Wrench LLC v. Taco Bell Corporation Case


 Read Wrench LLC v. Taco Bell Corporation case

1.what does the doctrine of implied in fact contract provide? explain

2.did taco bell act ethically in this case? did chiat/day act ethically in this case?

3.what is the purpose of recognizing implied in fact contracts? do you think there was an implied in fact contract in this case? if so, what damages should have been awarded to the plaintiffs?

Sample paper

Wrench LLC v. Taco Bell Corporation

The doctrine of implied-in-fact provide that if a party tacitly receives a benefit at a time when there is a possibility of rejecting it, then a contract automatically comes into effect (Miller & Jentz, 2008). This doctrine applies to contracts that are made through non-verbal conduct, without the explicit use of words. Taco Bell did not act ethically in the case. This is because the company had breached an implied-in-fact contract. The company refused to pay Wrench its dues yet it had implied that it would pay. Chiat Day acted unethically in the case because it took another person’s ideas without acknowledging it which is a breach of Copyright Act. It is important to recognize implied-in-fact contracts so as to enforce agreements where parties acted in a manner to suggest there was an agreement but no express contract was made. In the case, there was an implied-in-fact contract since Taco Bell had used Wrench LLC’s idea of the Chihuahua, with expectations that the company would provide compensation to Wrench LLC (Miller & Jentz, 2008). The plaintiffs should have been awarded monetary compensation equal to the proprietary value of the Chihuahua.

California and Hawaiian Sugar Company v. Sun Ship, Inc.

In the above case the plaintiff, California and Hawaiian Sugar Company (C & H) hired Sun ship Inc., the defendant, to build a barge. It was agreed that the work will be completed on a specific date, failure to which a liquidated damage clause would come into effect, requiring Sun Ship Inc. to pay specific amounts daily for each of the days that the final product was not delivered (Rosett, 2002). Sun Ship Inc. failed to deliver on the due date. C & H filed for payment of liquidated damages, and Sun Ship declined to pay. Liquidated damage clauses can be good for the business. This is because it ensures that the parties involved fulfill their promises. Payment of liquidated damages can enable the business to obtain compensation for any enforceable promises that were not delivered as required. The sum payable is due once a breach occurs, which means the business does not have to wait until actual losses occur. On the other hand, the clause may be bad for the business especially where it is not legally enforceable. Also, the amount payable may either be small or too large compared to the actual loss incurred.

The legal environment of business and online commerce

Cybersquatting involves dealing in trademarks and piracy. It occurs when business creates a domain name registration using the trademark of another company for the purpose of selling the domain name back to the company (Cheeseman, 2007). In worst case scenarios, cybersquatters can be made to pay damages of up to $100,000. In best case scenarios, the court has the power to decide whether to cancel, transfer, or forfeit a domain name. Agreement in law results to creation of obligations that can legally be enforced by a court of law. In best case scenario, agreements show mutual consent of the parties and hence any party that does not receive full part can seek legal redress. In the worst case, a party that forfeits its part of the deal is forced to pay damages. A force majeure clause allows a party that has entered into a contract to withdraw its obligations due to various circumstances. This clause applies in the U.S. and may arise when performance of the contract may be termed illegal, impractical, or when certain circumstances arise. E-license refers to express authority granted to individuals in relation to digital devices or content.


Cheeseman, H. R. (2007). Business law: Legal environment, online commerce, business ethics,    and international issues. Upper Saddle River, N.J: Pearson Prentice Hall.

Miller, R. L. R., & Jentz, G. A. (2008). Business law today: The essentials : text & summarized   cases–e-commerce, legal, ethical, and international environment. Australia:            Thomson/South-Western West.

Rosett, A. I. (2002). Contracts: Keyed to Rosett and Bussel’s Contract law and its application.     New York, NY: Aspen Publishers.


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