Wood v. Lucy, Lady Duff-Gordon Case Brief Summary | Law Case Explained

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Wood v. Lucy, Lady Duff-Gordon | 118 N.E. 214 (1917)
A contract requires consideration, which typically involves a bargained-for exchange of promises creating mutuality of obligation. Mutuality of obligation means each party must owe the other a duty to perform. So, if the contract affords one party unilateral discretion to perform or not, mutuality of obligation fails. This, in turn, makes the contract void for lack of consideration.
In Wood versus Lucy, Lady Duff-Gordon, one party sought to enforce a contract, even though the express terms seemed to let him decide whether he needed to perform or not.
Lucy, Lady Duff-Gordon was a celebrated fashion designer in the early twentieth century. She designed her own products, and because her name was highly marketable, other designers clamored for her to endorse their own products. These designs and endorsements were Lucy’s sole source of income. Seeking to maximize that income, Lucy hired Otis Wood, a promoter.
Wood drafted the governing contract, which both parties signed. Under its terms, Wood alone could market and sell Lucy’s designs and endorsements. Even Lucy herself needed Wood’s consent to sell her product or name. Each party was to receive half the profits. Further, the contract required Wood to account for the revenue monthly, and take whatever measures he deemed appropriate to safeguard Lucy’s intellectual-property rights. Wood formed a corporation to carry out the contract.
The way the contract was structured, Wood’s obligations took effect only if Wood generated sales revenue. Yet the agreement didn’t expressly require that he try to generate sales revenue in the first place. Read literally, the agreement let him sit idle if he wanted, leaving Lucy’s brand and livelihood at his mercy.
Sometime later, Lucy sold an endorsement without Wood’s consent, keeping all the profits for herself. Wood sued Lucy in New York state court, alleging breach of contract. Lucy moved to dismiss. She argued that the contract let Wood decide whether to perform at all, making it void for lack of consideration. Wood responded that regardless of the contract’s express terms, the context implied a promise, on his part, to make reasonable sales efforts. Thus, consideration existed, and the contract was enforceable.
The trial court ruled in Wood’s favor, denying Lucy’s motion. On appeal, the Appellate Division reversed, holding the contract void for lack of consideration. Wood appealed that ruling to the New York Court of Appeals, New York’s highest court.
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[@expensivepink7]

my contracts professor loves referring to Lady Duff-Gordon as “the original influencer”😆

[@NightCrafted]

In the second restatement of contracts S79, lack of Mutuality of Obligation does not bar a contract from being formed.