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Written Contracts are Best for Artists
Being Paid in Advance or on Stipend
I received a stipend in advance monthly payments to produce art for a gallery based on a verbal agreement between me and the owner. During the nine months that this lasted, he progressively made more and more requests of me. He wanted me to send every piece of art I produced and hold nothing back. This prevented me from stockpiling work for future shows. He also wanted me to paint a certain way and, to my way of thinking, wanted all the art to look alike. After a while, his payments started getting late, I started holding work back, our relationship became strained, and eventually the whole thing fell apart. Isn't the purpose of a stipend to encourage an artist to explore new territory?
The purpose of a stipend or any form of advance payment from a gallery, patron, organization or collector is whatever the payer and artist agree for it to be. In your case, the gallery owner apparently took it to mean one thing and you took it to mean another. The two of you did not adequately hash out the details of your arrangement ahead of time, and that's why things ended up the way they did. But back to this later.
Anytime money is to change hands for an artist to produce art on a regular basis and over an extended period of time, a written contract is highly recommended. If at any point either party gets hazy on the details, they'll be there in writing. Additionally, process of drafting an agreement forces all parties to identify, address and quantify specific issues that often get overlooked in casual verbal agreements based on a few conversations. It also provides a concrete framework for how the business relationship is to proceed. A good contract includes payment schedules, penalties for late payments, what types and amounts of art are to be produced and delivered within what periods of time, penalties for late art deliveries, the time period during which the contract is to remain in force, and all other specifics that both parties agree on.
A key to successful business relationships like this is that all issues be explored fully ahead of time. A problem with so many arrangements, particularly with art that has yet to be produced, is that what is not mentioned at the outset often turns out to be at least as important as what is. All parties must be clear, honest and forthcoming about their needs, expectations and requirements including as much about the physical characteristics of the art as the payer deems necessary.
Problems are likely to occur when issues are deliberately avoided or held back. A certain amount of this 'sandbagging' as it's called in poker may have gone on between the two of you. For example, you may have been so excited about the prospect of receiving payments in advance that you were purposely vague about how the money would allow you to experiment with new types of art. The dealer, on the other hand, may have withheld the fact that he only expected you to produce art that he could easily sell. If this was the case, you more or less conned each other into accepting an arrangement that was destined to fail.
Returning to the subject of advance payments for art, you're correct in assuming that they're ideally designed to finance artistic exploration, as is often the case with grants or residencies. In the real world of art galleries, however, a major reason why dealers pay artists in advance is to acquire art that can be sold to cover initial outlays and eventually produce profits on a continuing basis. A certain amount of artistic exploration can usually take place, but at the same time, some art has to be salable in order for everyone to stay happy-- at least enough for the gallery to break even.
Unless specifically agreed to, artists can't simply take advance payments from galleries, go off, create whatever they feel like creating, regardless of salability, and expect the owners to continue as benefactors. Owners, on the other hand, can't fill artists' lives with so many restrictions that they begin to feel like art machines cranking out whatever is most commercially viable. All parties must enter into the relationship with a certain sense of risk and adventure in order for the experience to be a positive and rewarding one. Galleries have to be sensitive to artists' creative needs; artists have to be aware that dealers make their livings by selling art.
What happened between you and this dealer was unfortunate, but keep in touch and do your best to remain on friendly terms. Never burn your bridges. He's had success selling your art in the past so you'd do well to update him several times a year on what your latest work looks like. At some point in the future, he may once again come to love what you're doing and offer to give you another show. You never know.