Loaned, Loved, Lost? Bailment in the Art World

Some states have art consignment laws which mandate galleries and dealers take an elevated level of care (mandating the artwork is trust property, the gallery owner or dealer is a trustee, the trustee is responsible for damages to work in their possession) when exhibiting or selling works of art on consignment. Someone states even preempt contracts which try and waive these extra duties. But what should artists (or other small business owners) do if they loan their work to be exhibited or sold in state that does not have these extra protections if something happens to their work? They might be able to rely on the legal concept of bailment.

Bailment is a legal relationship established between two parties when one gives property to another for a specific purpose. A bailment is established (at common law) if 1) property is delivered to a bailee (party who holds a property but does not own it), 2) the bailee accepts the property, 3) there is agreement on how the property will be handled. There are few types of bailments that are usually defined by common law. The first is a gratuitous bailment. This is when only one party benefits from the relationship. A good example of this is taking a book out of the library. The only one that benefits is the bailee and the law imposes a high standard of care on them when the property is in their possession. A good example of gratuitous bailment when only the bailor benefits is asking someone to watch our suitcase at the airport. Under that circumstance the law imposes a low standard of care on the bailee. A second type of bailment is mutual beneficial bailment. This is when both parties benefit from the relationship. A good example of this is taking clothes to the dry cleaners to be cleaned or having someone walk your dog. You are getting a service and the person is receiving payment. Under this circumstance, the law imposes a standard duty of care on the bailee in handling of property.

When an artist (or any small business which produces goods) gives artwork (or any good) to be sold on consignment a mutually beneficial bailment would likely exist at common law. In the case of goods or artwork being sold on consignment, the mutually beneficial nature is clear. The artist gets a fee and the gallery or dealer takes a commission. Accordingly, if a consignment agreement does not mention what duty of care the gallery owner or dealer has (or there is no written consignment agreement), the law will imply a reasonable duty of care while the artwork is in their possession.