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
Duff-Gordon argued that no
valid contract existed, since Wood himself was not actually required to
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.
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
It is obvious that this
wasn't a gift, it was a business
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)?