Summary of Wood v. Lucy, Lady Duff-Gordon, Court of Appeals of New York, 118 N.E. 214, 222 N.Y. 88 (1917)
FACTS: Lucy, the Defendant, is a fashion designer well-known for her creations. Her favor can increase sales of clothing. She contracts with Plaintiff Wood, a marketer, to have exclusive right [subject always to her approval] to place her endorsements on the designs of others in an effort to make a profit from her popularity. Wood was also to have the exclusive right to place Lucy’s own designs on sale, or to license others to market them. In return, Lucy was to have one-half of ‘all profits and revenues’ derived from any contracts Wood might make. This exclusive right was to last at least one year from April 1, 1915 and thereafter from year to year unless terminated by notice of 90 days.
Wood finds out that Lucy went behind his back, placing her endorsement on fabrics, dresses, and millinery without his knowledge, keeping the profits. Wood sues for damages.
Lucy’s claim is that the agreement lacks the elements of a contract, as Wood was not bound to do anything.
HISTORY: Appeal from a judgment entered April 24, 1917 upon an order of the Appellate Division of the Supreme Court, which reversed an order of Special Term denying a motion by defendant for judgment in her favor upon the pleadings and granted said motion.
ISSUE: Can a contract be formed by an implied promise in exchange for compensation as consideration?
RULE/ANALYSIS: A bilateral contract can be express, implied in fact, or a little of both. The finding of an implied promise within a contract (for the purpose of establishing sufficient consideration to support an express promise) can be used to uphold agreements, which may appear to be illusory. While an express promise may be lacking, the whole writing may be an implied promise and may form a valid contract.
SUMMARY: While the contract did not specifically state that Wood had promised to use reasonable efforts to place Lucy’s endorsement and market her designs, such a promise can be implied. Without his efforts, neither Lucy nor Wood could receive a profit and therefore the circumstances created an implied promise. Wood also promised to make monthly accountings and acquire patents and copyrights as necessary, showing his intention and duties. Additionally, Lucy gave Wood exclusive right to her endorsement – an express promise. The contract, therefore, is valid.