State Consignment Laws
Consignment Pitfalls to Avoid
NORMALLY, CONSIGNED GOODS remain the property of the seller until they are sold to the retail customer. However, if an establishment goes bankrupt–which is a very real possibility in today’s economic climate–merchandise left on consignment may be subject to the claims of creditors and be seized by them unless certain protective steps have been taken by consignors.
Note that a standard consignment contract will not offer sufficient protection in a bankrupt case. In some states, artists and craftspeople have lost all their merchandise due to such seizures. (In one case I recall, an artist actually had to pay $10,000 to retrieve her own paintings from a bankrupt gallery.)
Also, rent-a-space shops and craft malls (if any of the latter still exist), fall into a gray area that may not be covered by state consignment laws. The only way I know of to protect yourself here is to keep a keen eye on the shop and watch for warning signs of trouble. If you have consigned merchandise to a shop you can’t easily visit in person, my personal recommendation would be to remove that merchandise now and try to sell it somewhere else where you have more control over it.
States That Have Consignment Laws
Several states have consignment laws designed to protect artists and craftspeople. Those known to me are Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Florida, Idaho, Illinois, Iowa, Kentucky, Massachusetts, Michigan, Minnesota, Missouri, Montana, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Tennessee, Texas, Washington, and Wisconsin.
THERE IS A PITFALL in state consignment laws, however. Some states protect only “art” and may exclude protection to items that fall outside the area of painting, sculpture, drawing, graphic arts, pottery, weaving, batik, macrame, quilting, or “other commonly recognized art forms.” Each state with a law on the books has a different interpretation of “art,” and other states not listed above may or may not have a consignment law at all.
For those reasons, everyone interested in selling on consignment should contact their state legislature for more information. You may also be able to turn up information about your state’s consignment law on the web.
Related Items:
If you enjoyed this post, please consider leaving a comment and subscribing to the feed to get future articles delivered to your feed reader.
Comments
No comments yet.
Leave a comment