Loan agreements

The sharing of collections through loans is an important activity of museums and some private collectors. On the one hand there is a need for a flexible and pragmatic approach to ensure loan procedures are not too onerous. Yet on the other hand, it is recommended to sign a loan agreement that sets out the responsibilities of both parties in order to minimise the risk of any misunderstandings.

Among other things this is concerned with the purpose and period of the loan, transport, environmental conditions, security, insurance, reproduction and copyright and – last but not least – costs. Problems may arise especially when liability clauses are not clearly framed in the loan agreement. This can lead to unpleasant situations, for example, when the lender tries to hold the borrower liable for damage to the artwork after it has already been returned.

The borrower should exercise due diligence and be aware of possible legal issues when considering a loan. It is in the interest of both parties to be aware of outstanding or competing claims as it may open the artwork to the risk of court-ordered seizure. In the event of international loans, immunity from seizure arrangements may provide some protection, but they do not provide immunity from lawsuits. This is accompanied by an international tendency to limit immunity so that is does not cover property that was taken in connection with acts of a foreign government as part of persecution of a targeted group, such as Nazi-looted art.

For more information or assistance with loan agreements, please contact us.

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