Sally Beauty Supply Co. v. Nexxus Products Co. case brief summary
801 F.2d 1001 (7th Cir. 1986)
CASE SYNOPSIS:
Plaintiff successor appealed the decision of the United States District Court for the Northern District of Illinois, Eastern Division, that granted summary judgment for defendant hair products company in contract action, upon its ruling that an exclusive distributorship contract between defendant and plaintiff's predecessor was one for personal services and therefore not assignable.
CASE FACTS:
-Defendant hair products company cancelled the exclusive contract it had with its regional distributor when the distributor was acquired by and merged into plaintiff successor.
-Plaintiff was a wholly-owned subsidiary of a major competitor of defendant in the hair products market.
-Plaintiff sued defendant for breach of contract.
-On its motion, defendant was granted summary judgment on the grounds that the distributorship contract was one for personal services and therefore not assignable from the distributor to plaintiff, even upon merger.
-Plaintiff appealed.
HOLDING:
In affirming, the court relied upon different grounds, and ruled that the contract should be treated as a sale of goods contract, governed by the Uniform Commercial Code, Tex. Bus. & Com. Code Ann. § 2-210(a) (1968).
ANALYSIS:
Under that provision, the contract was not assignable without defendant's consent, and the distributor could not delegate its performance thereunder, because plaintiff was a subsidiary of defendant's competitor and defendant could not be compelled to accept a bargain it did not contract for, that is, performance by a party other than the original distributor.
RULES:
A contract is assignable except when there is some reason why the non-assigning party would find performance by the other party to be unsatisfactory.
OUTCOME: Summary judgment for defendant was affirmed, but on a different theory than that relied on by the district court. The distributorship contract was to be treated like a contract for the sale of goods, which was not assignable without defendant's consent, under the Uniform Commercial Code, because plaintiff was a wholly-owned subsidiary of defendant's direct competitor.
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801 F.2d 1001 (7th Cir. 1986)
CASE SYNOPSIS:
Plaintiff successor appealed the decision of the United States District Court for the Northern District of Illinois, Eastern Division, that granted summary judgment for defendant hair products company in contract action, upon its ruling that an exclusive distributorship contract between defendant and plaintiff's predecessor was one for personal services and therefore not assignable.
CASE FACTS:
-Defendant hair products company cancelled the exclusive contract it had with its regional distributor when the distributor was acquired by and merged into plaintiff successor.
-Plaintiff was a wholly-owned subsidiary of a major competitor of defendant in the hair products market.
-Plaintiff sued defendant for breach of contract.
-On its motion, defendant was granted summary judgment on the grounds that the distributorship contract was one for personal services and therefore not assignable from the distributor to plaintiff, even upon merger.
-Plaintiff appealed.
HOLDING:
In affirming, the court relied upon different grounds, and ruled that the contract should be treated as a sale of goods contract, governed by the Uniform Commercial Code, Tex. Bus. & Com. Code Ann. § 2-210(a) (1968).
ANALYSIS:
Under that provision, the contract was not assignable without defendant's consent, and the distributor could not delegate its performance thereunder, because plaintiff was a subsidiary of defendant's competitor and defendant could not be compelled to accept a bargain it did not contract for, that is, performance by a party other than the original distributor.
RULES:
A contract is assignable except when there is some reason why the non-assigning party would find performance by the other party to be unsatisfactory.
OUTCOME: Summary judgment for defendant was affirmed, but on a different theory than that relied on by the district court. The distributorship contract was to be treated like a contract for the sale of goods, which was not assignable without defendant's consent, under the Uniform Commercial Code, because plaintiff was a wholly-owned subsidiary of defendant's direct competitor.
---
Interested in learning how to get the top grades in your law school classes? Want to learn how to study smarter than your competition? Interested in transferring to a high ranked school?
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