Knowledge bank

A contract is an agreement between two or more people that is legally binding. It can be verbal or written. This guide by Sheena Etches and Nicholas Sharp outlines: essential ingredients of a contract, offer and acceptance, and implied terms.

Introduction

A contract is an agreement between two or more people that is legally binding. A contract can be verbal or written.

This guide outlines:

• Essential ingredients of a contract
• Offer and acceptance
• Implied terms

These are covered on the next pages.

Essential ingredients

Offer

There must be an offer made, that is a proposal to enter into a contract.

Acceptance

The offer must be accepted and must always be communicated to the person who has made the offer.

Consideration

Consideration must have been given, for example there must be a price paid, or promise made in return or something else that proves that both parties give some value to each other. Gifts are not legally enforceable, since the recipient of a gift gives nothing in return.

Legal relationship

The parties must have intended to create a legal relationship.

Offer and acceptance

The offer must be in reasonable detail

An offer to buy a work will not be valid if no price is stated. If you accept an offer that is not valid, it will not be legally binding.

An offer is not the same as an invitation to you to make offers

When a gallery exhibits a work with a stated price the gallery is not making an offer, but inviting the public to offer to buy the work for the stated price. If an offer is made by a member of the public to buy the work, the offer can still be accepted or rejected.

An offer can always be withdrawn by the party who made it before it is accepted, but not afterwards.

If a collector offers an artist £500 for a work and the artist does not respond, the collector can always withdraw the offer.

An offer is automatically cancelled by a counter-offer

If a collector offers an artist £250 for a print and the artist asks for £300, the original offer of £250 is automatically revoked. If the artist later decides to take the lower price of £250 the collector is entitled to say no as the earlier offer was automatically cancelled by the counter-offer.

An acceptance of an offer must be clearly communicated to the person making the offer

Implied terms

Some contract terms are implied by statute usually where Parliament has intervened to protect the consumer. They are 'implied' into every contract unless otherwise agreed and can apply to works of art and craft just as much as to other 'products':

Right to sell

The seller must have the right to sell the article being sold and it must not be owned by someone else.

Conformity with description

The goods must correspond to the description given by the seller.

Sale quality

Goods sold must be of 'satisfactory quality', meaning reasonably fit for the purposes for which that type of article is commonly bought.

Fitness for purpose

Where the buyer makes known that the goods will be used for a particular purpose, the law implies a term into the contract that the goods will be reasonably fit for the stated purpose.

Reasonable care

Where an artist is providing services, as opposed to merely selling work - this is common in residencies and commissions contracts - there is also an implied term that the services will be performed with 'reasonable care and skill'.

Other implied terms

Where it is clear that both parties intended to enter into a contract but some important term was not discussed, a court can decide that an implied term of contract arises. The court will try to make commercial sense of the arrangements made by the parties.

For example, a photographer is telephoned by a magazine editor and asked to take a landscape shot. The photographer acted on this, took the shot and sent the print to the magazine, but no fee was ever discussed.

Although technically a court could say that because there was no 'consideration' there was no contract, in practice the court would try to make commercial sense of the arrangements made by the parties by deciding the fee for them (or imply it into the contract), either on a 'quantum meruit' basis, based on what was reasonable in the circumstances, or else based on the magazine's standard fee for a commission of this kind.

The writers

Sheena Etches is a freelance arts consultant and researcher and has been project coordinator for the consultation and updating of the a-n Visual Arts Contracts and checklists and the associated Practical guides.

Nicholas Sharp is a solicitor who has advised visual artists on legal matters, especially contracts for many years. He was special adviser to the Arts Council's Percent for Art Steering Committee on Contracts for Public Art Commissions in 1990 and author of the a-n Visual Arts Contracts series. He is a Board member of a-n The Artists Information Company. He is a the founder director of The Multiple Store. He is a consultant with London-based law firm Swan Turton www.swanturton.com

Nicholas Sharp, Sheena Etches

Sheena Etches and Nicholas Sharp

First published: a-n.co.uk April 2003