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~  Consignment ~

Art & Craft Shows, Fairs & Festivals

Information for Craftsmen & Artists

Considering A Consignment Relationship?

Consignment is a two-edged sword. It's a relationship that is not to be entered into lightly...but with contracts, and armed with knowledge before-hand. You want a fighting chance to get paid for your work, or to have your merchandise returned to you in good condition.

FIRST: Ask for references, - and follow up by calling each one, identifying yourself, etc.

How long do they know the person. How long have they sold their work there? Do they receive their checks on time?

Do they have a contract?

Have they visited the store in person?

Does the store also carry imports, etc. purchased by the owner?

Consider: If the store owner has a large investment in merchandise , whose work do you think is going to be in the PRIME display area? Whose work will be on a back shelf, or dark corner?

 Who is responsible for faded/broken/shopworn merchandise?

Who is responsible for shipping charges?

Who is responsible for stolen items? It should be defined in the contract.....

Did the store close because of Chapter 11 proceedings? (Bankruptcy) Your work could have been seized to pay for the store owner's debts, - unless there was a sign posted "Work Offered for Sale Here is Sold Subject to a Contract of Consignment"  

If that is posted in plain sight, under the Uniform Commercial Code, (UCC) in MOST states you have a small amount of protection under the law.

A few years ago, the sudden closing of a chain of stores which sold hand-crafted items, including two in local malls in Poughkeepsie and Kingston, NY, reminded me of the endless warnings about consignment relationships, - and the very good reasons for those warnings!

 I use the term “relationship” because the craftsman and the shop owner are indeed, working together, and the terms of their arrangement should be spelled out in writing , and signed by each person, along with a written inventory list, and payment details.

In the above cases where the craftsmen lost payment for their work, merchandise, money and labor, documentation was sparse. The shops did not permit craftsmen to retain copies of the paperwork which specified the amount of rent to be paid and the percentage of commission paid the shop based on the craftsman’s total inventory.

 I wondered at the time why anyone would enter into such a one-sided relationship, - but there were many craftsmen who were trusting enough to get caught up in this scheme.

 A contract between two parties is a good contract, only if there is something that each one gets, that he wants. A good contract not only specifies each one’s obligations, but his rights, as well.

There are certain points that should be covered in any consignment contract, for instance:  Does it specify that the work may only be sold at the price specified on the inventory sheet? (If not, who sets the retail price?)

Do you set the retail price, or do you get a set amount, or can the shop or gallery sell it for whatever price it can get?

How much commission do you have to pay the shop/gallery?

It’s common to pay the shop a percentage of the sale price; if the shop gets 40%, then $200 in sales yields $120 to the craftsmen. I’ve heard of shops asking 50% commission. Since you can sell your work outright at wholesale prices (50%) why would you enter a consignment agreement for that amount?

  How will you get paid: monthly, on the first of the month, weekly, or .....? Make sure your contract states these terms in writing!

Did you specify the duration of the term of consignment? (When does it begin, - how long does it last? One month? Three months? Forever? - until your work is dusty and shop-worn and stored in a back closet........?  Who pays shipping, handling, packing, insurance, and other costs?

These, and any other issues that concern you should be spelled out in a written contract; the craftsman and the shop owner or gallery owner each should have a copy signed by the other.  These are points to consider, and put in writing if they are important to you, - and they should be.  These are the very basic issues which will protect you if something goes wrong, - and something usually does!  

Reproduced with the permission of Art & Craft Show Yellow Pages.   

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