Theory to Practice Questions
1.At one point, if ever, did the parties have a contract?
The parties had a contract when they agreed on the key terms of the distribution contract. The first agreement was a 90-day negotiation agreement and the second was an oral distribution agreement in a meeting prior to the end of the 90-day negotiation. The oral agreement was followed by an e-mail sent to Chou in which the terms of the agreement were reiterated by the manager of BTT. The manager of BTT showed objective intent to contract. In addition, “faxes, e-mails, letters, memos, and receipts help establish [a] handshake deal” (Hartline, 2007, para. 3). In other words, when BTT sent the email stating all the key terms orally discussed between the parties were agreed upon, both parties showed intent to contract, therefore the agreement of key terms should be considered under contract. 2.What facts may weigh in favor of or against Chou in terms of the parties’ objective intent to contract? Favor:
•Chou received payment from BTT, leading Chou to believe BTT had intent to come to agreement. •The meeting ended with an oral agreement.
•There is proof of the oral agreement via the BTT e-mail. •The e-mail may be considered a rough draft of the contract. •The manager sent the e-mail including all of the key terms the parties agreed upon. •Even though a month had passed, BTT still requested a copy of the distribution agreement draft. •The amount of time spent on the contract and in contact with both parties shows intent to contract.
•No signatures from either party to bind the contract.
•The 90-day negotiation deadline passed with only a written agreement, even though the negotiation agreement stated only a written contract was valid. •The contract wasn’t drafted until BTT requested a copy a month later. •The e-mail did not use the words “contract”.
3.Does the fact that the parties were communicating by e-mail have any impact on your analysis in Questions 1 and 2 above? The fact that the parties were communicating via e-mail did not impact the analysis of questions 1 and 2. E-mail is a viable and effective form of communication in today’s world, especially in business. E-mails can be saved and used as evidence in many court cases. According to the mailbox rule, the e-mail was sent prior to the 90 days and was considered accepted when it was sent (Melvin, 2011).
4.What role does the statute of frauds play in this contract? The statute of frauds applies to the sale of goods over $500; sales over that amount need to be in writing (Melvin, 2011). The provisions of the statute of frauds are satisfied if the writing contains several items, including quantity, signature, and clear, concise language (Melvin, 2011). The textbook states that key terms were discussed and agreed upon in the e-mail, however I am not sure if that included quantity. However, BTT provided an electronic signature in the e-mail and the language in the e-mail could be interpreted by a reasonable person as intent to form a contract. Therefore, the e-mail pretty much satisfies the statute of frauds conditions.
5.Could BTT avoid the contract under the doctrine of mistake? Explain. Would either party have any other defenses that would allow the contract to be avoided? I don’t think BTT can void the contract under the doctrine of mistake. A contract is void under the doctrine of mistakes because of misunderstanding in the parties involved such as unilateral mistakes and mutual mistakes. Nothing in the text indicates BTT made a mistake; their reason for not fulfilling contract was a change in management. Chou made the mistake of thinking the e-mail was a draft of the contract, however the fact that BTT requested a copy of the draft a month later gave Chou the impression the company still wanted to conduct business.
6.Assuming, arguendo, that this e-mail does constitute an agreement, what consideration supports this agreement? In order for a contract to be binding, it must be supported by agreement and consideration. The promise (Chou) was willing to give up something of value (his game) and the promisor’s (BTT) promise was part of a bargain for exchange (the key terms in the agreement, specifically price and time frames). BTT led Chou to believe that they were under contract because of their mutual agreement and consideration.
Hartline, K. (2007, September). Oral contracts: Do they carry any weight?.
Legal Zoom. Retrieved from http://www.legalzoom.com/business-law/contract-law/oral-contracts-do-they-carry
Melvin, S.P., (2011). The legal environment of business: A managerial approach: Theory to practice. New York, NY: McGraw-Hill/Irwin. Retrieved from: The University of Phoenix eBook Collection database