Art trade agreements and the protection of artists in an international comparison

The global art trade is based on complex legal and distribution models. Galleries in particular are regularly faced with the question of how they can offer works of art on behalf of artists or collectors without first having to acquire them themselves. In Germany, France and the USA, different legal constructions have been established for this purpose, which we will briefly describe.

Table of contents

D-A-CH: The codified "commission business"

In Germany this is Commission business is relatively clearly regulated in the German Commercial Code (§§ 383 ff. HGB). The commission agent (e.g. the gallery) sells goods in his own name, but for the account of the principal (the artist). Ownership remains with the consignor until the sale, the commission agent receives an agreed commission. This model is standard in the art trade, especially for galleries. The clear legal basis creates legal certainty, but also leaves room for contractual arrangements, such as pricing, insurance or duration of the commission.

The structure in Austria is virtually identical to that in Germany. In Switzerland, however, commission business is not regulated in commercial law but in Art. 425 of the Swiss Code of Obligations (OR).

(Sample) Gallery and exhibition contract

France: "Dépôt-vente" as a lived practice

In France, there is no special commission element in commercial law. Instead, galleries make use of two constructions under civil law:

the Mandate (mandat de vente)in which the gallery expressly acts as the owner's representative, and
the dépôt-ventewhere a work of art remains with the gallery "on consignment" until it is sold.

In functional terms, the "dépôt-vente" largely corresponds to the German commission business, but is not governed by the German Commercial Code, but by private law agreements.

This practice is established in the French art market, but is less systematically underpinned by law than in Germany. This means that the specific content of the contract is particularly important in France.

USA: Consignment agreements with special protection

In the USA, the consignment agreement is the common standard. It is regulated by federal law in the Uniform Commercial Code (UCC Article 9) and supplemented by specific art market laws in many states (e.g. New York, California).

The main features are
Ownership remains with the artist or consignor, even in the event of the gallery's insolvency.
Sales proceeds are considered trust funds in favor of the artist.
Galleries are subject to strict transparency and accounting obligations.

This means that artists in the USA are legally better protected against creditor access or abuse than in Germany or France.

Netherlands

Legal framework: There are Burgerlijk Wetboek (BW) none own "commission business" regulation as in Germany. The most common form in the art trade is the consignatieovereenkomst (commission or consignment contract).
PracticeThe practice is legally comparable to the German model: the consignor remains the owner, the gallery sells in its own name and charges a commission.
Special featureIn the Netherlands, pledge and insolvency law is highly relevant - a work can theoretically fall into the gallery's insolvency estate if the contract is poorly drafted. For this reason, many galleries and artists attach great importance to written contracts that Retention of title and insurance.
Art marketAmsterdam has an international role, especially in the auction sector (Christie's, Sotheby's), where the commission model is standard.

Belgium

Legal frameworkBelgium follows the traditional French legal model (Code civil). There is also no codified commission business as in Germany.
Practice: Here, too, we usually use dépôt-vente worked. Galleries take works into safekeeping and sell them for the owner's account.
Special featureBelgium (similar to France) has relied heavily on practice contracts in art law. Insurance issues are central - the gallery is regularly liable for loss or damage.
Art marketBrussels is an important location for contemporary art and design. Here is the Contractual protection through detailed delivery agreements usual.

Luxembourg

Legal framework: Luxembourg also follows the French civil law family. There is no special "commission business" here either. The dépôt-vente is applied in practice.
Practice: In Luxembourg's small art market (galleries, fairs), contracts are often very individual. Galleries work almost exclusively on behalf of artists and collectors.
Special feature: Due to its financial market tradition, Luxembourg has a pronounced sensitivity to fiduciary and ownership issues. For this reason, the contracts often contain clear clauses on insolvency protection and the separation of sales proceeds.

Comparison

Obligations of the galleries

	Contract type	Duties
🇺🇸	Consignment Agreement	Fiduciary duties, separate accounting, insurance
🇩🇪🇦🇹🇨🇭	Commission business	Sale in own name, for third-party account; duty of care
🇫🇷🇧🇪 🇱🇺	Dépôt-vente / Mandate	Duty of proper storage and accounting
🇳🇱	Consignatieovereenkomst	Mandatory billing, insurance usually regulated by contract

Ownership and insolvency protection (insolvency of the gallery)

	Ownership	Insolvency protection
🇺🇸	Remains that of the artist	Legally guaranteed, proceeds are considered trust funds
🇩🇪🇦🇹🇨🇭	Remains that of the artist	Exists due to ownership, but less explicitly against creditor access than in the USA
🇫🇷🇧🇪 🇱🇺	Remains with the consignor, but less clearly regulated	No explicit protection; possibly a question of contract interpretation
🇳🇱	Remains that of the artist	Contractually often very strictly regulated (fiduciary clauses are common)

Summary

From the perspective of artists, legal relationships are most clearly regulated in the USA, especially in states with an art trade law (New York, California). This is due in particular to the clear position of galleries as trustees, which provides solid protection in the event of insolvency. The protection for artists is very high here by default.

In the D-A-CH countries, the position of artists can be considered good. Although a fiduciary position is not explicitly provided for, insolvency law generally protects the owner (the artist) well in the event of insolvency; it should be noted that proof of ownership can be provided.

In countries that follow the (French) dépôt-vente model, protection depends very much on the quality of the underlying contract. Overall, the level of protection is therefore generally weaker. It seems advisable to insist on a fiduciary clause.

Tips and tricks for practical use

Clearly state who is the owner of a work at the time of consignment (list of works, illustrations).

A fiduciary position can be achieved in Germany, for example, if the contract is handled by a lawyer who is permitted to hold fiduciary accounts.