner to buy a consigned artwork – in case it is not sold until a certain date in his gallery – is considered to be a sale contract duly concluded.
The case: A consignment contract was concluded between the artwork owner and the Parisian gallery G A E M A Galerie d’Arts. The consigned piece of furniture with its price estimation documents were delivered to the consignee by Sotheby’s. Simultaneously, the gallery owner wrote a unilateral commitment in which he committed to buy the consigned artwork in case it is not sold by July 15, 2016 at the price indicated by Sotheby’s estimation and the consignment contract (EUR 120,000). Having not sold the artwork by the indicated date, the gallery owner informed the consignor on the refusal from his acquisition offer and claimed the sale agreement void. Dealer cited article 1596 of the French Civil Code that prohibits a person empowered to sell goods to buy them. In response, the consignor filed a lawsuit against the gallery’s owner and sought payment of EUR 120,000 under the sale contract.
The Court of Appeals, confirming the decision of the lower court, ruled that the gallery owner’s unilateral purchase commitment and the consignor’s actual deposit of the artwork by Sotheby’s intermediation represented a concluded sale contract. Thus, the sale was concluded on July 16, 2016 and the gallery’s owner had to pay EUR 120,000.
This decision is notable because for providing a detail to the general rule of the above-mentioned article 1596: the Court of Appeals held that the rule of partial invalidity (nullité relative) applied here. It means that only a person in the interest of whom the prohibition exists (in this case, the artwork owner) can claim the invalidity of the purchase agreement.
Conclusion:French courts took the real intentions and interests of the parties into account and clarify the application of general Civil Code rules. Therefore, the art dealer who promises to purchase the consigned object in case it is not sold before a certain date actually concludes a sale contract.
Restitution of the Consigned Artwork
In this question, the courts usually take the unanimous decision to respect the consignor’s right for restitution.
- The gallery is obliged to return a consigned artwork to its owner.
Paris Court of Appeals, pole 2, chamber 2, decision number 15/12018, 20th of April, 2017.
The case: This rather complex case involves two art objects and two independent contracts: a purchase and a consignment. After the sale of a statue of Saint Matthew from a private seller to the Galerie Ratton-Ladrière for EUR 10,000, the gallery had to return the statue to the French State without compensation since it was found out that the object had been stolen from a cathedral. The same gallery simultaneously came in possession of vase presumably from the Minoan culture, consigned by the same person who sold them the statue. A letter from the artwork owner’s invoked a consignment (dépôt-vente) and asked for a report on the gallery’s actions to sell the vase, and alternatively asked them to return the vase. The gallery contested the nature of the entrustment and stated that the vase was given to the gallery as a compensation for the purchase of the statue. The seller sought restitution of the vase.
The gallery stated that the vase could not be returned since it had been sold to one of its owners – acting as a private person, not as the gallery’s representative – by the consignor. The court held, that due to absence of any written purchase document between private persons concerning the object, the value of which is superior to EUR 1,500 (article 1359 of the Civil Code and article 1 of the Decree 80-533 dated 15.07.1980 with changes), the gallery can not claim the existence of such purchase. This part of the decision, however, is currently under appeal before the Cour de Cassation.
The Court of Appeals examined letters exchanged by the parties and ruled that the relations between the parties had the nature of consignment (dépôt-vente). As a consequence, the gallery had to return the vase, and its owner had to reimburse EUR 10,000 received as a payment for the statute to the gallery.
Conclusion: Separate cases must be distinguished in any complex contractual relations. The gallery is a consignee to the consignment agreement and a buyer to the purchase agreement. As a consignee, it is obliged to return a consigned artwork at the end of the consignment contract or upon consignor’s demand. As a buyer, it has the right to claim damages in accordance with the terms and conditions of the sale and purchase agreement and current legislation. The gallery, empowering itself to retain a consigned object as a compensation for damages under the purchase contract with the same client, goes beyond its rights.
- If restitution is not possible, the consignee has to reimburse the value of the consigned object.
Aix-en Provence Court of Appeals, decision number 16/02416, 22nd of June 2017.
The case: Some pieces of antique furniture were consigned to the Galerie Altmann in Nice by their owners in 2002. The Contract did not indicate either a sale deadline date or the deadline for restitution. In 2011 the gallery received a letter from the owners’ insurance company with a demand for restitution of the consigned objects. The consignors sent six more letters to the gallery without any response of the latter up until 2016. The consignors had intention to verify the presence and the state of the consigned objects, however the gallery could not set a date for such a visit.
The Court of Appeals ruled that the gallery had to reimburse the value of the consigned objects as defined at the moment of the Contract concluding. It motivated its decision by the facts that: (1) the consigned objects have not been returned by the consignee since the demand of restitution dated 2011; and (2) the documents provided by the gallery do not permit to evaluate the actual availability as well as the state of the consigned objects.
Conclusion: A consignor is protected by law in case a consignee refuses or ignores the demands of restitution of the consigned objects. Both decisions above comply with the Civil Code requirement of the restitution in kind within the consignment deal (article 1915). However, if the consigned object can not be returned, the consignee is obliged to reimburse its value.
Essential Terms for the Validity of the Sale
As declared by the Cour de Cassation (French highest civil court) on January 14, 2016, the consignment contract (dépôt-vente) must indicate the price and the conditions of sale so as to empower a gallery to sell it.
The case: The parties had signed a deposit receipt with the indication that a painting has been taken by Galeries Bartoux as an object of dépôt-vente and that the “details and conditions of this deposit will be determined later.” The gallery sold the painting and provided the owner with a check for EUR 23,000. The latter opposed the amount as well as the nature of the deal. The Court of Appeals in Paris (1) found that the contract was for a dépôt-vente, although there was no explicit grant of power of attorney to sell, and no provision concerning the sale, and (2) held that the owner of the painting only had to give prior consent to the price. Both findings were subsequently rejected by the Cour de Cassation.
The Court ruled that the power of attorney (mandat), given that it implies the transfer of property, has to be explicit. Due to the absence of any precision of the sale details, notably on the price, the contract can only be understood as an agreement allowing the gallery to look for the potential buyer, but not to conclude the sale.
Conclusion: The nature of the contract is defined by its content, not by its name. Consignment consists of two parts that have to be clearly indicated in the Contract: deposit and power of attorney to sell. It means including clearly expressed terms and conditions of sale, as well as the price of the artwork.
Changing the Price Term
Paris Court of Appeals, decision number 15/16718, 11th of October, 2016.
The Paris Court of Appeals ruled on the appropriate form in which the parties agree on changes to the consigned artwork price.
The case: A painting was consigned by its owners to an art dealer to be sold for EUR 220,000. The consignment contract indicated that the painting could be sold for an inferior price, subject to a prior consent of the consignor. The consignor died leaving his wife as the sole proprietor and consignor of the painting. Almost six years later the painting was sold for EUR 145,000. The wife claimed the painting sale as illicit, demanded the painting restitution and claimed damages. The art dealer stated that due to difficulties in finding a potential buyer for such a high price, he had to drop it. The dealer also presented the following documents: (1) an email from the consignor’s son, stating that his mother had accepted the new inferior price; (2) the art dealer’s letter to the consignor, informing her on the inferior selling price which was not objected by the latter; and (3) the consignor’s written letter informing the art dealer on her willingness to receive a payment of EUR 145,000. The painting was acquired by a private person in Brussels, whose lawyer presented all required purchasing documents.
The Court of Appeals, taking into account the above-mentioned circumstances, ruled that this was sufficient proof of the owner’s consent on the inferior selling price.
Conclusion: It is important to keep a constant position regarding the consignment and the price of the consigned artwork. Being a transaction that involves third parties (buyers), it can be difficult, if not impossible, to return already sold objects. Additionally, the consignor’s written letter informing a consignee on his/her readiness to receive a payment inferior to that stipulated by a consignment agreement and the consignor’s failure to object to the consignee’s informing on an inferior selling price can be considered by the court as the consignor’s acceptance of the pricing changes.
Artists, Don’t Forget About Copyright
The French law distinguishes two parts in a copyright (droit d’auteur): property or economic rights (droits patrimoniaux) and moral rights (droits moraux).
As an artist-consignor, it is necessary to assign the property rightsin the work, notably the right of public performance and the right of reproduction to the gallery for the time of the consignment, so that they can display the work and use it in marketing material.
Article L. 131-2 of the Intellectual Property Code (modified by Law no. 2016-925 dated 7th of July 2016, art. 7) requires a written form of such assignment: “The contracts that stipulate the transfer of the author’s rights must be concluded in written form.” This does not prevent the artist from retaining the property rights in the work after the sale: an explicit contractual term stating that the seller cannot transfer the copyright to the buyer may be advisable.
Moreover, the concrete situations of the gallery’s involvement in the promotion process are subject to contract regulation. Will it be just a space on the wall that the consignee offers to the artist? Or will the gallery install the artwork on the display window, print booklets, organize an exhibition or even “soirée arty” with the artwork exposed? These details have to be precisely mentioned in the contract.
Unlike the proprietary rights, the moral rights (the respect of the artist’s name, of his status as author and of his work) are perpetual, inalienable, i.e. cannot be repealed by contract, and imprescriptible, i.e. cannot be taken away by the passing of time (art. L. 121-1 of the Intellectual Property Code). They cannot be waived by any contract clause and are transferable only upon the death of the artist to his heirs.
Sources and Further Reading:
- French Civil Code. Available here.
- French Intellectual Property Code. Available here.
- Decree 80-533 dated 15.07.1980 with changes. Available here.
- Lyon Court of Appeals, civil chamber 01 A, decision number 15/08412, 21st of December 2017;
- Paris Court of Appeals, decision number 20/16314, 23rd of September 2016;
- Paris Court of Appeals, pole 2, chamber 2, decision number 15/12018, 20th of April 2017;
- Aix-en Provence Court of Appeals, decision number 16/02416, 22nd of June 2017;
- Cour de Cassation, decision number 12-22971, 14th of January 2016;
- Paris Court of Appeals, decision number 15/16718, 11th of October, 2016.
- Droit des Contrats Spéciaux. Philippe Malaurie, Laurent Aynès. LGDJ, 2018.
- Dépôt. Geneviève Pignarre. Dalloz, Répertoire de Droit Civil, 2017.
- Code of Ethics for Art Galleries. Available herein French and here in English.
About the author: Louise Chevrier has obtained her first master’s degree in Commercial Law from the Kyiv National University of Trade and Economics. After four years of legal work at UniCredit Bank in Kyiv, Ukraine, she continued her studies in Art History and International Law at Oberlin College, Ohio. She is a current student of master’s degree in Private Law at Paris 1 Panthéon-Sorbonne University.
Disclaimer: This article is intended for general information only and is not meant to provide legal advice. Readers should not construe or rely on any comment or statement in this article as legal advice. Opinions expressed are those of the author.