Also known as: substantial interests · material interest
Written by attorneys — see sources below.
2 senses
An interest of the government that is significant enough to justify a restriction on commercial speech. The restriction must directly advance the interest and maintain a reasonable fit with it.
The interest of an obligee in having the original promisor perform or control the acts promised under a contract. That interest prevents delegation of performance unless the parties agree otherwise.
An interest of the government that is significant enough to justify a restriction on commercial speech. The restriction must directly advance the interest and maintain a reasonable fit with it.
The interest of an obligee in having the original promisor perform or control the acts promised under a contract. That interest prevents delegation of performance unless the parties agree otherwise.
Each sense below has its own examples, sources, and questions.
Stella Shapiro, an attorney, mailed brochures to recent accident victims within thirty days of their injuries. The state bar enforced its rule against such mailings. The court upheld the ban because the state possessed a substantial interest in protecting the victims' privacy and the bar's reputation during their period of vulnerability.
2 common questions
A governmental interest is substantial when it concerns the protection of privacy, the reputation of a profession, or consumer welfare in a manner that is unrelated to the suppression of expression. The interest must be real and the restriction must directly advance it with a reasonable fit.
Supporting sources
The contract test focuses on whether the obligee bargained for personal performance by a particular promisor. The commercial-speech test focuses on whether the government has a significant non-speech-related objective that the restriction directly advances. The two inquiries serve entirely different doctrinal purposes.
Supporting sources
Midnight Satellite contracted with Delta Fiber for dedicated fiber installation and 24/7 monitoring by Delta Fiber's own elite team to guarantee 99.9 percent uptime. Delta Fiber delegated the monitoring to Highland Telecom without notice. Midnight Satellite had a substantial interest in Delta Fiber's personal performance because it had specifically negotiated for the internal team's reputation and direct accountability.
Sophia Singh hired Serena Soto to design and install custom cabinetry in her home because Soto had a distinctive style and reputation for precision. Soto attempted to delegate the work to another carpenter. Singh possessed a substantial interest in Soto's own performance, so the delegation was improper.
Nexxus Products granted Best a distribution agreement requiring Best to sell and promote Nexxus hair-care products. Best assigned its rights and delegated its duties to Sally Beauty, a competitor of Nexxus. Nexxus had a substantial interest in Best's own performance of the promotion and sales duties, rendering the delegation ineffective.
In 1979 Nexxus Products Company, a California corporation that formulates and markets hair care products, negotiated with Best Barber & Beauty Supply Company, Inc., a Texas corporation in the business of distributing beauty and hair care products to retail stores, barber shops and beauty salons throughout Texas. Between March and July 1979 Mark Reichek, Best’s president, negotiated with Stephen Redding, Nexxus’ vice-president, over a possible distribution agreement between Best and Nexxus. This resulted in an August 2, 1979 distributorship agreement executed in the form of a July 24, 1979 letter from Reichek to Redding under which Best would serve as the exclusive distributor of Nexxus hair care products to barbers and hair stylists throughout most of Texas except El Paso. The July 24, 1979 letter set forth pricing terms, Nexxus’s agreement to underwrite training and seminars, payment by letter of credit, and termination provisions allowing cancellation only on the anniversary date with 120 days’ prior notice and requiring Nexxus to buy back inventory at cost if it terminated the relationship. In July 1981 Sally Beauty Company, Inc., a Delaware corporation with its principal place of business in Texas and a wholly-owned subsidiary of Alberto-Culver Company, acquired Best in a stock purchase transaction and merged Best into Sally Beauty, which succeeded to Best’s rights and interests in all contracts; Alberto-Culver is a major manufacturer of hair care products and a direct competitor of Nexxus. Shortly after the merger Stephen Redding met with Michael Renzulli, president of Sally Beauty, and wrote a letter stating that Nexxus would not allow Sally Beauty to distribute its products because Sally Beauty was wholly owned by a direct competitor. In August 1983 Sally Beauty commenced this action by filing a complaint in the Northern District of Illinois, claiming that Nexxus had violated the federal antitrust laws and breached the distribution agreement. Nexxus moved for summary judgment on the breach claim. The district court granted the motion on January 31, 1985. The remaining claims were dismissed by stipulation in May 1985, and final judgment was entered on the breach of contract claim.
2 common questions
An obligee has a substantial interest when the contract terms or negotiations show that the obligee specifically bargained for the original promisor's personal performance or control. The interest exists even if the contract does not expressly prohibit delegation. Courts examine whether the identity of the performer was a material term of the bargain.
Supporting sources
No. An assumption agreement between the delegator and delegatee does not discharge the delegator's liability unless the obligee expressly agrees to the release. The obligee's substantial interest in the original promisor remains enforceable against the delegator.
Supporting sources
…to the obligee: “A party may perform his duty through a delegate unless otherwise agreed to or unless the other party has a substantial interest in having his original promisor perform or control the acts required by the contract.” UCC § 2-210(1), Tex.Bus. & Com.Code Ann. § 2-210(a) (Vernon 1968). Consideration is given to balancing…