A handshake is not a contract. In the art world, where original works can represent months of labor and significant financial value, the absence of a written consignment agreement is one of the most common — and most costly — mistakes artists and venues make. A well-drafted consignment agreement is not a sign of distrust; it is a sign of professionalism. It protects the artist, the venue, and the relationship between them.
What Is a Consignment Agreement?
A consignment agreement is a contract between an artist (the consignor) and a venue — a gallery, hotel, restaurant, real estate staging company, or any other business displaying the work (the consignee) — that governs the terms under which the artist's work is displayed and potentially sold. The artist retains ownership of the work until it is sold. The venue agrees to display, care for, and potentially sell the work on the artist's behalf. If a sale occurs, the proceeds are split according to the terms of the agreement.
Standard Pricing Splits
The most common consignment split in the gallery world is 50/50 — the gallery retains 50% of the sale price and remits 50% to the artist. However, splits vary significantly by venue type and market. Commercial galleries in major markets (San Francisco, New York, Los Angeles) typically take 40–50%. Artist co-ops and smaller regional galleries often take 25–35%. Hotels, restaurants, and staging companies typically take 20–30%, reflecting the fact that their primary business is not art sales. Whatever split is agreed upon, it should be stated explicitly in the agreement as a percentage of the final sale price, not a fixed dollar amount.
Duration and Termination
Every consignment agreement should specify a clear duration — the period during which the venue has the right to display and sell the work. Standard gallery consignment periods run three to six months, with an option to renew by mutual agreement. The agreement should also specify the notice period required for termination by either party (typically 30 days written notice) and the timeline for returning unsold work after the consignment period ends. Without a clear termination clause, work can become indefinitely stranded at a venue — a situation that is difficult and sometimes legally complex to resolve.
Pricing Authority
The agreement should clearly state who has the authority to set and adjust the retail price of the work. In most arrangements, the artist sets the retail price and the venue's commission is calculated from that price. The agreement should specify whether the venue can offer discounts (and if so, how discounts affect the split — typically, discounts come out of the venue's commission rather than the artist's share). It should also address what happens if the artist wants to raise or lower the price during the consignment period.
Liability and Insurance
This is the section most commonly neglected and most consequential when something goes wrong. The agreement should clearly state who is responsible for the work while it is in the venue's possession, what insurance coverage is in place, and what happens in the event of damage, theft, or loss. Best practice: the venue should carry fine art insurance (or add a fine art rider to their existing policy) covering the full retail value of all consigned works. The artist should request a certificate of insurance before delivering any work. If the venue cannot provide evidence of coverage, the artist should either insure the work independently or decline the consignment.
- Identify both parties clearly — legal names, addresses, and contact information.
- List each consigned work with title, medium, dimensions, and agreed retail price.
- State the commission split as a percentage of the final sale price.
- Specify the consignment duration and renewal terms.
- Define who sets the price and under what conditions it can change.
- Address insurance: who carries it, what it covers, and at what value.
- Include a condition report — document the state of the work at delivery.
- Specify payment terms — when and how the artist is paid after a sale.
- Include a termination clause with notice period and return timeline.
- State governing law — which state's laws apply in the event of a dispute.
A Note on California Law
California has some of the strongest artist-protection laws in the country. Under California Civil Code Section 1738.5–1738.9, when an artist delivers work to a dealer on consignment, the work is held in trust for the artist, the proceeds of any sale are trust funds, and the dealer's creditors cannot claim the work or its proceeds. This means that even without a written agreement, California law provides baseline protections for consigning artists. However, a written agreement remains essential — it establishes the specific terms that the law does not prescribe.
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