The War:

A bunch of artists, including Chuck Close and the Sam Francis estate, sued Christies and Sotheby’s for millions of dollars in back royalties under the California Resale Royalty Act. This law obligates the buyer and dealer in a fine art sale to pay the artist 5% of the sale price.This law is the only one of its kind in the U.S.

The Winner:

Sotheby’s, Christies, Art Dealers Everywhere won (so far).

The federal District Court judge found the statute pushes its tentacles too far into interstate commerce, violating the “dormant” Commerce Clause.  Because the statute applies to transactions where either the artist lives or the sale takes place in California, she found its offending provisions too encompassing to save the statute. It didn’t help that the California legislators who created the law were on the record trying to impose royalty obligations on out of state sales.  The law – for now –is gone. Appeals may be on the way.

Moral of the Story

Galleries, Dealers and Auction Houses: Relax – you probably don’t have to pay royalties under the California Resale Royalty Act anytime soon.

State legislators: If you hope to regulate stuff outside your state, you don’t help your cause by sticking your hopes in the legislative record.

Here is the Opinion.

By William F. Zieske, Coco Soodek & Matt Petersen, Attorneys at Law

You would not be the first person to take a commission without a written contract. Asking for a contract signals distrust, and negotiating often involves delays and lawyers. You may have grown accustomed to closing sales with a handshake or an invoice. But there is a vast difference between selling your work off your studio wall and promising a client to create a commissioned work. Your obligations do not end when the buyer walks out the door — that’s just the beginning. And the daunting task of balancing your creative freedom with your client’s expectations might be the least of your worries, if the oral agreement you just made goes sour.

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By John Paul Benitez, Attorney at Law

The Art Newspaper breaks this story. While not an earth shattering revelation, the clipping at least helps keep an important concept in the collective conscience of the art community: armed negotiating for your best interests isn’t a strategy exclusive to the suit-and-tie set. The rules of engagement apply whether your product is oil on canvas or oil in an SUV.