Law for Business 10th Edition by James Barnes,Terry Dworkin,Eric Richards

Exercise 8

Wine World, Inc., a producer and supplier of wines such as Beringer, Napa Ridge, and Chateau Souverain, distributed its wines through independent distributors including Varni Bros. Varni Bros. Varni maintained warehouses, a fleet of trucks, and trained salespeople and provided other services to its suppliers, including Wine World. Varni started distributing Wine World wines in 1975 on the basis of a handshake. Written contracts were rare in the business; everyone "understood" what a "distributorship" involved. There was no discussion regarding how long the arrangement would last. In 1989 Wine World consolidated its distribution network and terminated its arrangement with Varni on 60 days' written notice. Varni sued, arguing that an implied term of their contract, supplied by industry custom, was that they could be terminated only for good cause. Can industry custom supply a term of an implied contract?