The famous designer, Lucile, was involved in a case which is very important in contracts law: Wood v. Lucy, Lady Duff-Gordon.
Wood v.Lucy Duff-Gordon is an important case in the history of contract law. It is still surprisingly controversial.
The decision in Wood v.Lucy Duff-Gordon 222 N.Y. 88 (1917) was a landmark in contract law. It involved important rulings in what constitutes consideration and implied promise. Justice Cardozo’s luminously written judgement is still studied by law students in many countries because the case set these important precedents and it is cited in many decisions.
Facts of Wood v. Duff-Gordon
The facts involved an agreement between Lucile Duff-Gordon, a famous Edwardian designer, and Otis Wood, her manager. Duff-Gordon gave Wood the exclusive right to market her designs and place her endorsements on the designs of others. He was to be entitled to half of the revenues that he made from this marketing.
Duff-Gordon made an exclusive agreement with Sears, Roebuck to have her dresses marketed in the Sears’ mail-order catalogue. This was revolutionary for a designer who designed haute couture clothes. Duff-Gordon was far-sighted in selling a ready-to-wear line in Edwardian times. She didn’t tell Wood about the agreement with Sears or give him any of the profits.
The decision of Wood v.Duff-Gordon
The lower courts found for Wood when he sued for breach of contract. The Supreme Court denied Duff-Gordon’s argument that there was no valid contract because there was no consideration involved. She argued that Wood had not promised to do anything or given her anything in the agreement. The Appellate Division reversed this decision, and Wood appealed. The New York Court of Appeals found in favour of Wood.
Justice Cardozo wrote in his famous judgement that there was an ‘agreement instinct with an obligation.’ There was a valid contract because there were mutual obligations – Duff-Gordon gave Wood exclusive marketing rights and Wood was entitled to half of the profits of any business that he completed according to the agreement. Even though Wood had not expressly promised to do anything, he had agreed to attempt to market Duff-Gordon’s designs.
Cardozo also found that there was an implied promise in the agreement. Wood made an implied promise to use his best efforts to market Lucile Duff-Gordon’s designs and place endorsements for her. An important factor in this decision was that Wood had an organization which was capable of doing this. Another factor was that Wood had agreed to give Duff-Gordon monthly accounts.
Duff-Gordon had an obligation of good faith not to make marketing contracts with other people for the duration of her contract with Wood. She had breached this by entering into a contract with Sears, Roebuck.
Justice Cardozo’s widening of the areas of consideration and implied promise were controversial because of his alleged judicial activism, i.e. not sticking to the express terms of the agreement. He stated that: "the law has outgrown its primitive stage of formalism when the precise word was the sovereign talisman...it takes a broader view today." There have been many essays for and against this decision. The Pace University Law School even held a Symposium on ‘The Enduring Legacy of Wood v. Lucy, Lady Duff-Gordon in 2009 attended by leading contracts scholars and fashion experts from as far away as Australia and England.
Kauffman, Andrew. Cardozo, Harvard College, 1998
Today in History: Wood v. Lucy, Lady Duff-Gordon
An Exclusive Licensee's Obligation to Use Reasonable Efforts in Placing a Product