The Vanishing Gallery: What to Do When the Gallery Shuts Down
- Gunna Freivalde
- Sep 10
- 9 min read
Written by GUNNA FREIVALDE | AMG ATTORNEYS
Imagine the gallery scene as a grand and bustling bazaar that is experiencing a sudden, almost synchronized closing of stalls, leaving the artists with an echoing, "What just happened?" whisper.
The closure of art galleries globally, particularly in the wake of economic pressures and shifting market dynamics, is much more than just a professional setback for artists. As galleries transition to online platforms or shut down entirely, artists face significant challenges regarding intellectual property rights, financial claims and artwork ownership.
The rapid expansion of online viewing rooms during the COVID-19 pandemic has introduced new difficulties. Imagine the art collector scrolling through Instagram, bypassing the gallery entirely. Feels like ordering takeout when you have a Michelin-starred restaurant next door – very convenient, but … different. Then there's the economic climate, a beast that spares no one and can become a critical issue as artists face unpaid sales and lost royalties due to gallery insolvency or closure. The disruption in representation not only affects an artist's income but also complicates the ability to enforce contracts that govern these financial transactions. In addition to these financial concerns, the ownership and recovery of artworks pose another layer of complexity; when galleries close, questions surface about who retains ownership of unsold works and how artists can reclaim their creations.
Essentially, running a gallery and being represented by it is a bit like trying to balance a stack of Royal Albert teacups during an earthquake.
WHEN YOUR GALLERY BECOMES A GHOST SHIP
In the age of digital viewing rooms and online exhibitions, the lines of intellectual property are very blurred. While the artwork was safely hanging on a gallery wall and shining on the gallery's website, now its high-resolution image might be floating in the digital world and maybe even used for AI training, which leaves the question: "Who owns these images now?", and it is not a rhetorical question. The closure of galleries has significant implications for intellectual property rights, particularly concerning the ownership and usage of artworks. As galleries transition to online platforms or cease operations altogether, the legal landscape surrounding copyright becomes increasingly complex. Artists often rely on galleries to manage the intellectual property, including licensing agreements for the reproduction and display of the work. After the gallery closure, copyright becomes more of a Wild West rodeo. Without the gallery backing the artist, it's the creator of the artwork versus the world, armed with … well, hopefully, a good contract. Without clear agreements, the work could be vulnerable to unauthorized use.
Additionally, the sudden loss of representation may hold back an artist's ability to enforce the intellectual property rights effectively. Without the backing of a gallery's legal resources and market knowledge, artists might struggle with steering copyright claims or pursuing royalties from past sales. To avoid this situation, create a digital time capsule of the artistic journey – save every email, every receipt, every WhatsApp conversation.
THE QUEST FOR UNPAID SALES AND ROYALTIES
Gallery closures can significantly impact artists financially, particularly concerning unpaid sales and royalties. If the gallery is insolvent or has ceased operations without proper notification, recovering these funds becomes increasingly challenging.
When a gallery representing an artist closes, unpaid sales and royalties become a haunting spectre, leaving artists to grapple with the quest for recovering lost revenue. Imagine trying to chase down payments from a gallery that has announced its insolvency – you will soon find out that it's a bit like trying to find a needle in a haystack, with the exception that the needle is the hard-earned cash and the haystack is the access to the gallery's financial records or customer lists necessary for pursuing these claims. Contracts, once a source of comfort, now become crucial documents, and without them, you might find yourself in a legal tug-of-war, and let's be honest – who wants that!
Moreover, the transition to online platforms further complicates royalty structures. As galleries shift to digital sales models—often without clear communication regarding existing contract artists may inadvertently miss out on royalties due to mismanagement of rights or lack of clarity around new licensing agreements. Ultimately, the closure of a gallery represents not just a loss of representation but also a potential loss of significant revenue for artists caught in this tumultuous landscape.
WHEN YOUR ART BECOMES A LEGAL CAPTIVE
What happens to unsold or consigned artworks when a gallery closes? This is a question that often leads to a legal riddle. If the artist is always beginning, as per Ezra Pound, what happens if that beginning is abruptly halted by a gallery's demise? You may find yourself in a precarious position regarding your rights to retrieve or reclaim the artworks, especially if contractual agreements with the gallery are non-existent, unclear or inadequately defined. It's like having a pre-nuptial agreement for your art – practical and protective. In many cases, galleries hold artworks under various terms; some may be outright sales, while others involve consignment agreements that stipulate ownership remains with the artist until sold.
The lack of clarity around these agreements can complicate recovery efforts when galleries close, and the feeling might be like discovering that your beloved artwork has become a hostage in a legal standoff. If Aristotle pointed out that "the aim of art is to represent not the outward appearance of things, but their inward significance", then now is the time to ask what significance can the art hold when its very existence is challenged, when its ownership is debated under contract law and Uniform Commercial Code!
Legal disputes may arise over claims to ownership if a gallery has sold an artwork but failed to remit payment to the artist before its closure. This situation not only affects financial compensation but also influences an artist's ability to assert their rights over their work in future exhibitions or sales. Additionally, the proliferation of online platforms, rushed by the pandemic, has blurred the lines of authors' rights. In such cases, reclaiming the artworks becomes a battle – not only over the physical objects; it's about reclaiming the artistic identity, intellectual property and peace of mind, which are now being weighed by the specifics of bankruptcy law, contract law and the ever-evolving intellectual property law.
ECHOES OF RUIN
The art world, just like any other, is not immune to the harsh realities of commerce. The sudden closures of galleries, as recent case studies painfully depict, casts a long shadow over artists. For instance, in New York, a wave of gallery closures has disrupted the careers of many artists who relied on these venues for representation and sales.
Consider the Salander-O'Reilly Galleries in New York, which filed for bankruptcy back in 2007, leaving numerous artists and collectors with substantial financial losses. Many artists discovered they were owed significant sums for artwork left with the gallery, highlighting the risks artists face when galleries encounter financial difficulties. The application of bankruptcy law, specifically Chapters 7 and 11, became a grim reality for the artists and collectors who were seeking to recover their assets.
Then came the Chowaiki & Co., a New York-based gallery, declared bankruptcy amid allegations of fraud back in 2017. Several clients and artists claimed they were defrauded in art deals, leading to legal proceedings to recover their artworks or financial losses. And let us not forget the Thomas Kinkade Company bankruptcy in 2010, which is a story where the "Painter of Light" found himself in the shadows of legal wars. Millions in punitive damage underscored the importance of ethical business practices and the protection of contractual obligations. The application of state-level business laws and contract law was crucial in this instance.
These cases, while unique, share a common line – the lack of specificity regarding legal implications in existing legislation underscores the need for a deeper examination of contracts between artists and galleries. Many agreements may not adequately protect artists in cases where galleries declare bankruptcy or cease operations, leaving you vulnerable to loss of income and diminished visibility.
Furthermore, copyright considerations emerge as critical when galleries transition to online exhibitions. As galleries utilize high-resolution images and written content for virtual showcases, the necessity for securing proper licenses from artists becomes paramount.
This shift raises questions about ownership rights over digital representations of artwork that were previously displayed physically.
Additionally, subjective evidence suggests that relationships between artists and galleries can become contentious post-closure. The absence of clear legal frameworks can exacerbate disputes over unsold artworks or unpaid commissions. Without established precedents addressing these issues directly within artist-gallery contracts, artists may struggle to assert their rights effectively when faced with abrupt gallery shutdowns or bankruptcies. Overall, while case studies illustrate the challenges posed by gallery closures, they also highlight an urgent need for clearer legal protections tailored to safeguard artists' interests in an evolving art market landscape.
FORTIFYING THE CITADEL
In the unpredictable theatre of the art world, where fortunes and finances can shift with the stroke of a brush or the click of the door, you should become your own guardian. Empower yourself by mastering contract negotiation. The contracts you sign should explicitly outline terms regarding representation, commission structures, and the handling of artworks in the event of a gallery's insolvency or closure. Artists must ensure that they retain ownership rights over their works until sold, as well as secure provisions for the return of unsold pieces. These contracts, far from being mere formalities, are the barricades against ambiguity.
As the proverb advises, "Do not put all your eggs in one basket", a crucial step involves diversifying representation by seeking multiple galleries or exploring alternative exhibition platforms such as online marketplaces and art fairs. This approach not only broadens an artist's audience but also reduces dependency on a single gallery's success and aligns with the spirit of artistic independence.
Meticulous record-keeping is the artist's historical archive, a testament to their transactions and communications. These records, admissible as evidence in any court, serve as irrefutable proof in disputes over unpaid commissions or lost artworks. It's similar to keeping a detailed journal of your artistic journey, ensuring every stroke and sale is accounted for.
In the digital age, where images can travel faster than thought, copyright awareness is vital. "The law is a weapon", Anatole France once declared, and the truth is that every artist should have a good amount of knowledge of copyright law. This knowledge empowers you to negotiate favorable terms for image use and royalties, safeguarding the intellectual property in the vast expanse of online exhibitions.
Lastly, engaging with professional organizations or legal advisors specializing in art law can provide valuable guidance tailored to individual circumstances. These experts, well-versed in legal complexities, provide you with invaluable guidance adapted to individual circumstances. It's like having a Yoda for art law, except (hopefully), they don't speak in riddles.
WHEN THE GALLERY GOES BELLY UP
So, your gallery has decided to throw in the towel, declare bankruptcy, and leave you wondering if your art is now going to be sold off to pay for their office coffee budget? First things first, it is crucial to review the contracts with the gallery thoroughly. Understanding the terms related to representation, sales commissions, and rights to unsold works can provide clarity on what actions can be taken in response to a gallery's financial distress. And while digging into the pile of papers, you should also gather all communications with the gallery regarding sales and inventory status, as this information may be vital if legal recourse becomes necessary.
Establishing direct communication with collectors who have purchased works through the gallery can help maintain relationships that might lead to future sales or exhibitions. Reach out, let them know what's going on (if they haven't learned it already), and maybe suggest a private viewing at the studio. Reaching out to more art spaces can reduce dependency on a single entity, thereby lessening vulnerability in times of market instability.
Let's be honest – understanding bankruptcy law is like trying to understand quantum physics while blindfolded. Grab yourself a lawyer specializing in art law. They will be your superhero who will provide guidance on intellectual property rights concerning unsold artworks and advise on how best to protect these assets during bankruptcy proceedings. And while you are at it, participating in artist collectives or networks may offer support systems where shared resources and knowledge about navigating such crises are available.
Lastly, maintaining an online presence through personal websites or social media platforms is essential for continuing visibility in the art market. By implementing these practical steps, you can better position yourself amidst the uncertainties posed by gallery bankruptcies.
THE BOTTOM LINE
Gallery bankruptcy is a pain, but it doesn’t have to be a career-ending catastrophe. The impact on intellectual property rights is significant; financial claims related to unpaid sales and royalties present another layer of complexity in this landscape, and recovery of artworks poses critical challenges; when galleries shut down unexpectedly, the status of unsold pieces may become ambiguous. By being proactive, strategic and determined, you have a chance to reinvent yourself and emerge stronger than ever. And who knows, maybe you will
even create a bankruptcy-themed art installation that will become a crowd-pleaser. Now that’s turning lemons into lemonade!
Reading between the lines: It is important to remember that not all countries have the same laws.
Gunna Freivalde is the legal maestro behind AMG Attorneys, where art and law collide in the most harmonious of ways. Based in Belgium, Spain, and Switzerland, Gunna is a legal ninja, wielding her expertise across borders with finesse.
And there's more! You'll also find her donning her arbitrator hat at The Court of Arbitration for Arts in The Hague, Netherlands - because who says legal proceedings can't be a work of art?
When she's not busy untangling legal knots or advocating for artistic justice (those rare moments), you can catch her donning her superhero cape as Legal Trustee at Tigers4Ever, a UK-based charity dedicated to wildlife conservation. Saving tigers by day, slaying legal dragons by night or vice versa - it's all in a day's work!
However, Gunna's most important role is being a full-time mom to two artistic teenagers and a furry squad of three cats, a dog, a horse, and a ferret (because every legal eagle needs a fuzzy sidekick).
And when the chaos of the day finally settles, you'll find Gunna unwinding with a well-deserved glass of wine, dreaming of a world where art reigns supreme, and justice is served with a side of creativity. Because hey, who says you can't change the world one masterpiece at a time?
AMG ATTORNEYS
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