Business Law Assignment

Business Scenarios and Case Problems 11-3 (page 229): Spotlight on Taco Bell – Implied Contract. Assignment is to prepare a written response to the following question: “Do these facts satisfy the requirements for an implied contract? Why or why not?”

 

 

11–3. Spotlight on Taco Bell—Implied Contract. Thomas Rinks and Joseph Shields developed Psycho Chihua-hua, a caricature of a Chihuahua dog with a “do-not-back-down” attitude. They promoted and marketed the character through their company, Wrench, L.L.C. Ed Alfaro and Rudy Pollak, representatives of Taco Bell Corp., learned of Psycho Chihuahua and met with Rinks and Shields to talk about using the character as a Taco Bell “icon.” Wrench sent artwork, mer-chandise, and marketing ideas to Alfaro, who promoted the character within Taco Bell. Alfaro asked Wrench to propose terms for Taco Bell’s use of Psycho Chihuahua. Taco Bell did not accept Wrench’s terms, but Alfaro continued to promote the character within the company. Meanwhile, Taco Bell hired a new advertising agency, which proposed an advertising campaign involving a Chi-huahua. When Alfaro learned of this proposal, he sent the Psycho Chihuahua materials to the agency. Taco Bell made a Chihuahua the focus of its marketing but paid nothing to Wrench. Wrench filed a suit against Taco Bell in a federal court claiming that it had an implied contract with Taco Bell and that Taco Bell breached that contract. Do these facts sat-isfy the requirements for an implied contract? Why or why not? [Wrench, L.L.C. v. Taco Bell Corp., 256 F.3d 446 (6th Cir. 2001), cert. denied, 534 U.S. 1114, 122 S.Ct. 921, 151 L.Ed.2d 805 (2002)] (See Types ofContracts.)

Answer:

Based on the information provided, it is unclear whether an implied contract was formed between Wrench, L.L.C. and Taco Bell Corp. An implied contract is a contract that is not expressed in writing or orally, but rather inferred from the actions and conduct of the parties involved.

The facts suggest that representatives of Taco Bell Corp. showed interest in using the Psycho Chihuahua character as an icon, and Wrench sent artwork, merchandise, and marketing ideas to Taco Bell. However, Taco Bell did not accept Wrench’s proposed terms, and later hired a new advertising agency to create a Chihuahua-focused marketing campaign. While Alfaro sent the Psycho Chihuahua materials to the agency, it is not clear if this action was meant to form a contract.

Therefore, it cannot be determined definitively whether these facts satisfy the requirements for an implied contract, as the evidence is not conclusive as to whether the parties intended to enter into a binding agreement. The case went to court and Wrench filed a lawsuit claiming an implied contract, but the outcome is not specified in the information provided.

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