Wednesday, July 28, 2010

Consignment deal gone bad? Take it to The People's Court!!!

When a consignment deal gone bad reached an impasse, a crafter and a shop owner took it to court - The People’s Court that is! I saw it myself this morning.

The crafter was a laid-back casual sort of old soul who truly enjoys the art of decorative painting. He claims to generally work on specially commissioned projects only. The shop owner was a polished, slick business type who seemed to put on a few airs, billing his shop as an upscale boutique offering “hearth products - home décor items.”

It seems the painter was an acquaintance of the shop owner’s mother-in-law who just happened to be the shop’s bookkeeper at one point in time. She suggested the shop carry some of the painter’s work “on consignment”. A verbal agreement was reached and the artist delivered the goods which were then displayed in the shop. It is unclear if this ever really resulted in any sales.

In time, there was some sort of family falling out and the mother-in-law left her position with the shop. The shop owner decided he no longer wanted to carry the painter’s merchandise and advised the mother-in-law to tell him to come and get his things. She did not want to do this as she wanted to spare her friend’s feelings. The shopkeeper removed the items from display and put them in storage.

The painter got wind of this and showed up to claim his merchandise since it was no longer on display. It was a “bad time” and the shop owner told him he would have to come back . After several attempts, the merchandise was picked up by the painter’s representative. The shop owner explained the delay as a “paperwork problem” and inferred that situation was due to his mother-in-law’s record keeping.

Had this been the whole dispute, the players would have taken their respective toys and simply agreed not to play together anymore.

Ahhhh, but there’s more…

At some point in this time period, the shop owner visited his mother “upstate”, where she either owned or worked for an antique shop. (Her role was a bit disputed but really not important here.) He returned with two antique milk cans which he wanted the painter to clean up and paint as room accents. He indicated to the artist that he had been given the cans but, in Court, maintained he paid $75 for each of them. The agreement between the two was such that the painter would paint the cans with whatever design he deemed appropriate and the shop owner would place them in the shop. When sold, at whatever price, they would split the profits. They actually had this agreement in writing!

The painted cans were placed in the shop but they did not sell . (We’re talking well in excess of two years later, here). At this point, the artist requested payment for the painting job. He demanded $250 for the work he’d done on each can as the shop owner had them priced at $500 a piece. (This was marked down from $700. Apparently, this shop is in a high rent district!) Funny, this particular dilemma had not been dealt with in the agreement. What would happen if they didn’t sell? Good question.

Judge Milian saw three possible solutions to this mess:

(1) The cans could remain in the shop waiting for a buyer to come along. (The shop owner blames the poor economy. He is convinced they will sell at that price when the economy improves.) Everybody would simply have to wait to make the profit. The Judge didn’t really feel this was an ideal solution.

(2) The shop owner could simply pay the artist outright. He didn’t like this solution.

(3)They could each take one of the cans and do with it what they will.

Since it seemed most equitable to all concerned, Judge Milian went with the third option. They actually reached easy agreement on which can each would take. No money exchanged hands as a result of this ruling.


The artist took his can and left the courtroom. On his way down in the elevator, someone admired the can and, get this, bought it right then and there for $250!!!!
The moral of this story?

Make sure you take EVERY possibility into mind when entering a consignment agreement and get it ALL in WRITING!!!!

Of course, there is an underlying marketing lesson here, too. Take one of your best pieces and simply ride elevators all around town, who knows who might fall in love with the product!! LOL


Diana said...

Great story! I'm glad the artist walked away with something for all that trouble!

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