Write a 700- to 1,050-word paper using Microsoft® Word. Address the following questions:

 Apply: The Use of Contracts to Protect Property Rights

Assignment Content

Read (Attached Word Document) the “Summary of the Wrench LLC v. Taco Bell Corporation case” It is suggested that you also research and read the full court opinion, to aid your understanding of the legal issues presented.

Read (Attached Word Document) the “WHAT IS EXPRESS AND IMPLIED-IN-FACT CONTRACT AND QUASI CONTRACT”

Write a 700- to 1,050-word paper using Microsoft® Word. Address the following questions:

• 1.) What type of intellectual property was at issue in this case? Were these ideas entitled to protection under the law?
• 2.) Explain the difference between an implied-in-law (quasi contract) and an implied-in-fact contract. (READ ATTACHED DOCUMENT FOR DEFINITIONS) What type of contract was at issue in this case?
• 3.) Explain what the parties could have done differently to protect their rights and avoid this dispute.
• 4.) Explain how a properly written contract could have been utilized for the licensing and use of the intellectual property to prevent the issue, and provide terms you would recommend being included in such a contract.
• 5.)  Identify and explain each of the elements that would have been necessary to form a valid contract.

Use APA format. Include in-text citations and include a reference page.

SUMMARY OF THE WRENCH LLC V. TACO BELL CORPORATION CASE

Thomas Rinks and Joseph Shields created the Psycho Chihuahua cartoon character, which they promote, market, and license through their company, Wrench LLC. Psycho Chihuahua is a clever, feisty cartoon character dog with an attitude, a self-confident, edgy, cool dog who knows what he wants and will not back down. Rinks and Shields attended a licensing trade show in New York City, where they were approached by two Taco Bell employees, Rudy Pollak, a vice president, and Ed Alfaro, a creative services manager. Taco Bell owns and operates a nationwide chain of fast-food Mexican restaurants. Pollak and Alfaro expressed interest in the Psycho Chihuahua character for Taco Bell advertisements because they thought his character would appeal to Taco Bell’s core consumers, males ages 18 to 24. Pollak and Alfaro obtained some Psycho Chihuahua materials to take back with them to Taco Bell’s headquarters.

Later, Alfaro contacted Rinks and asked him to create art boards combining Psycho Chihuahua with the Taco Bell name and image. Rinks and Shields prepared art boards and sent them to Alfaro, along with Psycho Chihuahua T-shirts, hats, and stickers. Rinks suggested to Alfaro that Taco Bell should use a live Chihuahua dog manipulated by computer graphic imaging that had the personality of Psycho Chihuahua and a love for Taco Bell food. Rinks and Shields gave a formal presentation of their concept of using an animated dog to Taco Bell’s marketing department. Taco Bell would not enter into an express contract with Wrench LLC, Rinks, or Shields.

Just after Rinks and Shields’s presentation, Taco Bell hired a new outside advertising agency, Chiat/Day. Taco Bell gave Chiat/Day materials received from Rinks and Shields regarding Psycho Chihuahua. Three months later, Chiat/Day proposed using a Chihuahua in Taco Bell commercials. Taco Bell aired its Chihuahua commercials in the United States, and they became an instant success and the basis of its advertising. Chiat/Day says that it conceived the advertising idea by itself. Taco Bell paid nothing to Wrench LLC or to Rinks and Shields. Plaintiffs Wrench LLC, Rinks, and Shields sued defendant Taco Bell to recover damages for breach of an implied-in-fact contract.

A federal court jury found that an implied-in-fact contract existed and that Taco Bell stole the plaintiffs’ idea for the commercial. The jury ordered Taco Bell to pay $42 million in damages to the plaintiffs. Wrench LLC v. Taco Bell Corporation, 256 F.3d 446, 2001 U.S. App. Lexis 15097 (United States Court of Appeals for the Sixth Circuit, 2001)

Ethics Questions 

Did Taco Bell act ethically in this case?

Did Chiat/Day act ethically in this case?

(READ ATTACHED DOCUMENT
“WHAT IS EXPRESS AND IMPLIED-IN-FACT CONTRACT AND QUASI CONTRACT”
) FOR EXPAINATION OF DEFINATION OF TERMS USED TO WRITE PAPER.

WHAT IS EXPRESS AND IMPLIED-IN-FACT CONTRACTS

Express and Implied-in-Fact Contracts

An actual contract may be either express or implied-in-fact. These contracts are described in the following paragraphs.

An

express contract

is stated in oral or written words. Most personal and business contracts are express contracts.

express contract

An agreement that is expressed in written or oral words.

Examples

A written agreement to buy an automobile from a dealership is an express contract because it is in written words. An oral agreement to purchase a neighbor’s bicycle is an express contract because it is in oral words.

An

implied-in-fact contract

is implied from the conduct of the parties. The following elements must be established to create an implied-in-fact contract: (1) The plaintiff provided property or services to the defendant, (2) the plaintiff expected to be paid by the defendant for the property or services and did not provide the property or services gratuitously, and (3) the defendant was given an opportunity to reject the property or services provided by the plaintiff but failed to do so.

implied-in-fact contract

A contract in which agreement between parties has been inferred from their conduct.

In the following case, the court had to decide whether there was an implied-in-fact contract.

Ethics Implied-in-Fact Contract Prevents Unjust Result

“The appellants produced sufficient evidence to create a genuine issue of material fact regarding whether an implied-in-fact contract existed between the parties.” —Graham, Circuit Judge

MORE ON WHAT IS IMPLIED-IN-LAW CONTRACT (QUASI CONTRACT)

The equitable doctrine of

implied-in-law contract

, also called quasi contract, allows a court to award monetary damages to a plaintiff for providing work or services to a defendant even though no actual contract existed between the parties. Recovery is generally based on the reasonable value of the services received by the defendant.

implied-in-law contract (quasi contract)

An equitable doctrine whereby a court may award monetary damages to a plaintiff for providing work or services to a defendant even though no actual contract existed. The doctrine is intended to prevent unjust enrichment and unjust detriment.

The doctrine of quasi contract is intended to prevent unjust enrichment and unjust detriment. It does not apply where there is an enforceable contract between the parties. A quasi contract is imposed where (1) one person confers a benefit on another, who retains the benefit, and (2) it would be unjust not to require that person to pay for the benefit received.

Example

Heather is driving her automobile when she is involved in a serious accident in which she is knocked unconscious. She is rushed to Metropolitan Hospital, where the doctors and other staff members perform the necessary medical procedures to save her life. Heather comes out of her coma and, after recovering, is released from the hospital. Subsequently, Metropolitan Hospital sends Heather a bill for its services. The charges are reasonable. Under the doctrine of quasi contract, Heather is responsible for any charges that are not covered by her insurance.

CONCEPT SUMMARY Classifications of Contracts

Formation	1. Bilateral contract. A promise for a promise. 2. Unilateral contract. A promise for an act. 3. Express contract. A contract expressed in oral or written words. 4. Implied-in-fact contract. A contract inferred from the conduct of the parties. 5. Implied-in-law contract (quasi contract). A contract implied by law to prevent unjust enrichment. 6. Formal contract. A contract that requires a special form or method of creation. 7. Informal contract. A contract that requires no special form or method of creation.
Enforceability	1. Valid contract. A contract that meets all the essential elements of establishing a contract. 2. Void contract. No contract exists. 3. Voidable contract. A contract in which at least one party has the option of voiding the contract. 4. Unenforceable contract. A contract that cannot be enforced because of a legal defense.
Performance	1. Executed contract. A contract that is fully performed on both sides. 2. Executory contract. A contract that is not fully performed by one or both parties.