Lessen Liability for Lost or Damaged Art

Lessen Liability for Lost or Damaged Art – art examines how picture frames can avoid problems, examines store owner’s liability for damages

Gilda Zimmet

Accidents can happen, especially with valuable art. Learn how to protect yourself when you’re framing it in your shop.

You may not realize it, but when a customer walks through your door and leaves a lithograph to be framed, the two of you have just entered into a complex legal relationship by way of your conversation, actions and written agreements. Usually, you frame the item, the customer picks it up, and he or she returns home a happy lithograph owner. But what happens when something goes wrong while you are in possession of the lithograph or after you have returned the framed lithograph to the customer? As a small business owner, you should know your duties and how to limit your liability and avoid problems.

What are your duties while you are in possession of a piece of art? When your customer leaves property with you for the purpose of having it framed, you the frame shop owner become a “bailee” and your customer the “bailor.” These are the legal terms that define your relationship. As long as your frame shop is in possession of the property, you must treat the property in the same way a “reasonably prudent person” would treat his own property under the same circumstances. In other words, you must not be negligent with the property while it is in your possession or the possession of one of your agents. Steps must be taken to protect and preserve the property.

This boils down to using common sense. If a valuable piece of property is left with you, it might be prudent to keep it in a separate part of the shop under lock and key. A less valuable piece of art could perhaps be kept in the common areas of the store. The higher the value, the more care that must be taken. Therefore, part of determining your duty of care is knowing the nature of the property that you have received and knowing how to care for it.

For example, certain pieces of art may be damaged by light, necessitating the need for a dark storage space. Others may be sensitive to moisture. Perhaps all pieces should be wrapped to avoid dirt and puncturing. Perhaps some pieces should be handled by persons wearing certain types of gloves. Each time a piece is left with you, you must evaluate it in order to be able to care for it properly while it is in your possession.

You may also want to learn how other frame shops care for certain types of property. What is the customary practice in the industry? For example, if you are asked to frame a tapestry when you are more experienced with paintings, you should consult an expert or knowledgeable colleague to learn what the “trade custom” is with regard to the storage and care of tapestries.

These same principles apply to the decisions you make with regard to framing. This decision of course is not entirely your own. You probably reached this decision in consultation with the customer. To some degree, your options may be limited by the customer’s willingness to spend and his personal preferences. Because of this, you must document the verbal and written exchanges you have with a customer. For example, if you know a certain piece of art, based on its nature and on where the customer proposes to hang it, needs special glass which blocks UV rays, this suggestion should be documented in the event that the customer declines your recommendation and subsequently returns to complain about sun damage.

Limiting Liability

After contemplating all of the possible harmful things that could happen to a piece of art in your possession, you may be wondering if there is any way to limit your liability. If you have ever read a contract with small print and language which looks like English but sounds like Greek, then you have seen a limitation on liability. The degree to which you can limit your liability differs from state to state. Therefore, be sure to learn about this issue in each jurisdiction in which you conduct business.

You may try to insert an exculpatory clause in your contract which basically states that your customer leaves his property at his own risk, that you are not responsible for loss or damage to the property in certain situations and that the amount for which you may be held liable is limited to a specific amount. This may or may not be effective depending on the jurisdiction, the nature of the customer (i.e. an experienced art dealer versus a first-time owner of a piece of art) and the terms of the clause. While this area of the law is not clear or uniform, two things are certain: (1) an exculpatory clause must include an explicit reference to “negligence” or “negligent acts” and (2) the validity of an exculpatory clause will turn on the bargaining power of the parties.

Rather than using a contract, it is more likely you use a receipt when dealing with a customer. Therefore, you may try to include on the receipt an exculpatory clause. The question here becomes what is the receipt? If the receipt is merely the mechanism for identifying and picking up the piece left with you, your carefully worded limitation on liability might be ignored on the grounds that the customer stuffed it in his wallet along with film and dry cleaning receipts and had no idea he was agreeing to all of the terms squeezed onto the receipt in fine print. On the other hand, a court may look at a receipt and parse it into terms that are binding and those that are not.

For example, the receipt may state the time and date for completion of work, the price, the types of materials used and more. These are items that you likely discussed with the customer. The rest of the receipt, the legalese, boiler plate in small print, however, is not something you likely discussed with the customer. Therefore, these terms may end up being invalidated by a court.

You may decide to limit your liability by posting a sign on the premises which includes all of your exculpatory clauses. Be aware this sign must either be in a place likely to be seen by the customer or the customer must have actual knowledge of the sign.

Uniform Commercial Code

One body of law that relates to this topic is the Uniform Commercial Code or UCC for short. The provisions of the UCC usually apply to the sale of goods rather than a context in which services are rendered. However, some states are applying the UCC to the types of transactions that could arise in your frame shop.

In the event that you operate in a state where the courts are inclined to apply the UCC to bailment situations, you may find your actions judged against the standards contained therein. Therefore, your exculpatory clause may be valid or invalid depending on whether or not it is common for flame shops to use exculpatory clauses and whether the particular customer involved knew or should have known that it was likely that a flame shop would limit its liability for negligence.

Furthermore, the contents of your disclaimer may be judged against an “unconscionability” standard. Is your disclaimer of liability reasonable under the circumstances, and does the disclaimer catch a customer by surprise?

The UCC contains several provisions having to do with the disclaimer of warranties. (i.e. We make no representation express or implied regarding the suitability of the flame.) Few states have applied these provisions to bailments even though bailees often insert disclaimers of warranties into their receipts and contracts. For example, as a frame shop owner, you may sell flamed items as well as framed art that is brought to you. In this case, it is likely your standard forms contain a disclaimer of warranties since you are acting as both a seller of goods and as a bailee. Simply be aware that your disclaimers of warranty as well as your limits on liability for negligence may be tested by UCC standards. In that case, the limits and disclaimers must be in writing, they must be conspicuous and they must mention negligence.

Keep Your Bases Covered

The following tips will help you steer clear of problems:

1 Your receipt should be more than a piece of paper used to identify

the art that was dropped off. Rather, it should contain the following,

clearly and conspicuously:

* An “Offered and Refused/Accepted” portion where you indicate what

special products or services (i.e. UV glass protection, acid-free

matting, heavy duty chop, etc.) were offered and either refused or

accepted by the customer. Have customers initial their refusal, just

like when you decline insurance at a car rental company.

* An estimate of the value of the property left with you and any

limits on financial liability you are imposing (a dollar figure or

limits to insurance coverage).

* A notification that you are not responsible for property left in

your possession a certain number of days after you have completed the

framing job. If property is left with you beyond the end date, your

responsibility, if any, is to notify the client before you can sell it

for costs incurred.

2 Encourage your customers to read the terms of your agreement so they

are not caught by surprise. Make them sign front and back.

3 Make sure the terms of your agreement are clear, easy to read (i.e.

not hidden or buried), and if you limit your liability for negligence,

you should make an explicit reference to “negligence.”

4 Consult colleagues to insure your practices are in line with those

of other frame shops of a similar size and caliber.

5 Carry adequate insurance.

6 Have systems in place to adequately care for pieces of art. For

example, valuable art should be kept under lock and key where fewer

number of people have access to reduce the likelihood of theft and/or


7 The terms of your agreement should cross reference the terms of your

insurance policy.

8 Find out if in your jurisdiction you can sell art left with you too

long in order to recoup the value of your services when a client

neglects to pay for your services, If this is allowed in your

jurisdiction, inform the customer of this possibility.

9 Limit your damages to a specific dollar amount, unless the art is of

a higher value and the value was disclosed to you.

Gilda Zimmet, Esq. is an attorney in the Washington D.C., office of the law firm of Venable, Baetjer, Howard & Civiletti. She practices art law and estate planning. She can be reached at gmzimmet@venable.com or (202) 216.8548.

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