Wood
was a top New York advertising agent, representing major commercial
clients as well as celebrities. Duff-Gordon (a noted fashion designer),
signed a contract with Wood giving him the exclusive right to market
garments and other products bearing her endorsement for one year beginning
on April 1, 1915.
This
contract gave Duff Gordon half of all revenues thus derived. Wood's only
duties under the contract were to account for monies received and secure
patents as necessary - but if Wood did no work to market the clothes, no
monies would be received and no patents would become necessary.
Around
the same time, Duff Gordon came up with an idea to market a line of
clothing "for the masses" and broke the agreement by endorsing
products sold by Sears Roebuck without Wood's knowledge. Wood sued.
Duff
Gordon argued that no valid contract existed, since Wood himself was not
actually required to do anything, Lucy contended that the agreement
provided no consideration.
The
Trial Court found for Wood. Duff Gordon appealed.
The
Appellate Court reversed.Wood appealed.
The
NY Supreme Court reversed the reversal and reinstated the Trial Court's
decision.
NY
Supreme Court made new law by determining 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."
You
wouldn't make a contract like this unless you 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.
This
case established the fact that the doctrine of consideration should not be used to dismiss what are
obviously commercial contracts.The requirement of reasonable effort can always be read in to a business contract as
an implied consideration.
Considering
the fact that what was being sold was endorsements and not 'goods', is
this case covered under UCC § 2-306(2)?
