Gruber v. S-M News Co.

Facts

In September 1945, plaintiffs Gruber and Martin, operating as International Cards, entered into an oral agreement with defendant S-M News Company at their New York place of business. Under the contract, plaintiffs promised to manufacture 90,000 sets of twelve Christmas greeting cards conforming to approved samples, pack them in approved boxes, and be ready for shipment by the second week of October 1945. The cards featured caricatures of twelve different nations designed to exploit the novelty appeal of the newly-formed United Nations. Defendant promised to exercise reasonable diligence to sell all sets using its resources for scientific sales promotion, national advertising, newsstand outlets, and sales organization through its network of over 700 wholesalers and jobbers supplying over 90,000 retail outlets. Defendant agreed to pay eighty-four cents per set f.o.b. wholesalers’ places of business where cards were sold at retail, with credit for unsold returns. Plaintiffs manufactured and packed the sets in accordance with the agreement and notified defendant on October 2, 1945, but defendant refused to perform, distributing samples to only four out of over 700 wholesalers in September. Plaintiffs eventually sold 40,000 sets in 1949 for only six cents per box.