Question

Rinks and Shields created a “Psycho Chihuahua” cartoon character that they promoted through their company, Wrench LLC. They were approached by Taco Bell to adapt the character for use in their advertising. Later, the idea was adjusted to include a real dog that was digitally manipulated. Rinks and Shields created several ads, including one in which a male dog passes up a female dog to get to the Taco Bell food. Taco Bell did not enter into an express contract with them, but, a few weeks later, hired Chiat/Day to produce the same style ads, one of which was the male dog passing on up a female dog to get the Taco Bell food. Wrench, Rinks, and Shields sued Taco Bell for breach of contract.

Issue:  Is there a contract? If so, why? If not why not?

Answer 1

Yes, there is an implied contract that existed between Wrench LLC and Taco Bell Food

Reasons

1. Taco Bell had sought for a contract with Wrench LLC but later rejected an actual contract
2. Taco Bell’s new advertising agency proposed the use of Chihuahua for the ad
3. Taco Bell and the ad agency appointed by it knew very well about the character before the campaign
4. Under objective theory of contracts test of an implied contract, the plaintiff (Wrench LLC) had furnished a service or property and was expecting to be paid, the defendant (Taco Bells) knew or should have known that the payment was expected. Though the defendant rejected the service or property in words, it has accepted the property in its conduct and actions (by making use of the product using another agency)
5. Hence there is a breach of implied contract under objective theory of contracts in this case