Q: I am an art gallery in CA which sold consigned art in 2006 and was unable to pay the artist. Statute of limitations?
I made payments in 2007 on other sold pieces and paid them in full... however a balance of $45,000 remains on art sold from 2005 to 2006... artist is threatening to take me to court. Do the CA statute of limitations apply in a consignment relationship where the "invoice date" is the date the painting sold? Please advise.
A:
The date of the breach of contract will be determinative of statutes of limitations related to contracts. If fraud is claimed, the date of discovery of the fraud will be controlling. If there is a date where you made it clear, and it was understood, you were not going to pay, the clock would start running at that time.
The SOL is four years from the "breach" of a written contract and two years from the "breach" of an oral contract.
One question will be whether your 2007 payments can be associated with 2007 sales as the artist may assert that the 2007 payments are that which are due and owing, etc.
A:
In a case like this, time is generally your friend. There is a four year statute which can be extended under certain conditions. If they take you to court you will need to defend yourself. There are ways to protect yourself without creating fraud.
http://taxbizlawyer.com/civil-litigation-orange-county.htm
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