Ask an Instructor: Bailment, Salvage Value vs. Scrap Value, and More

Ask an Instructor: Bailment, Salvage Value vs. Scrap Value, and More

Tuesday, June 16, 2020 in Ask an Instructor

If you have questions about general appraisal methodology and/or fine art, antiques, or collectibles specific methodology, please reach out to your ISA course instructor or the Director of Education. We are happy to help guide you in the right direction.

Q: Will you explain to me a little more about what the difference is between salvage value and scrap value? It seems odd that a damaged fine art painting would have salvage value.

A: Think of salvage value as the value of the item in its damaged state and scrap value as the intrinsic value of the materials. If a painting has a hole in the lower right corner from a puncture, does it still have value? Yes! The salvage value would be what the painting would sell for with the hole unrestored. Examples of works sold with marked condition issues such as holes do exist, but may be hard to find. You may need to speak with experts on how this level of damage would affect the value. Another example is that a small fire caused a fine layer of soot to settle across a painting such that the painting only needs a light cleaning. There was no damage to the support or the paint layers, but the varnish layer is now dirty. In this case, the salvage value would be what a similar piece that needs a similar surface cleaning would sell for. Scrap value is not often associated with fine art, as there is little intrinsic value in damaged oil paint or canvas. You would have scrap value in a damaged copper sculpture, as there is value in the copper material itself even if mangled.

Q: If I’m doing an insurance appraisal for a limited edition photograph that is numbered 4/10 and another impression from the edition, number 9/10, is still available from a gallery, is that replacement cost comparable or replacement cost new?

A: This is a very common question, and the general answer is replacement cost comparable. There is only one impression numbered 4/10. To replace it with another work from the same edition is replacement cost comparable because the work is not exactly the same edition number. But, there is always an exception to the general rule. If the photograph is destroyed, the artist may decide to print a new work and mark it as 4/10 for the replacement. In this situation, you are using replacement cost new, as you are replacing the work with a new example of the exact same 4/10 impression.

Q: Screenprint, silkscreen, or serigraph? Which is the correct term to use in my appraisal report?

A: The short answer is that all three terms are synonymous and often used interchangeably. That said, let’s look a little closer. Traditionally, the stencil printmaking process was called silkscreen printing because the screen used to create the print was made of silk. Today, the screens are made of synthetic fibers, so silkscreen may not be the most accurate description when describing contemporary prints. Silkscreen printing and the more generic term screenprinting are the same process as serigraphy. Some say that screenprinting is more of a commercial process (think of mass-produced t-shirts), and serigraphy is a more of a “fine art” process. However, the catalogue raisonné for Andy Warhol prints identifies the artworks as screenprints. Most would agree that a Warhol screenprint is a work of fine art using a commercial process. Thus, we circle back to the terms essentially being synonymous. When in doubt, choose the term that is mostly commonly used in the industry to describe the medium of the artwork, i.e. how is it listed in the catalogue raisonné or how is it described by a museum, a gallery, or an auction house.

Q: What is bailment?

A: Bailment is the delivery of personal property (or chattels) from the bailor to the bailee. In simple words, it is the legal relationship where physical possession but not ownership of personal property is transferred from one person to another. The key characteristics of bailment are that it involves temporary possession only and there is an obligation on the part of the bailee to return the goods to the bailor. A good example is when you allow your car to be parked by a valet. You are the bailor, and the valet is the bailee. The valet has temporarily both possession and control of your car; however, the valet never gains ownership of your car and must return it to you. For appraisers, an example of bailment applies when your client delivers an item to you to be appraised and temporarily leaves the item with you to be collected later. The appraiser, as the bailee, has a duty of care to use ordinary care and return the item in good condition to the client.