Beanstalk Group, Inc. v. AM General Corporation
United States Court of Appeals for the Seventh Circuit
283 F.3d 856 (7th Cir. 2002)
AM General (defendant), maker of the Hummer, hired Beanstalk Group (plaintiff) as its exclusive representative to negotiate trademark license agreements for the Hummer name, paying Beanstalk a 35 percent commission on any resulting license payments. The representation agreement broadly defined a "license agreement" as any arrangement, in the form of a license "or otherwise," granting merchandising rights in the trademark. AM General later entered a joint venture with General Motors, transferring the Hummer trademark to GM; that deal did not require GM to assume AM General's contract with Beanstalk, and GM refused to pay Beanstalk any commission on it. Beanstalk sued AM General and GM for breach of contract, arguing the joint-venture deal was, in substance, a "license agreement" under the broad contract definition. The district court dismissed for failure to state a claim.
Whether a contract's literal terms should be enforced where doing so would lead to an absurd result inconsistent with the parties' actual intent.