Art Law_Final Assessment

AN EXAMINATION OF THE DIFFERENT LEGAL
RESPONSIBILITIES FACED BY DEALERS IN THE OLD MASTERS
AND CONTEMPORARY SECTORS OF THE ART MARKET
SUBMITTED TO FULFIL REQUIREMENTS FOR
SOTHEBY’S INSTITUTE OF ART – LONDON
MAAB PROGRAMME 2005/06
ART LAW
STUDENT 0068
ALBRECHT DÜRER, ALLEGORY OF JUSTICE, 1498,
THE HERMITAGE, ST. PETERSBURG, RUSSIA
PETER MAX, LADY JUSTICE, 1995, PRIVATE COLLECTION

AN EXAMINATION OF THE DIFFERENT LEGAL RESPONSIBILITIES FACED BY DEALERS
IN THE OLD MASTERS AND CONTEMPORARY SECTORS OF THE ART MARKET
It is often said that the two most important people to have as friends are lawyers and
accountants. That is no more true than in the world of fine art and antiquities.
Presenting its own unique set of challenges for the aspiring business owner, opening
and operating a gallery or art dealership requires the oversight and oft-sought advice
of an attorney who specializes in the field. This essay will look at the various
responsibilities faced by those entering into the field, contrasting the vagaries as
experienced by those dealing in Old Masters and antiquities with those who deal
exclusively in contemporary art. To further clarify this distinction, the dealers in
contemporary art will be said to deal only in those artists who are either now living
or recently deceased. Their counterparts in the Old Masters/Antiquities sector will
be those dealing in long-dead artists and/or those works from the deep past. The
reasons for this will make themselves clearer as the essay delves deeper into the legal
mechanics of the art market.
No essay can hope to all-inclusive; this work is no exception. As the writer is
a resident of the United States attending post-graduate work in the United Kingdom,
most, if not all, of the points discussed revolve around law in the Anglosphere as
opposed to that of the Francosphere. For the uninitiated reader, countries within the
Anglosphere rely on a minimum of code-based law; the vast majority of law is
‘common law’, decided by interpretations of the law in prior court cases known as
precedents. Conversely, Francosphere law revolves around the civil code. Changes
to the law and the interpretation of it are dependant upon the code being updated or

SIAL MAAB Programme 2005/06
Art Law Final Assessment
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edited by the governmental bodies responsible for its maintenance. Awareness of
the rubric that the respective gallerist is operating in is perhaps the most
fundamental legal knowledge to be obtained. It has been argued that another
fundamental difference in the two spheres’ approach to law lies in the role of the
judiciary; however, that provides the subject for another essay and another class.
The vagaries listed below are part of the substantive issues confronted by dealers in
both spheres.
CONTRACTUAL ISSUES
While the respective gallerist or dealer in either of the Old Masters/Antiquities or
Contemporary sectors are not confronted with any measurable differences in the
formation of their business plan, they do have significant contrasts in their
relationship(s) with artists. Obviously, those in the Old Masters/Antiquities sector
are not dealing with living artists1. Their inventories consist largely of objects and
works of art from creators unknown or long passed. Acquisition is usually a simple
matter of business-to-business (B2B) transactions, following everyday rules
regarding the nature and form of the transaction.
For those dealing in Contemporary works of art, the relationship with the
artist is central to the continued success of both parties, as the dealer is acting as
agent for the works of the artist in question. It is best if this relationship is cemented
in the form of a contractual relationship, something which is often avoided in the art
world akin to a plague. As the business of art has become more business-like over
the past decades, the use of contracts “help(s) avoid misunderstanding and can draw
1 Issues arising from work created by artists’ estates will be dealt with in turn.

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the attention of the dealer to things the artist thinks are important, and vice versa.”
(Merryman & Elsen 2002: 746) As the sums of money often exchanged in
contemporary art deals is often in excess of six figures, this is a sound and prudent
course of action. In any other field where goods or services change hands with this
amount of capital, the lack of a binding contract between the involved parties would
be seen as ludicrous, if not criminal. Both the artist and the dealer should retain the
services of legal counsel to preserve their best interests. The respective attorneys can
also ensure that all contractual terms are written in plain English, to be readily
understood by both parties. In the United Kingdom, ignoring this caveat can lead to
the contract being nullified by the courts.
The nature and extent of the relationship is the primary objective of the
contract. Details such as exclusive selling rights for the dealer and management of
the artist’s financial affairs are clauses worthy of discussion. The extent that the
dealer has geographical and territorial representation is an important point to
establish, as well. For dealers with the reach of the Marlborough Gallery, this is
vitally important to the artist. As the Marlborough has seven galleries operating on
four continents, the artist needs assurances that his/her work will be given equal
billing at all venues, with accompanying guarantees of produced work. The length
of the contact is also important. A good rule of thumb to observe is to have the
contract fixed for two years with the right to renew at the end of the term. The
contract needs to make it clear whether or not the dealer will tell the artist who
purchased their works, assuming the artist desires this. Not all of them do.

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The pay structure of the relationship needs to be established as well. Will the
dealer take the works on consignment from the artist or will he/she simply buy them
outright and sell them at his/her discretion? The percentage split of the final price
needs to be agreed upon. The assumption of the unfortunate, but inevitable spectre
of death needs to be addressed. Does the gallerist have rights to the artist’s work
after death? The lessons learned from the rancorous infighting that occurred after
the death of seminal artist Mark Rothko should be required reading for all of those
wishing to own a gallery or to sell their œuvre.
ISSUES SURROUNDING EXPORT OF WORKS
Similar to the need to understand the legal ramifications of contractual issues for
dealers in contemporary art, it is important for dealers in Old Masters and antiquities
to be aware of the laws and regulations surrounding the export of goods deemed to
be a part of a country’s patrimony or cultural heritage. The extent of this knowledge
should not be confined to one’s own location. Having a familiarity with the
international scope of this topic is vital, as every nation has a decidedly different
approach to these issues. For countries such as Italy, Spain and France, all of which
have a rich cultural patrimony, enforcement of tight restrictions on their cultural
exports is the norm. Objects that are of extreme cultural importance can not leave the
country under any circumstances. In Italy, which has some of the strictest laws
internationally2, these works are defined as partimone nationale. These are goods that
2 It is also worth noting that Italy, to the author’s knowledge, is the only nation to have established a
national police force solely responsible for the protection of their cultural heritage. The Carabinieri
assigned to this duty are attached to the Italian Ministry of Defense. To this end, they have
jurisdictional powers that allow them to operate in a manner appropriate with their mission.

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can never be exported from the country under any circumstance. In the words of one
legal analyst,
“Art-rich nations such as Italy…have highly
restrictive export control which can classify virtually
any work of subjective interest to the state as an
inalienable national treasure and embargo its export.
In Italy for example over 30 million works are listed
and require authorization for export (which is rarely
granted).” (McAndrew & Dallas-Conte 2002: 19)
An object of more than fifty years in age needs an export license, effectively keeping
all of Italy’s cultural heritage in its own borders3. Recent events surrounding the
head curator of the Getty Museum in Los Angeles demonstrate that the reach of these
Carabinieri is long; she is currently on trial in Rome for purchasing stolen grave goods
from Italy. The fact that the United States Attorney General was willing to extradite
her should be an indication of the seriousness of the offense (Italian-American
political allegiance notwithstanding!).
The United Kingdom possesses a unique system for ensuring that art or
antiquities fundamental to the national patrimony do not unduly leave the country.
Rather than setting up a system that flatly prohibits the trade in these objects, the UK
has established laws to encourage their staying within the country. The rich
narrative of history has given Great Britain a wealth of archaeological sites and
goods that spans a vast timeline. Early Bronze Age settlements compete with
Neolithic megalithic sites and Roman ruins for attention and study.
3 For objects that must leave the country temporarily (i.e. museum loan, conservation) a special system
is in place. These objects can receive a ‘carnet’ which is like a passport for that object, which grants an
exemption on paying export taxes if the work is only to be temporarily removed from the country and
not sold abroad.

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This richness of heritage has created a unique breed of ‘treasure hunters’ in
Great Britain. Often armed with only a metal detector and a trowel, these amateur
excavators routinely turn up goods that would remain hidden from study were it not
for their passion and effort. In the United Kingdom’s rich and fertile farmland,
instances are not uncommon whereby a farmer stumbles upon buried antiquities in
the course of his/her daily work in the field. It is with this understanding that, in
1996, the House of Commons enacted legislation designed to regulate the trade of
these found goods in such a way that was seen to benefit all the parties involved.
The 1996 Treasure Act (HC §1996 Chapter 24) is perhaps the only legislation of
its kind in existence worldwide. It provides a scheme by which the finder of a
‘treasure’, if not participating in a registered or sanctioned archaeological exercise, is
entitled to compensation for the goods. (House of Commons 1996) This legal
precedent was designed to encourage the finders of such goods to duly report their
discoveries and subsequently provide a more thorough analysis through established
archaeological techniques – a voluntary scheme to record archaeological objects
found by members of the public in England and Wales. Every year many thousands
of objects are discovered, many of these by metal-detector users, but also by people
whilst out walking, gardening or going about their daily work. “All finders of gold
and silver objects, and groups of coins from the same findspot, which are over 300
years old, have a legal obligation to report such items...” (Portable Antiquities
Scheme 2006) As a preventative measure, it was designed to discourage the
exportation of antiquities deemed important to the national heritage. Museums
would benefit from the goods, scholarly pursuit of knowledge surrounding the past

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would be enhanced, and the financial well-being of the lucky individual(s) would be
greatly improved.
For objects put up for sale, a different set of laws come into place. It can be
assumed that this portion of legislation could be enforced regarding
contemporary/living artists, but to the author’s knowledge, this has not been the
case. (It appears that for an artist to viewed as fundamental to the cultural identity,
as expressed through his/her works, he/she must be deceased.) The criteria for
judging each works’ importance are via the Waverley Criteria, which was established
in 1952 by act of Parliament. Three questions are asked regarding each respective
work:
 Is it so closely connected with our history and national life that its departure
would be a misfortune?
 Is it of outstanding aesthetic importance?
 Is it of outstanding significance for the study of some particular branch of art,
learning, or history? (McAndrew & Dallas-Conte 2002: 19)
If a work is deemed worthy of inclusion, the sale is halted and the piece retained for a
determined length of time (usually six months). This allows the government to
attempt to raise funds to match the purchase price of the work. If the funds are not
forthcoming, the export ban is lifted and the item can leave the country.
ARTISTS RESALE RIGHT (DROIT DE SUITE)
Another piece of legislation affecting dealers in Contemporary Art is the Artist Resale
Right (or droit de suite, as it is more commonly known). On 14 February 2006, the
Untied Kingdom finally enacted this legislation, which has been a law in France and

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the majority of the European Union for some time. This law provides a royalty right
granted to all artists, wherein they are to receive a percentage of the sale price
whenever and wherever (in the EU or other signatories – the United States being
conspicuously absent) one of their works is resold. This right is enforcable for the
entire life of the artist and then 70 years thereafter. If the artist is deceased, this
royalty right will be left to that artist’s family or estate and cannot be given away by
either the artist or his/her estate; however, the UK version of the legislation does
allow for the proceeds from droit de suite to be granted to a charitable trust or
institution, if so desired. This prevents the artist from having what is essentially a
weak bargaining position with their dealer whereby he/she could be put under
duress during contractual negotiations and give up his/her rights.
The amount of the royalty payable is a percentage of the sale price based
upon a fixed sliding scale of consecutive portions of that price and the total royalty
amount payable on any one sale shall not exceed €12,500. The artist resale right only
applies to art market professionals and works over £1,000 (Lydiate 2006: 44).
Collection of these royalties will be administered by The Design and Copyright
Society (DACS) on behalf of the respective artist and distribute it accordingly. DACS
will also collect money for other EU artists and send to their sister societies abroad,
with the understanding that these sister societies will act in a similar manner when
dealing with artists or estates residing in the United Kingdom. It is the responsibility
of all contemporary dealers and auction houses from now on to collect this royalty
when it is sold. Reaction to this was mixed, with some in the art business (including
some artists) declaring that it would stifle the marketplace. Early indicators show

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this response to be a bit hasty, as the market has not responded negatively at all, with
sales at auction continuing to be robust and record-breaking.
INTELLECTUAL PROPERTY ISSUES (COPYRIGHT AND MORAL RIGHTS)
Intellectual property issues are another fundamental item for dealers in
Contemporary art to be well-acquainted with. By definition, intellectual property is
the legal term for intangible rights attaching to abstract creations of the mind.
(McLean & Schubert, et al.) Copyright is an economic right and is an automatic
right of the artist the moment an original work of art is made of independent skill
and labor.
“In order to qualify for copyright protection a work
must be 'original', in the legal sense that it is not
'substantially derived' from the earlier work of another
artist, and 'substantial' in this context means
qualitatively, not quantitatively. The test is applied by a
'non-visual expert' (in other words, the person in the
street, not an artist, art historian or curator).” (Lydiate
2006)
As an economic right copyright protects the aesthetic quality of the work, not the
ideas and concepts behind it. Copyright gives the artist the exclusive right to
reproduce, publish and mechanize their work of art; they also have the right to
prevent others from doing these things. These rules do not apply if the artist made
the work of art as an employee under contract. (cf. Sax 1999) An illustration of this
principle comes from the realm of animation. The Walt Disney Corporation owns
the rights to images of Mickey Mouse; the countless individual animators/illustrators
who have drawn him over the years do not.
The rights surrounding the reproduction of images are similar. It is illegal to
copy a work of art without consent; however, unlike the Artist Resale Right, an artist

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can give away or sell an exclusive copyright licence to do so. Copyright in any given
work lasts for the lifetime of the artist plus seventy years after their death, a tenet of
law that is virtually unchanged in all of the countries of the Western Hemisphere.
Copyright infringement is defined as being anyone who is not the artist or the owner
of the copyrighted image, reproduces the work without his or her permission.
Interestingly, intent does not play a part in determining guilt. The simple act alone is
justifiable grounds for prosecution. The laws do make exceptions for instances that:
do not entail prosecution for the copying party. Some of these include: use of the
image(s) for private study, criticism or review, news reporting, and the advertising
the art work for sale. Waiver of the copyright is also often granted for use in museum
publications (but not catalogues, which generate profit, therefore a royalty is more
often than not demanded), and publications of an academic/scholarly nature. The
author’s own work in museums can attest to this fact. We often received formal
requests for the use of images from our collections in dissertations or academic
books. With the sole exception of ‘textbook’ publishers, we granted these rights
freely.
While dealers in Old Masters/antiquities are not often, if at all, subject to
copyright issues due to the age of the artists in their inventories, the related issue of
‘Publication Rights’ does occasionally surface. If a respective work is newly
discovered or rediscovered and has never been seen by the public the person who
discovered it becomes the legal owner of the copyright in the work for a period of 25
years. This provides for ample time to study, document, and analyze the significance

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of the work. After this period of time, the rights to the image revert to the public
domain.
Moral rights, or droit moral, are another form of intellectual property that are
fundamental when dealing in art, both Old Masters/antiquities and Contemporary
art. Moral rights protect the ideas behind the work and its artistic integrity. They
were developed in France and are defined as “sort of a defamation law, under which
protection of the objectts that are the artist’s work is necessary to protect the artist’s
reputation.” (Sax 1999: 22) Given international status by The Berne Convention (1971),
of which the UK is a signatory, moral right give the artist three main rights: Paternity
right (the right to be solely identified as the creator of a given work) the right to
protect one’s work from harmful treatment, and the right to object to false
attribution. Moral rights laws automatically apply to works that have copyright and
are inalienable in the same manner of the Artist’s Resale Right.
The length of time that moral rights are enforceable varies from country to
country. In the United States, they are only allowed for the lifetime of the artist. For
artists in the UK, the same time is allotted as for copyright protection (lifetime plus
seventy years). In France, these moral rights last indefinitely. The California Art
Preservation Act of 1979 is seen as a model for the rest of the United States to catch up
with the rest of the world. It states that
“...the physical alteration or destruction of fine art,
which is an expression of the artist’s personality, is
detrimental to the artist' s reputation, and artists
therefore have an interest in protecting their works of
fine art against any alteration or destruction; and that
there is also a public interest in preserving the integrity
of cultural and artistic creations.” (Sax 1999)

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For the rest of the country, ownership implies ultimate responsibility. One could
‘play darts with a Rembrandt’ or burn a Van Gogh and no one could prevent it.
PROVENANCE AND THE PROBLEM WITH FAKES AND FORGERIES
For dealers in Old Masters/antiquities, one of the most overreaching concerns is that
of provenance. Illegal looting of archaeological sites around the world continues
unabated, despite major international law prohibiting the sale of these goods on the
open market (cf. ‘Unidroit Convention on Stolen or Illegally Exported Cultural
Objects (1995)’ and ‘Unidroit Convention Relating to a Uniform Law on the
International Sale of Goods (1964)’). Recent scandals involving several major London
dealers, museum curators from around the world, and the plunder of the treasures
from myriad ancient civilizations have continued the focus on this troublesome area,
with some hope of curtailing its excesses.
Issues of provenance also appear with art that has ownership dating from the
period of the Second World War. Among the atrocities of the Nazi war machine, the
theft and appropriation of art treasures from the territories they occupied is an
ongoing battle. Via mechanisms like the Art Loss Register, many of these ill-gotten
gains are returning to surviving family members victimized by this tragic chapter in
our history. Dealers and auction houses frequently, if not always, consult these
databases with the hope of finding their works to be cleared for sale.
Fakes and forgeries have a long established place in the history of the art
market. It seems that for as long as there have been artists of note, there have been
people copying their work in order to pass it off as ‘authentic’ and thereby dupe an
unsuspecting buyer into thinking they own a masterpiece. Dealers in all realms of

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the art market need to be aware and constantly on guard for works of dubious
production. While modern technology has enabled the forger to produce better
copies, it has also allowed for art professionals to more readily identify the problem
pieces. In a curious twist of fate, the master forger of the 20th century, John Myatt, as
apparently atoned for his crimes and is legitimately selling ‘authentic forgeries’ of
masterworks, many of which fetch large sums when sold.
CENSORSHIP ISSUES
It would also seem that there are always those individuals who object to the
expression found in certain artists’ works. From the placing of fig leaves over the
painted and sculpted genitalia of Renaissance-era artists to the forced closure of
exhibits by provocative modern photographers, the puritanical streak in some people
never seems to wane. It is true that artists often push the boundaries of what is
‘acceptable’ in society with each passing year. It is also true that what is ‘acceptable’
changes and evolves over time. The dealer in both spheres examined in this essay
must be aware of these concerns, no matter their location of business. While the
Mapplethorpe exhibition in the United States was shut down in the Midwest, a
traditionally conservative area, it is pertinent to remember that it was also protested
against vehemently in New York City, arguably one of the most culturally open and
diverse cities on the planet.
Dealers can protect themselves in a variety of ways. Upfront and open
publication of the potential to offend is a good starting point, with potentially
inflammatory images mentioned, but not overly discussed. Curiosity often gets the
better of potential visitors and they often attend these exhibitions in record numbers.

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Selectively screening off areas of gallery space is also recommended to allow staff to
‘herd’ those wanting to see the piece and ensure that those who do not wish to see it
are allowed that right.
CONCLUSIONS
The art market is a vast arena with many challenges and pitfalls. It is subject to a
variety of legal restrictions and policies that are as unique to its practice as the pieces
that move through it. For those professionals brave enough to be a part of it, it can
be a rewarding and lucrative field. Both artist and dealer alike can share in this
bounty. However, navigating the complex legal issues surrounding the sale of art,
ancient, old, and contemporary is tricky and is best done with a firm understanding
of the issues. This essay only provides a succinct summary of several of the major
areas for study. A dealer’s relationship with the artist and his/her work need not be
a strictly formal one; further appreciation of the nature of art is enhanced by
understanding the context it is produced. Its historical provenance only adds to its
beauty. An excellent relationship with a dealer/agent makes all parties involved
happier and adds a level of goodness to the historical circumstances surrounding the
piece. Successful management of the rights to the images and the rights of the artist
in that work extends the token verbal respect given to works of originality into the
sphere of mandated law, as does the proper compensation to the artist and his/her
heirs for their œuvre. Far from being an impediment to the beauty that is art, the law
grounds its discussion and provides a firm basis for true appreciation.

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APPENDICES
I. LYDIATE, HENRY. (1993) ‘Contracts as Easy as ABC: A Users Guide’
II. LYDIATE, HENRY. (2006) ‘The Artist’s Resale Right Regulations 2006’

Appendix I
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LYDIATE, HENRY. (1993) ‘Contracts as Easy as ABC: A Users Guide’ [Internet]
<http://www.artquest.org.uk/artlaw/contracts/contractsabc.htm> Viewed 08 May 2006
CONSIDERATION
To be legally enforceable by the courts, every contract has four legal elements required by
law: an offer, acceptance, consideration and an intention to create legal relations. Of these,
consideration is probably the most difficult to understand and to explain! It is also very
important. Without consideration there may be an agreement between two parties, but there
will not be a legally binding contract. The law will not allow either party to get something for
nothing; both sides must give some 'thing' of value to the other. That 'thing' is the
consideration. Some examples are: giving a promise to pay the asking price for a work; giving
a promise to paint a picture and sell it to the commissioner for an agreed sum. Consideration
is the crucial element which distinguishes a legally enforceable exchange of promises from
mere mutual promises (such as friends agreeing to meet each other), from a simple gift, or an
unenforceable agreement.
EVIDENCE
Even if a contract has been made the parties may find it difficult to prove its existence in a
court of law if the deal was made orally or simply by gestures. Written documents, tape-
recordings and faxes are admissible in court as evidence of the making of a contract and of its
Terms and Conditions (see below).
GESTURES
Even without speaking a word, parties can make a contract. Supermarket shopping provides
an everyday example: buyers fill their baskets with food, take it to the checkout and offer to
buy at the advertised price; the seller keys in the price, accepting the offer; the money - the
consideration - is handed over. Nothing has been said, yet a legally enforceable contract for
the sale of the goods has been made. (See also, Intention to create Legal Relations, below).
HIRE PURCHASE
Hire purchase agreements are contracts of sale, whereby the buyer agrees to pay the full
purchase price by instalments and is allowed to use or 'hire' the goods until final payment is
made, when ownership passes from seller to buyer.
INTENTION TO CREATE LEGAL RELATIONS
One of the four elements required by law for a contract to exist. If both parties intend to make
a legally binding agreement, then they intend to create legal relations. It is customarily shown
in this country by the parties shaking hands. In roost agreements, the law assumes that
parties do intend to create legal relations, even if nothing is said.
LEGALLY BINDING
All contracts are legally binding in theory, unless they are themselves in some way legally
unacceptable (such as a deal to buy illegal drugs). In practice, if there is no evidence of the
existence of a contract, it may be impossible to prove; which is why documentary evidence is
preferable.
MORAL RIGHTS
An artist's moral right to be identified as the author of his/her work must be asserted in
writing and signed by the artist as author. This should be included in all contracts concerning
artwork, and be indelibly marked on the work together with the declaration of copyright
ownership: '© Henry Lydiate & Nathalia Berkowitz 1993; the moral rights of the joint authors
are asserted'.
NOTICE
Terms and conditions of a contract will only be binding on the parties if they have notice of
them before they finalise the deal. For example: an artist offers to make and sell a work to a
commissioner for £500; the commissioner agrees and specifies the materials to be used; it later
transpires that the materials the artist agreed to use are more expensive, so the artist asks for

Appendix I
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more money saying that the buyer should have realised that the price might rise if the
specified materials actually cost more; but nothing was said to clarify this point when the
contract was made. The commissioner had no notice of this matter and so is entitled to refuse
to pay any more for the materials, and the artist must still execute the work in the materials
specified and sell it for £500. If, however, the commissioner agreed to pay extra as requested,
then the terms and conditions of the original contract would have been varied by mutual
agreement.
ORAL
Almost all contracts may be made orally. But there may be problems proving them. A few
contracts, especially ones for the transfer of copyright ownership, must be made in writing
and signed by the artist/copyright owner.
PAYMENT
The method and manner of payment should always be included in the terms and conditions
of all contracts. The parties should consider how and when payment is to be made.
QUALITY
All contracts for the sale of artwork must comply with the provisions of the Sale of Goods Act
1979. Among other things, the act requires that goods are of 'merchantable quality' and 'fit for
the purpose' for which they are sold, i.e. they must not deteriorate or fall apart and be capable
of being used and enjoyed by the buyer, if they are treated properly.
REVOCATION
An offer may be revoked (taken back) at any time before it has been accepted, thereby
preventing a contract from coming into existence.
SMALL CLAIMS
Taking a contractual dispute to court need not be difficult. If the claim is for £5,000 or less, the
matter can be resolved by arbitration in the 'Small Claims Court', a service provided by a
County Court. The parties can, and often do, represent themselves without lawyers and the
procedure is relatively informal.
TERMS AND CONDITIONS
These are the essential details of a contract agreed by the parties at the time - or subsequently
construed by the court in resolving a dispute.
UCTA
Contracts must also comply with the Unfair Contracts Terms Act 1977, which aims to protect
parties from a contractual 'small print' and will not allow the terms to contain 'exclusion
clauses' which are unreasonable; e.g. where the seller states that no liability will be accepted
for any damage whatsoever.
VARIATION
Parties may vary the terms and conditions of their contracts, but only if both agree to do so. It
is possible, and useful, to specify in a written contract that any subsequent variations must
also be in writing.
WRITTEN
Contracts do not need to be in writing to be legally binding. But it is essential that artists'
commercial dealings are always written, so as to provide evidence in subsequent disputes
and to act as a useful aide-memoire in any event.

Appendix II
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LYDIATE, HENRY. (2006) ‘The Artist’s Resale Right Regulations 2006’ [Internet]
<http://www.artquest.org.uk/artlaw/droitdesuite/artistresalerightregulations.htm> Viewed
08 May 2006
On December 15 2005, the final draft of the Artist's Resale Right Regulations 2006 were placed
before parliament by the UK government for approval by resolution of each House of
Parliament, with the aim of their coming into UK law by February 2006. The regulations
represent the fulfilment of the UK government's legal obligations to enact into UK law the
requirements of an EU law (Directive 2001/84/EC) requiring all member states to give UK
artists an automatic legal right to receive a payment when their works are resold. This
month's column describes and explains how those regulations will apply to resales from 14
February 2006.
The Resale Royalty Right
An artist will have the right to receive a royalty on any resale of their work after the first
transfer of ownership (not necessarily the first sale - it may be a gift) by that artist; in other
words, an artist will have a 'resale right' to receive a 'resale royalty': a resale royalty right.
This right will apply to works that are protected by copyright law (works that have been
made by independent creative skill and labour - have not been stolen from another artist),
and will last for the same length as copyright (the lifetime of the artist plus 70 years after the
end of the year of the artist's death). The amount of the royalty payable is a percentage of the
sale price based upon a fixed sliding scale of consecutive portions of that price:
Portion of the sale price % amount
From €1,000 to €50,000 - 4%
From €50,000.01 to €200,000 - 3%
From €200,000.01 to €350,000 - 1%
From €350,000.01 to €500,000 - 0.5%
Exceeding €500,000 - 0.25%
However, the total amount of royalty payable on any one sale shall not exceed €12,500.
Exempted Resales
Three types of resale are outside the regulations, and therefore of the new scheme. First,
where the sale price is less than €1,000. Second, where the buyer or seller (or agent of the
buyer or seller) is not 'acting in the course of business of dealing in works of art'; in other
words, the regulations apply only to sales or purchases by art market professionals. Third,
where the seller previously acquired the work directly from the artist less than three years
before the sale, and the sale price does not exceed €10,000; in other words, the regulations
apply only to sales made three or more years after the artist's first studio sale or transfer of
ownership, and to all sales exceeding €10,000 even if they are made within the first three
years after the artist's first studio sale or transfer of ownership.
Exempted Artworks
Not all artworks are included in the new scheme - only works of 'graphic or plastic art such as
a picture, a collage, a painting, a drawing, an engraving, a print, a lithograph, a sculpture, a
tapestry, a ceramic, an item of glassware or a photograph'; also included are copies of works
if they are 'one of a limited number which have been made by the author or under his
authority'.
Authorship
An artist's signature on a work is presumed by the regulations to identify the author/artist,
who is therefore entitled to the resale right. Where a work is made by two or more artists,
both their signatures on their works will likewise trigger the legal presumption that they are
the joint authors - each of them will have the resale right, and they will share the resale
royalties equally, unless they both sign a written agreement stating otherwise. (This

Appendix II
19
reinforces the importance of artists working collaboratively always to have a written creative
partnership agreement clarifying all such matters: see AM271).
Who Pays the Resale Royalty?
Sellers and their agents will be jointly and separately responsible for paying the resale
royalty; if the seller has no agent, then the seller and the buyer's agent will be jointly and
separately responsible, and if neither seller nor buyer has an agent, then the seller and the
buyer will be jointly and separately responsible. This means that where, for example, a work
is sold at auction, both the seller and the auction house (as the seller's agent) will be jointly
responsible for paying the resale royalty. Or where, for example, one dealer sells directly to
another dealer, both dealers will be responsible for paying the royalty. The legal duty to pay
arises automatically on the completion of the sale, but payment may be withheld until the
artist proves their entitlement - this raises important issues about the method of payment,
collection and enforcement, which are specifically dealt with in the regulations.
Who Collects Resale Royalties?
Artists cannot claim their resale royalties directly. The Regulations provide that artists must
do so through a 'collecting society', which is defined as 'a society or other organisation which
has as its main object, or one of its main objects, the administration of rights on behalf of more
than one artist... for a fixed fee or percentage of the royalty'. For all practical purposes, this
will mean that artists will have to transfer the management of their resale rights to an
organisation such as the Design and Artists Copyright Society (DACS), which has for over 20
years managed the collection of artists' copyrights throughout the world for a fixed fee or
percentage of the copyright royalties collected. If artists do not transfer their rights to such a
collecting society, the regulations empower such a collecting society to manage such artists'
rights automatically. Taken as a whole, the effect of these particular provisions will greatly
facilitate the payment, collection and distribution of resale royalties: art market professionals
will send their resale royalties directly to, say, DACS which, in turn, pays them directly to
artists; artists merely register their contact data with DACS and await payment.
Inalienability
Unlike copyright - an economic right that can be bought and sold as can any physical object
of monetary worth - the artist's resale right cannot be relinquished by the artist. This is a
specific and vital requirement of the EU Directive. The UK regulations therefore strongly
provide that a 'waiver (legal undertaking not to enforce the right) of a resale right shall have
no effect' and that 'an agreement to share or repay resale royalties shall be void'. These
provisions ensure that artists in weak bargaining positions with art market professionals
cannot be pressured into relinquishing their resale rights - a factor which also relates to the
compulsory collecting society provision described earlier. But the regulations go further, and
strengthen artists' position in the art marketplace: the resale right cannot be 'assigned' - that's
to say it cannot be legally transferred to somebody else; nor can artists 'mortgage' their resale
royalty rights (by borrowing money and offering the benefit of the resale right to the lender if
the loan is not repaid in full and on time). In this latter respect, the UK government has
commendably followed an excellent suggestion from DACS to make an exception to the basic
'inalienability' provisions: the regulations specifically permit resale royalty rights to be
transmitted in an artist's will to the ownership of a charitable organisation inside or outside
the UK. (In the absence of such a specific bequest, the artist may bequeath the resale right to a
'natural person', and, in the absence of a will, the resale right passes under the ordinary rules
of succession to the next of kin.)
Right to Information
Artists (or their collecting society) will have the legal right to ask an art market professional
seller or buyer (or their respective agents) - within three years of the relevant sale - for any
information necessary to ensure payment of the resale royalty, such as the amount of royalty
due or the name and address of the person responsible for making the resale royalty

Appendix II
20
payment. Such requests will require the art market professional to 'do everything within his
power to supply the information requested within 90 days of the receipt of the request'.
Failure to supply such information will entitle the artist (or their collecting society) to ask a
court to order the defaulter to do so - with a penalty for contempt of a court's order being the
final sanction. Any such information supplied about the resale must be treated as confidential
by artists and their collecting society.
Territorial Extent
The resale right extends far beyond the UK and EU. It can be exercised in the UK by artists
who are nationals of an EEA state (that's to say one of the 25 EU member states plus Iceland,
Liechtenstein or Norway), and of Algeria, Brazil, Bulgaria, Burkina Faso, Chile, Congo, Costa
Rica, Croatia, Ecuador, Guinea, Iraq, Ivory Coast, Laos, Madagascar, Mali, Monaco, Morocco,
Peru, Philippines, Romania, Russian Federation, Senegal, Serbia and Montenegro, Tunisia,
Turkey, and Uruguay.
Transitional Provisions
These new regulationas do not apply to (re)sales of works contracted before they came into
force (sales before 14 February 2006), but they do apply to any further sales of those works
contracted after the regulations came into force (sales contracted on or after 14 February
2006). For example, sales of contemporary artworks of EEA artists conducted at a London
auctioneers/saleroom/dealership during January 2006 (before the new regulations came into
force) will be outside the new resale royalty scheme; but further resales of those works in
February 2006 or at any subsequent date will be within the scheme and resale royalties would
therefore be payable.
As for artists who died before the new regulations came into force (say, before the end of
January 2006), their heirs and successors to ownership of their resale royalty rights will not be
able to enforce them in respect of sales made before January 1, 2010. This is because the UK
government has chosen to exercise the option (permitted to member states by the EU
Directive) not to apply the resale royalty right to dead UK artists until January 1, 2010. So,
although the estates of, say, Eduardo Paolozzi, Francis Bacon and Patrick Heron will have
automatically acquired their respective resale royalty rights at the end of January 2006, they
will not be able to exercise them until January 1, 2010, at the earliest. (This derogation by the
UK government from the EU Directive's spirit and intent to provide that the heirs and
successors of artists should benefit from the resale royalty right for 70 years after the artist's
death, was said to be a measure intended to mitigate the potential economic damage likely to
be suffered by UK's art market professionals from having to suffer the loss of paying a
maximum resale royalty of €12,500 on the sales of the works of dead artists from February
2006).
How Will it Really Work?
It is very likely that DACS will be the only collecting society in the UK that will be ready,
willing and able to manage the artist's resale royalty right on behalf of UK artists - and others
qualifying throughout the world - from February 2006. DACS is the only artist's rights
management body in the UK: it has a significant and successful 20-year record of doing so,
and has invested substantial financial and intellectual capital in developing and field-testing a
computerised and straightforward business model capable of effective and efficient
worldwide resale rights management. The one thing that DACS's management model cannot
guarantee is that UK art market professionals will cooperate in fulfilling their new legal
responsibilities. Everyone is confident they will do so.
The Department of Trade and Industry (note: not the Department of Culture Media and
Sport) has been responsible for developing and implementing this legislation through one of
its specialist units, the Patent Office, which has issued a very helpful leaflet Guidance for
Business on Artist's Resale Right (www.patent.gov.uk).

21
BIBLIOGRAPHY
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SCHUBERT, KARSTEN. (eds) (2002) Dear Images: Art, Copyright, and Culture. London:
GOVERNMENTAL AND NGO DOCUMENTS
 The Antiquities and Treasures Act (1972) (USA)
 HC414: Government Response to the Culture, Media, and Sport Select Committee
Report on the Market for Art (2005) (United Kingdom)
 The 1996 Treasure Act (United Kingdom)
 2006 Portable Antiquities Scheme (United Kingdom)
 Unidroit Convention on Stolen or Illegally Exported Cultural Objects (1995)
 Unidroit Convention Relating to a Uniform Law on the International Sale of Goods
(1964)
 United Nations Convention for the Protection of Cultural Property in the Event of an
Armed Conflict (1954)

23
INTERNET SITES
 ART LAW CENTRE - http://www.art-law.org
 ARTQUEST - http://www.artquest.org.uk
 MORAL RIGHTS BASICS -
http://cyber.law.harvard.edu/property/library/moralprimer.html
 UNESCO - http://portal.unesco.org/culture.html

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