Chihuaa Case Study Business Law

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The lack of an express contract does not extinguish contractual obligations because parties may create obligations by their conduct. The course of conduct of the parties is used to determine the existence of the contract. An implied in fact contract is created when there is no written contract between the parties but an obligation arises based on the facts of the situation. This obligation is created when a party accepts a benefit from the other party. If the conduct of the parties at the time suggested that they had an understanding to create obligations, a contract is implied in the interest of fairness to the parties. In order to establish the existence of an implied in fact contract it is necessary to establish an offer, acceptance, an …show more content…
Employees from Taco Bell approached them and were interested in using their Chihuahua character in Taco Bells advertisements. They were later contacted by Taco Bell to create art boards using their Chihuahua character and Taco Bells name and image. They prepared the boards and sent then w9ith other materials featuring their Chihuahua character. Taco Bell successfully tested the advertisement strategy and Rinks suggested using a computer manipulated Chihuahua image with the personality of heir Chihuahua character and the love for Taco Bells and gave a presentation of the concept. However, Taco Bell hired a new advertiser to produce the commercials and gave them the information regarding the Psycho Chihuahua created by Rinks and Shields. The new advertiser produced commercials using the psycho Chihuahua and never paid anything to Wrench LLC. The plaintiffs sued to recover damages for breach of an implied in fact contract. The issue in this case was whether there was a breach of an implied in fact contract. There was sufficient evidence from the conduct of the parties to create an implied in fact contract. The court found that the plaintiffs had provided enough evidence to infer the existence of an implied in fact contract and the contract had been breached by the

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