The first Zero Art Fair in Upstate New York was scheduled to last four days in July 2024, but lasted only two, because nearly all the exhibited artworks were taken away by collectors – who paid no money to the selling artists. Instead, collectors signed a novel online agreement as a ‘Friend’ of the selling ‘Artist’. The artwork’s title, completion date, dimensions, materials, edition number, and retail price are stated; and ownership of intellectual property rights in the artwork – copyright and moral rights – are expressly reserved by the Artist.
The terms and conditions (T&Cs) specify that the Friend takes care of the artwork, but is only liable for loss or damage due to gross negligence or wilful conduct. The Friend maintains ‘Casualty Share’ insurance covering the artwork’s loss or damage; and any insurer’s payout to the Friend of a Casualty Share is remitted to the Artist. The Casualty Share is the highest of either: half the full retail price; or the discounted purchase price the Friend would pay to buy the artwork.
If the Friend opts to buy the possessed artwork, the purchase cost would reduce the full retail price by 20% for each full calendar year in possession (meaning that after five years they automatically become owner). Within the five year possession period, the Artist may sell the artwork to a third party. Before doing so, the Artist must give the Friend email notice of a third party’s price offer to buy, giving the Friend ten days to buy at the same price less any discounted percentage earned to date.
The Friend may not transfer or sell the artwork to a third party before becoming its owner. After becoming owner, any transfer or sale is valid only if it is executed via a written agreement with precisely the same T&Cs as included in the first contract. In this way, new owners would be ‘stepping into the position of Friend, in which case, “Friend” shall thereafter refer to such successor-in-interest’. Accordingly, all subsequent transferees or buyers would be bound by the same T&Cs as in the first contract – and to ensure the Artist knows about all subsequent transfers or sales, the first Friend and all successors are obliged to notify the Artist.
If the first Friend is owner of the artwork and validly sells it, the Artist is paid a ‘First Sale Share’, which is half the proceeds of first sale. On subsequent resales, the successor Friend pays the Artist ‘a royalty equal to 10% of the sale price, less any amounts already paid to Artist pursuant to applicable droit de suite or similar laws’. Any purported sale of the artwork in violation of that T&C is invalid, and the relevant Friend or successor pays the Artist any Casualty Share, First Sale Share, and royalties due.
On giving the first Friend or successors one month’s email notice, the Artist may borrow the artwork back for public exhibition, limited to two years in any five year period; in which case, Artist pays all applicable packing and shipping expenses for borrowing and returning. First Friend or successors may loan the artwork for exhibition with the Artist’s prior written consent.
The contract endures for the Artist’s lifetime plus 70 years after death, but may be terminated earlier. The Friend may terminate at any time by giving 30 days’ email notice. The Artist may terminate by giving ten days’ email notice to cure any Friend’s violation of contractual T&Cs. If the contract is ended before a Friend becomes owner of the artwork, they lose any right to buy, which must be returned at the Friend’s expense. If either party dies, the contract’s T&Cs remain in force between the surviving party and the other party’s estate or successor-in-interest. The contract is governed by the laws of New York State, which generally follow doctrines of ‘common law’ developed over centuries in the UK.
At first sight, the contract appears to provide a balance of basic benefits for all parties. Artists gain cost-free artwork storage by potential buyers, who also pay for insurance against loss/damage (and remit any insurance payout to Artists); and successor Friends pay artists a share of resale prices for up to 70 years after the Artist’s death. First Friends gain possession of artwork free of charge for up to five years, after which time they automatically become owners – again without payment; or may choose to buy the artwork at a discounted price at any time during their first five years’ possession.
However, on closer consideration, the contract’s deployment in the art marketplace may encounter practical problems. Artists using such contracts may face the prospects of: first Friends taking away the artwork but not buying or insuring it, or reselling it without using the original T&Cs, and their whereabouts being untraceable for lawsuit purposes. Moreover, subsequent buyers may not sign up to the original T&Cs, and so not become ‘successor Friends’, who may therefore resell without imposing such T&Cs; and art market professionals – agents, dealers, auctions – would be similarly inclined to refuse to take artworks on consignment to sell with such T&Cs. If these problems arise, and artworks increase in market value, Artists would not be entitled to resale royalty payments.
Over the past 50 years in the US, attempts have been made to introduce an artist’s transfer of ownership-cum-sale contract, requiring resellers to pay artists a share of resale proceeds. In 1971, the Artist’s Reserved Rights Transfer And Sale Agreement was published: initially drafted by dealer/curator Seth Siegelaub with attorney Robert Projansky (Interview AM327 and AM328), it has been revised and varied over subsequent decades. But few, if any, buyers ever signed such versions.
Over a century ago in mainland Europe, it was widely accepted that buyers were invariably reluctant to support contractual resale rights for artists. Led by France, some European countries developed a non-contractual corrective for what many viewed as an economic injustice: they enacted a new artist’s resale right resale right/droit de suite. This intellectual property right now operates in over 80 countries worldwide – but not yet in the US. The creation and deployment of the Zero Art Fair’s store-to-own contract represents the latest valiant attempt, by US artists, to control and share economic rewards of the resale market. Art market history suggests it is likely to fail.
© Henry Lydiate 2024