Wood v. Lucy, Lady Duff-Gordon
222 N.Y. 88, 118 N.E. 214 (N.Y. 1917)
- Wood was an advertising agent. Duff-Gordon (a noted fashion designer), signed a one-year contract with Wood giving him the exclusive right to market clothes and other products with her name on them.
- This contract gave Duff-Gordon half of all the profits from the venture.
- The only thing Wood was required to do under the contract was to account for the profits and get patents on the designs.
- So technically if Wood did not try to market the clothes, no profits would be made and no patents would be necessary, so he wouldn’t be contractually obligated to do anything at all.
- Around the same time, Duff-Gordon came up with an idea to market a line of clothing “for the masses” and broke the contract with Wood by allowing another company to market products with her name on them. Wood sued for breach of contract.
- Duff-Gordon argued that no valid contract existed, since Wood himself was not actually required to do anything.
- Basically, Duff-Gordon argued that the agreement couldn’t be a valid contract because there was no consideration on Wood’s part.
- The Trial Court found for Wood. Duff-Gordon appealed.
- The Appellate Court reversed. Wood appealed.
- The NY Supreme Court reversed and found for Wood.
- The NY Supreme Court found that a promise to represent the interests of a party constituted sufficient consideration to require enforcement of a contract based on that promise.
- “A promise may be lacking, and yet the whole writing may be ‘instinct with an obligation,’ imperfectly expressed.” “The acceptance of the exclusive agency, was an assumption of its duties.”
- The Court reasoned that a person wouldn’t make a contract like this unless they actually intended to do something, so the argument that it didn’t require anything of Wood is silly. In addition, the fact Duff-Gordon would have gotten profits if Wood was successful implies that both parties believed Wood would be working.
- It is obvious that this wasn’t a gift, it was a business deal.
- Contract liability is a two-way street. If Wood had not given reasonable efforts, Duff Gordon could theoretically sued for breech of contract.
- The requirement of reasonable effort can always be read in to a business contract as an implied consideration.
- This case established the fact that the doctrine of consideration should not be used to dismiss what are obviously commercial contracts.
- Considering the fact that what was being sold was endorsements and not ‘goods’, is this case covered under UCC §2-306(2)?