Sally Beauty Co. v. Nexxus Products Co.

801 F.2d 1001 (1986)

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Sally Beauty Co. v. Nexxus Products Co.

United States Court of Appeals for the Seventh Circuit
801 F.2d 1001 (1986)

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Facts

In 1979, Best Barber & Beauty Supply Company (Best) entered into a contract with Nexxus Products Co. (Nexxus) (defendant), a California producer of haircare products. The contract provided that Best would promote and be the exclusive distributor of Nexxus products in Texas. The letter agreement between Best and Nexxus was executed following several days of meetings between Nexxus’s vice president and Best’s president. In 1981, Sally Beauty Company, Inc. (Sally) (plaintiff) purchased Best and merged the businesses. As a result of the merger, Sally received assignment, as successor in interest, of all of Best’s contracts, including the contract with Nexxus. Following the acquisition and merger, Nexxus renounced its agreement with Best because Sally was a wholly owned subsidiary of Alberto-Culver, another haircare-product producer that was a direct competitor of Nexxus. Sally sued Nexxus alleging, among other things, breach of contract. The district court granted Nexxus’s motion for summary judgment, finding that the parties based their agreement on “a relationship of personal trust and confidence” and therefore Best’s performance was not assignable without Nexxus’s consent. Sally appealed.

Rule of Law

Issue

Holding and Reasoning (Cudahy, J.)

Dissent (Posner, J.)

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