Contract Fever: The Legal Dance of Gallerists, Buyers, and Artists

A work once exhibited as a Pollock (image via artlistings)

“Above $1 million, you kind of expect it now. These are business people who are used to contracts accompanying every sale they make. It is the same to them if they are buying or selling companies or artwork.” This is how Ron Warren, director of the Mary Boone Gallery, describes the increasingly byzantine contracts at play in today’s art market in an illuminating story by the New York Observer‘s Daniel Grant last week. The piece landed in the midst of the Miami Basel bacchanal, a time when the transactional nature of the art world surfaces like a nuclear submarine.

In addition to providing a boon for lawyers like Peter Stern and Susan Duke Biederman, two of the article’s sources, these ironclad legal agreements are providing an unprecedented level of surety for the buyers. “Paragraphs cover a range of warranties, provenance, condition reports, indemnification, escrow accounts,” Grant writes. This obsessive focus on limiting risk and assigning liability is, despite the context, a good thing. Few are deluded about the intentions of the most prolific buyers of art; that these acquisitions are mere investments in instruments of capital, prestige, and influence is already abundantly clear. But contracts are (at least) bilateral things, and can be important instruments of leverage for an artist. It has been well documented:

Artists may add their own conditions for selling artwork, such as James Turrell and Sol LeWitt, who both have demanded that those who own their work apply to them (in LeWitt’s case, his estate) for “transfer” documents, permitting the artists to approve or disapprove the sale to new owners. Buyers of the work of painter Richard Haas stipulate on the invoice that they will pay a 5 percent royalty (on the profit or just the sale price) to him if and when the artwork is resold. Both the South African artist Marlene Dumas and the Scottish-born artist Peter Doig want buyers of their paintings to agree to donate these pieces to museums, rather than putting them up for sale. When collectors have gone against their wishes, lawsuits have occurred. In 2010, Ms. Dumas directed galleries representing her work to refuse to sell any more of her paintings to a collector who sold one through a New York art gallery — he was on what was referred to as a “blacklist” — and that collector brought a lawsuit against that gallery in effect for snitching. (The suit was dismissed in a Manhattan federal court last year.)

Indeed, gallerists operate in the deep muck of what amounts to a very sequestered private equity market — access, quid pro quo, and double dealing are their bailiwick — and contracts help introduce a measure of transparency to the whole endeavor. (At one point in the article, the New York gallery owner Renato Danese whines: “there is not so much trust in a dealer’s word and reputation anymore. People want it in writing, or there’s no deal.”)

But just as an extremely expensive contract attorney helped save an anonymous client from an $11 million mistake on a Knoedler Pollock (the gallery reportedly balked), so too can contracts help artists control the fate of their work. Part of Gulf Labor‘s boycott practices, I have learned, is encouraging participating artists to use contracts to prevent their work from being displayed at the Guggenheim Abu Dhabi. So while contracts may not be healthy in and of themselves, if they give some some muscle to the artist’s vision and limit the obscure influence of the gallerist, then let us, for once, welcome the lawyers.