Discounts belong to the client, and the contract has to say so.

An independent advisor passes every discount from a seller to the client in full. The client pays exactly what the seller receives. ArtisDomus works on that basis and writes it into the engagement letter. A sound contract says who pays the advisor and that discounts belong to the client. It also requires the advisor to disclose any interest in writing before recommending a work. Those three clauses deal with the conflict of interest. A contract that only states the fee leaves it open.

Published by ArtisDomus, written by Polina Surina.

The five clauses

Three clauses deal with the conflict. Two cover a deal that changes.

ArtisDomus takes these five clauses from its own engagement terms.

1. Only the client pays. The advisor takes no payment of any kind from a seller in connection with the engagement.
2. Discounts belong to the client. Any reduction from a seller passes to the client in full. The client pays exactly what the seller receives.
3. Written disclosure for each purchase. The advisor discloses in writing any interest in a work, a seller or an outcome. This happens before the work is recommended.
4. The records belong to the client. Invoices, condition reports, provenance and correspondence belong to the client. The advisor hands them over on request and at the end of the engagement.
5. The fee if the deal changes. The contract settles in advance whether the fee moves with the price, and what is owed if a purchase is abandoned.

The first three settle who the advisor works for. The last two cover a purchase that changes or stops. That is when people find out an arrangement was never written down.

What the silence costs

A discount kept back never shows in the buyer’s paperwork.

A gallery invoice shows the price the buyer pays. It leaves out the price the gallery agreed with the seller. It also leaves out anything the gallery paid to whoever brought the buyer in. From the paperwork alone, a buyer cannot tell whether anyone negotiated the price for them.

So the clause has to be in writing. The buyer cannot check it afterwards from the documents they hold. The obligation has to be agreed before the purchase.

In this area

The fee structure behind this contract.

How an art advisor is paid, and where the conflicts of interest sit · Reference

Private capital and collections covers governance, acquisition policy and collection strategy for families and their offices.