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Session Law

2006

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Chapter 353 AN ACT FURTHER REGULATING THE CONSIGNMENT OF FINE ART.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same as follows:

SECTION 1. Section 1 of chapter 104A of the General Laws, as appearing in the 2004 Official Edition, is hereby amended by striking out the definitions of “Fine art” and “Art dealer” and inserting in place thereof the following 2 definitions:-

“Fine art”, a painting, photograph, sculpture, functional sculpture, hologram, wearable art, drawing, fiber-based work, ceramic-based work, metal work, conceptual-based art, glass-based work, an installation, a work that is created or displayed using computer, digital devices and/or new technology such as, but not limited to, digital prints, digital photographs, CD Roms, DVDs, cyberart, a web/internet-based art work, a performance-based art work and the results of the performance such as, but not limited to, film, video, DVDs, CD Roms, a sound work, an electronic-based work, a work of graphic art, including an etching, lithograph, off set print, silk screen/screen print, or work of graphic art of like nature, a work of calligraphy, an artist’s book, or a work in mixed media including collage, assemblage or any combination of the foregoing art media.

“Art dealer” or “Consignee”, a person engaged in the business of selling works of fine art, who takes works of fine art on consignment in the regular course of business, other than a person exclusively engaged in the business of selling goods at public auction.

SECTION 2. Said section 1 of said chapter 104A, as so appearing, is hereby further amended by striking out the definition of “Consignment” and inserting in place thereof the following 3 definitions:-

“Consignment”, a delivery of a work of fine art under which no title to, estate in, or right to possession of, the work of fine art superior to that of the consignor shall vest in the consignee, notwithstanding the consignee’s power or authority to transfer and convey to a third person all of the right, title and interest of the consignor in and to the work of fine art.

“Consignor”, a person who consigns a work of fine art to a consignee, including but not limited to an artist who creates works of fine art, an artist’s heirs or legatees, or an owner of a work of fine art who holds title to the work of fine art.

“Deliver” or “Delivery”, the process of physically transporting a work of fine art from a consignor to a consignee, whether done by the consignor personally, by a professional transportation service, or by the services of an agent or dealer who acts on behalf of the consignor.

SECTION 3. Said chapter 104A is hereby further amended by striking out section 2, as so appearing, and inserting in place thereof the following section:-

Section 2. (a) Notwithstanding any custom, practice or usage of the trade to the contrary, or any other language herein, whenever a consignor delivers or causes to be delivered a work of fine art to a consignee in the commonwealth for the purpose of exhibition or sale, or both, on a commission, fee or other basis of compensation, the delivery to and acceptance of the work of fine art by the consignee shall constitute a consignment, unless the delivery to the consignee is pursuant to an outright sale for which the deliverer of the work of fine art receives or has received compensation for the work of fine art upon delivery.

(b) A consignor who delivers a work of fine art hereunder shall, upon delivery of the work of fine art, furnish to the consignee a separate written statement of delivery of the work of fine art, which shall include at a minimum the following information:-

(1) the artist’s name and the name of the owner of the work of fine art;
(2) the title, if any, of the work of fine art;
(3) the medium and dimensions of the work of fine art;
(4) the date of completion of the work of fine art;
(5) the date of delivery of the work of fine art; and
(6) the anticipated fair market value of the work of fine art.

(c) The consignee shall maintain a copy of the consignor’s written statement as an acknowledged acceptance of delivery of the art work. If the work of fine art is sold, the consignee shall record the date it sold, for what amount it sold, and name and contact information of who purchased the work of fine art. If the consignor is the creator of the work of fine art or the artist’s heirs or legatees, the consignee shall disclose the name and contact information of the purchaser of the work of fine art to the consignor with payment of the funds owed to the consignor.

The consignee shall make all records pertaining to that consignee, including records of accounts, available for the consignor to review during consignee’s normal business hours, within a reasonable time after consignor’s request, and shall provide copies of the account records to the consignor when requested. The consignee shall keep copies of all books and records for at least 4 years after completion of the consignment.

SECTION 4. Section 3 of said chapter 104A, as so appearing, is hereby amended by striking out subsection (a) and inserting in place thereof the following subsection:-

(a) The consignee, after delivery of the work of fine art, shall constitute an agent of the consignor for the purpose of sale or exhibition of the consigned work of fine art.

SECTION 5.
Said section 3 of said chapter 104A, as so appearing, is hereby further amended by striking out subsection (d) and inserting in place thereof the following subsection:-

(d) The proceeds from the sale of the work of fine art shall constitute funds held in trust by the consignee for the benefit of the consignor. The proceeds shall first be applied to pay any balance due the consignor, unless the consignor expressly agrees otherwise in writing. The funds shall be allocated and disbursed in accordance with section 4A.

SECTION 6. Said chapter 104A is hereby further amended by striking out section 4, as so appearing, and inserting in place thereof the following 2 sections:­

Section 4. (a) A work of fine art received as a consignment, and the funds derived from the sale of the work of fine art, shall remain trust property, notwithstanding the subsequent purchase thereof by the consignee directly or indirectly for the consignee’s own account until the price is paid to the consignor. If the work of fine art is thereafter resold to a bona fide purchaser before the consignor has been paid, the proceeds of the resale received by the consignee shall constitute funds held in trust for the benefit of the consignor and the trusteeship shall continue until the fiduciary obligation of the consignee with respect to such transaction is discharged.

(b) A work of fine art, or funds received as a result of the sale of a work of fine art, held in trust and pursuant to this chapter shall be considered property held in a statutory trust as defined and contemplated by 11 U.S.C. section 541 and any other relevant bankruptcy law. A work of fine art received as a consignment, or funds derived from the sale of a work of fine art so received, shall not, under any circumstances, without the express written consent of the consignor, become the property of the consignee.

(c) The consignor of the work of art is solely responsible for keeping his contact information current with the consignee, including name, mailing address, phone number, fax number and email address. If the consignee has in good faith attempted to return the consignor’s work of fine art and has attempted in writing to notify the consignor of the intent, but has not been able to locate the consignor within 1 year of the consignee’s decision to return the unsold artwork, the work shall be considered forfeited and the consignee may dispose of the property in a manner as the consignee considers appropriate. The consignee shall keep on file a record of attempts to contact the consignor.

Section 4A. (a) A consignee who accepts a work of fine art hereunder and who shall receive money upon the sale of a consigned work of fine art shall show the accounts of each consignor separately on its books. Maintenance by the consignee of separate sub-accounts at its bank in the names of multiple consignors shall serve as prima facie evidence of fulfillment of the separate accounting requirement.

(b) Upon the sale of a consigned work of fine art, the consignee shall pay to the consignor funds owed to the consignor, less any monies owed by the consignor to the consignee, within 90 days of receipt by the consignor of proceeds for the sale. Failure of the consignee to comply with this section shall entitle the consignor to be awarded the amount owed to the consignor together with interest, calculated at a rate of 5 per cent per annum from the date when the payment became due, together with court costs and reasonable attorney’s fees incurred by the consignor in collecting monies owed.

(c) Failure by the consignee to pay the consignor funds owed to the consignor, less any monies the consignor owes to the consignee, within 180 days of receipt by the consignee of the funds, shall entitle the consignor to be awarded a sum equal to 3 times the amount owed to the consignor together with interest, calculated at a rate of 5 per cent per annum beginning 90 days after receipt by the consignee of the funds, together with court costs and reasonable attorney’s fees incurred by the consignor in collecting monies owed.

(d) A consignee shall not be held liable for any payment obligations or penalties, if the form of payment provided by the purchaser of a work of fine art is denied processing by its bank or credit card company; but the consignee shall be liable for recovering a work of fine art from the purchaser if the purchaser’s payment cannot be processed.

(e) The consignee shall not be held liable for any payment penalties if the consignee has in good faith attempted to make payment to the consignor, but the consignor has not kept his contact information current with the consignee. If the consignee has in good faith attempted to pay the money in trust owed to the consignor, but has not been able to locate the consignor in 4 year’s time of the sale of the consigned work of fine art, the consignor’s money in trust shall be forfeited to the consignee.

(f) In the event of the closing of the consignee’s business, the consignee shall be responsible for notifying the consignor in writing of the closing of the business. All consigned work shall be returned to the consignor by the consignee and all moneys held in trust shall be allocated to the consignor in full within 90 days of the closing. Additionally, in the event of a closing or bankruptcy of the consignee’s business, the controlling persons of an art dealership shall be obligated to keep and maintain all records of the dealership for 4 years.

Approved November 8, 2006.


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