Question

Thomas Rinks and Joseph Shields developed Psycho Chihuahua, 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, merchandise, 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 Chihuahua. 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 district court, claiming in part that it had an implied contract with Taco Bell, which the latter breached. Do these facts satisfy the requirements for an implied contract? Why or why not?

Answer 1

For an implied contract to be valid, certain conditions should be met. The Court has decided that an implied contract can be formed only when the following conditions are met:

a. The defendant had an opportunity to decline the property or service but was not declined.

b. The plaintiff has anticipated being remunerated for the property or service and the defendant knew or ought to have known to such remuneration was anticipated.

c. The plaintiff ensured the delivery of certain property or services.

In this scenario, the plaintiff furnished the Taco Bell Corporation with some services related to Chihuahua but the defendant did not comply with the terms and conditions mentioned by the plaintiff. What is also to be noted is that defendant revokes the services of Wrench by hiring another advertisement firm. We can conclude that they did not form the implied contract as all the requirements mentioned above are not complied with.