What Is an Artwork Loan Agreement
Artwork loan agreement refers to the legal contract governing the loan of a particular piece of art for a specified period of time. It is important when loaning a piece of art for a number of reasons, but primarily it is there to ensure both the lender and the borrower understand their indemnification obligations and what happens if either party fails to uphold their end of the agreement . It also outlines the obligations in regards to replacing the piece of art should it be damaged or destroyed whilst on loan. It is typically between a lender who may be a gallery or association and a borrower who could also be a gallery or an association or could be a private person.
Essential Elements of Artwork Loan Agreements
Any reputable artwork loan agreement templates will include a comprehensive description of the artwork being borrowed. This should include a description of the physical dimensions of the artwork, the medium, the artist, as well as images of the piece. This is the baseline for what should be included in the artwork loan agreement, but it may also include information about the exhibition venue or condition reports.
Depending on what is being loaned, an indemnification clause may also be used to limit one party’s liability. These are very useful for attorneys as they can limit the liability of each party when the piece is loaned.
The agreement should also include a loan protocol which sets limitations on how the piece is used during the loan period. This may include information on where the piece may be displayed or restricting the use of the piece beyond the terms of the loan agreement. The loan protocol also serves to clarify how exactly the loan works for both parties.
A crucial part of the loan agreement is the duration of the loan. This term should be clearly defined and specify the beginning and end date of the loan. A default date can also be defined.
Along with that, conditions of the loan should be included, as well. These conditions should state the care that should be taken with the piece along with any insurance requirements that may be appropriate. This is also the place where the clause for insurance requirements should be included.
Specific insurance requirements and what happens if the artwork is lost or damaged should be outlined in detail. This is the best way to protect both parties from damage while the piece is within their control.
Advantages of Artwork Loan Agreement Template
Using a template for an artwork loan agreement can be extremely useful for anyone who is new to the practice, or to those more experienced who are looking for a timesaving option. A pre-formatted document will have most, if not all, of the standard provisions commonly included in an artwork loan agreement, such as conditions of the loan, applicable law, and insurance requirements. The ready-made framework encourages attention to detail and completeness. The documentation protects the gallery or museum, and by having a checklist to review, helps to avoid the risk of misplacing important conditions. There are various examples available online and, while the content may differ, the key provisions tend to remain the same.
How to Customize Your Artwork Loan Agreement Template
As with all templates, artwork loan agreement templates should be modified to meet the specific needs of the loan. The precise terms of the Loaned Artwork will impact how the template is utilized and what additional terms may need to be added to the boilerplate language used in the template. Some of these details may include:
• The loan period – While artwork can be on loan for as little as a day or as long as a year, artwork is often on loan for a period of 2-3 months, until the end of a specific exhibition, for example. Regardless of the duration of the loan, longer loans should be detailed in an artwork loan letter of agreement, rather than a template. This is mainly to ensure that the use and treatment of the artwork is detailed in writing.
• The type of artwork – While most artwork can be loaned, some types of artwork can be particularly vulnerable and should be treated with extra care during the loan period. For example, it is considered bad practice to loan out textile artwork, unless the textiles are used for display considerations, as they are more likely to be saltier and can be adversely affected by hand oils.
• The insured value – While valuables of all kinds can be insured, investment typically goes into the artworks themselves, rather than their frames or display materials. Alternatively , the loaning organization may choose to not insure the artwork at all. Regardless of the value of the loaning organization’s investment, however, if the lending institution or gallery does not have adequate insurance coverage, the loaning organization can become liable for the artworks’ loss, destruction, corruption, or theft, making coverage an important factor to consider before even drafting the agreement.
• The loan fee – While it is common practice for museums and galleries to charge galleries, art fairs, and art fairs fees for borrowing artworks, it is uncommon for two museums or galleries to charge each other for the use of their collections. Nonetheless, the exchange of money for services can still be outlined in the template, if the loaning organization requests reimbursement for transportation and handling expenses, or if there is any other monetary agreement between the two institutions.
While it is easy for a gallery or museum to draft their own artwork loan agreement template, it is highly recommended that a legal professional be consulted, as even the simplest of loan agreements can often prove complex, and a single mistake can invalidate the entire agreement. In addition to this, the legal professional may suggest additional terms to include in the artwork loan agreement template, making it all the more invaluable.
Mistakes to Avoid When Drafting an Artwork Loan Agreement
When dealing with an artwork loan, problems can arise from a moment’s inattention to detail. Even if you received your artwork loan agreement from an experienced lender, you should beware of common mistakes. You may find that the greatest danger lies in the words which may relate to a particular industry or profession. People often don’t recognize the worst pitfall because the words used are so common to the art world. A truly unfortunate result may be that the lender loses a claim for damages because they fail to define their rights in a particular way.
If you are using someone else’s template, it is especially important to educate yourself on these common mistakes. Otherwise, you may not realize you have failed to amend a term to suit your own circumstances. Sometimes the lender or artist will simply copy a form used in a prior loan without checking the date line. The most common error is the wrong date in the final amendment, where the date on the signature line is different from the date on the last page of the agreement. A lender may have a typo in a subsequent loan, and you will end up with two versions of the same document. The lender uses the wrong form, you make the payment, and the lender later takes the position that the second document is invalid.
Another example has a more serious consequence — the lender may lose their money if the artwork has been stolen or lost. A term on the subject of a lost shipment may be useful if the artwork is being sent to another place, but if the lender is not able to recover the cost of the loan, the lender loses the money. These common errors can undermine the integrity of your new agreement, and it is important to understand where the risk lies. The good news is that if you are aware of these pitfalls, you will have a much easier time avoiding making the same mistake.
Artwork Loan Agreements – Legal Issues and Best Practices
Beyond practicalities, it is essential to ensure that an artwork loan agreement complies with relevant statutory considerations, such as the following:
1. Moral Rights – Moral rights are personal rights that are separate from—and remain in addition to—the copyright attributable to an artwork. Typically, these comprise the following rights:
a. a right of attribution, which entitles the creator of each original work to claim authorship of the work, and to object to derogatory treatment of it (provided such injury to honour or reputation is prejudicial);
b. a right of integrity, which entitles the creator of each original work to restrain or claim ownership of an adaptation, reproduction, or other transformation of that work that is of a derogatory nature; and
c. a right of disclosure, which entitles the creator of each original work to decide if, when, and how his/her name is to appear on the reproduction of that work and to exercise control over access to his/her works, for example, by issuing a right of access for researchers who wish to study the works.
- Copyright – In addition to moral rights, copyright is often considered when drafting an artwork loan agreement. It is important to have a clear understanding of copyright ownership, for example, if the items were created by employees, or produced by someone else for the benefit of another. It also makes sense to consider copyright in the specific context of the use of a borrower’s image and reputation , in order to ensure that the borrower does not inadvertently approve the work and then subsequently finds a third party using his or her celebrity in association with the work and without the borrower’s consent.
- The Statute of Anne – In England and Wales, the Statute of Anne (1710) established the distinction between copyright and moral rights. Section 78 of the Statute of Anne, as amended by the Copyright Designs and Patents Act 1988, allows authors of engravings, artists, and engravers exclusive rights to print, reprint, publish, and vend their engravings, engravings on cards, maps, or designs for maps, as well as to alter, deface, or disfigure the engravings. This means that there are limits on the right of parties to permanently dispose of objects without the owner’s consent.
- The Copyright Designs and Patents Act 1988 – This Act regulates copyright and moral rights in the UK. Its 1976 US counterpart has been reviewed above. As covered earlier, moral rights entitlements under the 1988 Act can be assigned and waived, while copyright entitlements cannot be assigned but can be licensed. Different requirements apply for assignment of copyright entitlements from those for assignment of moral rights entitlements, and how these are satisfied can sometimes be complicated.
Best practices are to:
Although the advent of international and common law treaties such as the Berne Convention and the Statute of Anne enhance the position of these issues from a statutory perspective, case law should be reviewed carefully for any additional considerations that might impact the drafting of the art loan agreement.