Wood v. Lucy, Lady Duff-Gordon

Filling the Gaps, Illusory Promises

Facts

Lucy employed Wood to help her make money. He was to have exclusive right, subject always to her approval to place her indorsements on the designs of others. In return she was to have onr-half of all profits and revenues derived from any contracts he might make. The exclusive right was to last for one year. He kept his part of the agreement she did not. She place her indorsements on fabrics, dresses etc without his knowledge and withheld the profits. They both signed the agreement. Wood sued her for damages. She brought the case to the appeals court on demurrer-questioning the legal sufficiency of the claim. Lucy said the agreement lacks the elements of a contract.

Issue

Was plaintiff Wood’s promise illusory and therefore not supported by consideration, since it did not obligate him to take any positive action or do anything of an affirmative nature whatsoever?

Rule - sacred talisman

The law has outgrown its primitive stage of formalism when the precise word was the sovereign talisman, and every slip was fatal It takes a broader view to-day. A promise may be lacking, and yet the whole writing may be “instinct with an obligation,” imperfectly expressed.

Holding/Court’s Rationale

The promise has a value. It helps to enforce the conclusion that the plaintiff had some duties. His promise to pay the defendant ½ of the profits and revenues resulting from the exclusive agency abd to render accounts monthly was a promise to use reasonable efforts to bring profits and revenues into existence. Judgement of the lower court for Lucy should be reversed.

Implied Duty or Promise

Courts uniformly agree that every contract includes an implied duty/promise of good faith and an implied duty/promise of reasonable efforts/due diligence. 

Recitals

introductory statements that provide background usually not binding statements