In an earlier article on basic concepts of contract law, we noted that contracts don’t need to be in writing to be binding.

It is our experience that many deals between artists, galleries, dealers and collectors go undocumented. There are all sorts of reasons for this, but some see setting out a contract in writing an unnecessary hassle and source of friction in an industry where trust and personal reputation are often key, and most deals are simple enough to be done on a handshake.

But this is assuming nothing will go wrong. As anyone familiar with the machinations of the law (whether Murphy’s or otherwise) will tell you, that is not always a smart assumption to make. Parties who seem honest may not be; and parties who are honest can still make mistakes or find themselves impacted by events that they didn’t see coming.

Further, the very act of setting out the key terms of a contract in writing can help ensure that the parties turn their mind to what needs to happen to make a deal work by making them consider the steps needed to do so.

This can both ensure that the basic element of certainty is being met, and that the parties have turned their mind to important details before agreeing to go ahead with a deal. For example, a contract of sale between an art gallery and a collector could be as simple as verbally agreeing a particular price for a particular painting. But in order to complete the transaction, do the parties need to consider things such as when the payment will be made; the currency the payment will be made in; when the painting will be delivered; how it will be packaged and transported; who will pay for the delivery; who will be responsible for loss or damage to the painting before delivery etc? And if all of these factors are agreed, how can the parties ensure that they both remember the terms accurately, let alone that they actually share a common understanding of what these are?

Such things can be difficult to resolve after the contract has been entered into, and there is always a risk that conflict over such points may arise.

Therefore, having a written contract is always recommended to ensure clarity, and reduce the risk of misunderstandings or matters slipping through the cracks. This need not be seen as signifying a lack of trust between the parties, but instead should be seen as a sign mutual respect. After all, a reasonably well thought out written agreement can protect both parties in the event of the unforeseen (as much as it might also deter a bad actor); or at the least allocate risk, rights and obligations in advance, and thereby save the parties from costly, stressful and uncertain disputes about matters that could have been amicably agreed at the outset.

The information on this website is general in nature and may not be up to date. It is not intended as legal advice for any specific situation or person and should not be relied on for that purpose. You should always seek up to date legal advice for your specific situation.

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