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LEGAL ANALYSIS:Then-Judge Cardozo's opinion in Wood v. Lucy, Lady Duff Gordon, 222 N.Y. 88, 118 N.E. 214 (1917), underpins the analysis for a duty of good faith to supply missing terms. In that case, the defendant Lady Duff Gordon, a self-styled "creator of fashions," agreed with the plaintiff Otis Wood that he would have the exclusive right, subject to her approval, to sell her designs, to license others to market them, and to place her endorsement on the designs of others. As Cardozo phrased it, "she employed the plaintiff to turn this vogue into money." Id. at 90. Under the agreement, Lady Duff Gordon was to receive one half of "all profits and revenues" derived from contracts made by the defendant involving her work. Id. at 90. The defendant sued Lady Duff Gordon, claiming that she had placed her endorsement on various products without his knowledge and kept the profits for herself. Lady Duff Gordon claimed in response that the original agreement between herself and Wood was unenforceable and illusory because it failed to specify Wood's obligation to sell and market her designs. In Wood, the Court held that although the contract between the parties did not spell out each party's obligations, 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. If that is so, there is a contract. Id. at 91 (internal quotation marks omitted). The Court found the implication of a binding promise between the parties from numerous aspects of the agreement. Lady Duff Gordon gave Wood the "exclusive" right to market her creations; she must have expected him to perform, because her business would have ceased to exist without him. Additionally, Lady Duff Gordon's sole compensation was to be one-half of the profits: Therefore unless Wood made reasonable efforts under the agreement, she could recover nothing under its terms, defeating the "business efficacy" that both parties must have desired when they made the agreement. Id. The contract between Wood and Lady Duff Gordon was upheld, and generated a body of law in which the duty of good faith upheld binding agreements with scant details. See Curtis Props. Corp. v. Greif Cos., 212 A.D.2d 259, 265-66, 628 N.Y.S.2d 628, 632 (1st Dep't 1995); Ultra Innovations, Inc. v. Food Lion, Inc., 130 N.C. App. 315, 317-18, 502 S.E.2d 685, 687 (1998); 2 Corbin § 5.27 ("The finding of implied promises is more common today than in the era before the Wood case. Courts recognize that if the parties intend a contract, rather than a nullity, implying promises to avoid the finding of illusoriness or indefiniteness protects the reasonable expectation of the parties engendered by the agreement.").
An implied promise is sufficient detriment to the plaintiff to constitute consideration. The term valuable consideration is the type of consideration that makes a contract valid. The detriment in this arrangement was the implied promise to use best efforts which is considered a change of position. The court's desire to validate these types of agreements has great merit. If these types of agreements were treated as illusory, many businesses would not be able to get their products to the marketplace through the use of manufacturers' representatives. This case is codified under UCC 2-306(2); an exclusive dealing contract implies an obligation by both parties to use their best efforts.
Note: Consideration is any change in position that one is not obligated to perform in the past; the use of best efforts would be a change in position.
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