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The reinvestment of public funds by subsidised visual arts organisations

Model artist’s Commissioning Agreement with notes for guidance

How to use the model Commissioning Agreement 2

1 Introduction 2

2 Purpose 2

3 Key Terms 3

Model Artist’s Commissioning Agreement 7

Schedule 20

Appendix 1 21

Project description 21

Developed by Arts Council England in conjunction with Withers LLP

August 2008

This document is intended for guidance and general information only and should not be used as a substitute for specific legal advice. Nothing contained in this document is intended to constitute legal advice, nor should it be construed to provide legal services. Arts Council England and Withers LLP will not accept any responsibility for loss resulting from any person or persons using this document.

How to use the model Commissioning Agreement – notes for guidance

1 Introduction

Commissioning agreements can be developed and used by public arts organisations in a variety of ways. In many instances, the commissioned artwork will be sold by the artist or the artist’s gallery to third parties entirely unconnected with the commissioner, after the commissioned artwork has been exhibited. In other cases, the public arts organisation may acquire the commissioned artwork directly from the artist.

2 Purpose

The purpose of the model Commissioning Agreement is to reflect in a fair manner, the different contributions made by the artist, the public arts organisation, and the artist’s gallery, in the production, exhibition and sale of the artwork. By granting public arts organisations enforceable legal rights, the agreement enables public arts organisations in return for their investment to benefit from the sale of the commissioned artwork and to retain other benefits related to the artwork. These benefits include:

Sharing in the proceeds of the sale of the artwork

The public arts organisation may wish to recoup the whole or part of the commissioning costs invested in the artwork or to benefit from a share in the percentage of the revenue from the sale of the artwork

Acquiring in certain circumstances, the commissioned artwork

The commissioning organisation may also wish to acquire the ‘unique’ commissioned artwork for its own collection. It is also common practice with editioned artworks for the commissioning public arts organisation to retain an edition of the artwork for its own non-commercial use.

Using the intellectual property rights attached to the artwork

Public arts organisations can also benefit from the intellectual property rights, particularly copyright, attached to the commissioned artwork. They can receive an income stream from their exploitation (for example, if the work is used in some form of merchandise or perhaps, where a limited edition print series is produced) and also be granted a non-exclusive licence to exploit these rights in limited situations, for example, in promotional material and in catalogues.

Ensuring that the public arts organisation is credited for commissioning the artwork

It is important for the public arts organisation to ensure that it is credited in all publicity and publications over which the artist has control, an agreement is an effective way of helping to achieve this.

Public arts organisations should consider carefully the type of agreement they wish to negotiate with artists. There is no ‘one-size fits all’ approach.

Commissioning Agreements should be used flexibly to adapt to the different roles played by the public arts organisation, the artist and the commercial gallery. For example, if a public arts organisation invests a substantial amount of income and time in commissioning an artist’s project, then it may wish to include a term in the agreement dealing with profit-share as well as with the recoupment of production costs. By contrast, a public arts organisation that has not invested heavily in a commissioned artwork may decide to secure a relatively modest level of recoupment.

3 Key Terms

We have identified some of the key terms to consider when negotiating and drafting the agreement.

The parties

Defining who the parties are is key to any legal agreement. It is vital to get this right at the outset or problems can arise. In many situations, it will make sense for the agreement to only be between the public arts organisation and the artist. An important reason for this is that an artist may change galleries or dealers over time and will therefore wish to sell the artwork through a different commercial gallery in the future. Accordingly, we have provided a model Commissioning Agreement where the artist and the gallery are the only parties.

However, if a commercial gallery has co-invested heavily in the production of a commissioned artwork, it will wish to ensure that it has exclusivity in selling the artwork as well as the right to recoup its investment. The artist and the commercial gallery should enter into a separate agreement, under which both parties can protect their interests. We have also set out a short model agreement between the artist and the gallery.

Duration of the agreement

We think it is good practice for the agreement to last for a maximum period of ten years. If the artwork has not sold within this period then it is a strong indication that the artwork does not have a strong market. However, if the public arts organisation is a co-owner of the artwork (see below), then the agreement should last longer, until the artwork is sold.

Ownership of the artwork

Generally, the artist will be the sole owner of the artwork. However, it may be fairer in certain circumstances for the public arts organisation to be a co-owner, for example, where the public arts organisation is responsible for investing heavily in the production of the commissioned artwork. Joint ownership of the artwork will give the public arts organisation greater protection against the unauthorised sale and retention of proceeds from the sale of the artwork by the artist and the commercial gallery, particularly when the commercial gallery is not a party to the agreement.

Option to purchase

The commissioning public arts organisation may include an option to purchase the commissioned artwork or to authorise another public arts organisation to acquire the commissioned artwork. It is common practice for the public arts organisation to acquire the commissioned artwork at an agreed discount from the artwork’s normal market value, for example, at a significant discount. In this way, the public arts organisation benefits from its investment in the production of the artwork, whilst the artist receives the benefit of the artwork entering into a public collection.

We have not included a clause covering options to purchase in the model Commissioning Agreement and if you wish to incorporate such a provision you should discuss this carefully with your legal advisor.

Recoupment and sharing in revenue

The agreement should define what benefit the public arts organisation is to receive from the sale of the commissioned artwork, for example, a share of the percentage of sale revenue and/or the recoupment of production costs. It is vital to impose an obligation on the artist to pay the public arts organisation this benefit upon receipt of the sale proceeds. The parties will need to decide whether any costs should be deducted form the sale price, eg storage costs, prior to the distribution of recoupment costs or the share of sale proceeds, so it relates to the net sale price rather than the gross sale price.

Storage costs

The artist and particularly the artist’s gallery may wish to offset the costs of storage from the sale of the artwork as generally, it will be the commercial gallery selling the artwork that is responsible for storage of the artwork and for payment of the storage costs. However, this is a difficult area as storage costs are often complex to calculate and verify. The gallery may for example, store the commissioned artwork as part of its ‘bulk’ storage, and inflate the stated costs of storage for an individual item beyond the real cost. Public art organisations might wish to encourage artists and (indirectly) commercial galleries to consider reasonable storage costs and to place the burden on private galleries when negotiating the % sales return or recoupment terms of the initial agreement.

Sale of the artwork

It is standard practice for the artist or the commercial gallery to decide who is to sell the artwork and for what sale price. The public arts organisation may wish to include a stipulation that the artist and gallery are not allowed to sell the artwork for a value less than 10% below the artwork’s current market value in order to ensure that the public art organisation receives its proper benefit, for example, revenue share.

Auditing rights

This grants the public arts organisation the right to inspect the artist’s financial records to ensure that the artist has not received payment for the sale of the artwork and failed to disclose to the public arts organisation these sale proceeds. This term is essential if the agreement is to be enforceable.

Accreditation

It is essential to include a clause obliging the artist to ensure that the public arts organisation is credited as being responsible for the commission on all occasions when the commissioned artwork is exhibited or reproduced, providing the artist has control in these situations.

Intellectual property rights

The agreement should enable the public arts organisation to benefit from the exploitation of intellectual property rights in the artwork, for example, copyright. It should also provide the public arts organisation with a free, non-exclusive licence to exploit the intellectual property rights attached to the work, for restricted purposes, for example, in promotional literature.

Termination

The agreement should preserve the public arts organisation’s right to benefit from revenue from the sale of the artwork, where the agreement is terminated by the organisation following the artist’s breach.

Execution of the agreement

How the agreement is executed is also important. There may be circumstances where the public arts organisation and the artist co-own the artwork. In these circumstances, the agreement should be executed as a deed rather than a simple contract because this formality is required legally. This means that the document must be witnessed and signed by witnesses on behalf of all the parties.

Model Artist’s Commissioning Agreement

THIS AGREEMENT is made the [ ] day of [month] [year]

PARTIES

1 [Name and address of the commissioning public arts organisation] (‘the Organisation’).

2 [Name and address of the artist] (‘the Artist’).

BACKGROUND

(A) The Organisation has agreed to commission the Artist to create the Artwork defined in the schedule attached to this Agreement (‘the Schedule’).

(B) In consideration for investing in the production of the Artwork, the Organisation wishes to benefit from the sale of the Artwork.

(C) The Artist has agreed with the Organisation to allow it to share in the proceeds from the sale of the Artwork upon receipt by the Artist of the proceeds of sale.

NOW IT IS HEREBY AGREED AS FOLLOWS:

1 Commencement and Duration

This Agreement shall come into force on the signing of this Agreement (‘the Commencement Date’) and subject to earlier termination pursuant to clause 14 or until the Artwork is sold in accordance with clause 11, shall continue in force for a period of ten years (‘the Term’).

2 Commission

2.1 The Organisation agrees to commission the Artist to create the Artwork as defined in the Schedule in accordance with the commissioning plan (‘the Plan’) and the commissioning budget (‘the Budget’) as set out in the Schedule. The Artwork, the Plan and the Budget may only be varied by the written agreement of the parties.

2.2 The Organisation agrees to pay the Artist an agreed commission fee (‘the Commission Fee’) as defined in the Schedule in consideration for creating the Artwork. The Commission Fee shall be included in the Recoupment Fee as defined in clause 12.1.1.

2.3 The Artist agrees that the Organisation shall be entitled to receive the Share of the Sale Proceeds of the Artwork as defined in clause 12.1.

3 Completion

3.1 The Artist agrees to complete the Artwork by the completion date agreed in the Plan (‘the Completion Date’) and to complete all preparatory stages in the execution of the Artwork as defined in the Plan on time; time being of the essence of this Agreement.

3.2 The Artist shall permit members of the Organisation to view the Artwork in the course of its production at the artist’s studio or at an alternative venue to be agreed between the parties in writing. The Organisation shall provide the Artist with a reasonable period of notice, not less than [3] working days prior to viewing, in which to arrange to view the Artwork.

3.3 The Artist shall immediately notify the Organisation once the Artwork is complete. The Artist shall be solely responsible for judging when the Artwork is complete and for authorising its public display and exhibition. Once the Artist has notified the Organisation that the Artwork is complete, the Artist shall not be entitled to retract authorship of the Artwork or to prevent the Organisation from publicly exhibiting the Artwork.