Consigning Fine Art

Civil Code Division 3, Part 4, Title 1, Chapter 2 deals with the consignment of fine art in California.

Section 1738.5 provides that, whenever an artist delivers or causes to be delivered a work of fine art of the artist’s own creation to an art dealer in this state for the purpose of exhibition or sale, or both, on a commission, fee or other basis of compensation, the delivery to and acceptance of such work of fine art by the art dealer shall constitute a consignment, unless the delivery to the art dealer is pursuant to an outright sale for which the artist receives or has received full compensation for the work of fine art upon delivery.

Section 1738.6 explains that a consignment of a work of fine art results in all four of the specified results.

Section 1738.7 provides that a work of fine art received as a consignment must 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 in full to the consignor.

If this work is thereafter resold to a bona fide purchaser before the consignor has been paid in full, the proceeds of the resale received by the consignee must constitute funds held in trust for the benefit of the consignor to the extent necessary to pay any balance still due to the consignor and such trusteeship must continue until the fiduciary obligation of the consignee with respect to such transaction is discharged in full.

Section 1738.8 declares that any provision of a contract or agreement whereby the consignor waives any provision of this title is void.