Big Time Toymaker (BTT) develops, manufactures and distributes toys and board games. An inventor named Chou created a board game called Strat. Chous invention caught the attention of BTT and they sought out to negotiate with Chou. During the time of communication between both Chou and BTT an agreement was made. Both parties agreed to BTT having exclusive negotiating wrights for a 90-day period in exchange for $25,000.00. The agreement stated that no contract exist unless in writing. After a meeting when an oral agreement was made Chou was emailed a document subject Strat deal by a manager of BTT. This email can be considered the contract in writing and Chou assumed so, later to find that BTT was now run by new management who claimed they were uninterested in his invention.
The point where parties entered a contract was when the BTT manager sent Chou an email subject “Strat Deal”. This was the point where a contract was mad because BTT had received an exclusive 90day negotiating period, and distribution agreement wasn’t going to be in effect until received in writing. This email also included terms discussed during the oral agreement and pricing. The agreement of a contract was that it had to be in writing in order to exist. Never did BTT stress the form of writing. An email consist of written words, therefore it was a written agreement. A contract is an agreement with specific terms between two or more people or entities in which there is a promise to do something in return for something else. When the email was sent that was the completion of the exchange and fulfilled contract requirements. The oral agreement that both parties had before the email was sent was establishing objective intent to contract. BTT also sent a fax to Chou a month after the 90day period passed requesting the draft to be sent. This action also showed intent to contract. What weighs in Chous favor in terms of parties objective to contract is the fact that BTT paid him. They exchanged money for exclusive negotiating rights. Chou could always state an unilateral mistake was made and he misunderstood the terms of an agreement. The fact that both parties communicated by email has no impact on the decision of Chou rightfully still having a contract.
Email is just as sufficient as a letter or hand written draft. With a subject email sent saying “Strat deal”. “The law governing which contracts must be in writing in order to be enforceable” is also known as the statue of frauds according to University of Phoenix The Legal Environment of Business (2011) . The contract was emailed to Chou before the 90day deadline right after an oral agreement. The statue of frauds supports Chou still having a valid contract. BTT could avoid this contract under mistake. Chou had mistaken the email as the contract agreement. BTT specified that the distribution deal would only be valid if contract was in writing. BTT could argue their meaning of a contract in writing is a contract on paper. This would be a mutual mistake. Both parties had a different understanding of what a contract consist of. Mutual mistake shows both parties at fault instead of only one. If the email does constitute an agreement, the thing that support this agreement is the fact that Chou was within the 90 day period when the email was sent. Although the email said nothing about a contract it was titled Strat Deal. During the verbal agreement Chou was lead to believe that both parties had finally agreed on the terms of the contract.
Assuming that Chou did have a contract and BTT decided to breach the contract Chou could obtain remedies for his lost. The proper remedy would be compensatory damages. “Compensatory damages are an attempt to put the nonbreaching party in the same position she would have been in if the other party had performed as agreed (melvin, 2011, Chapter Chapter 7, Contract Performance:Conditions, Breach, and Remedies).” By the new management breaching the contract Chou misses out on potential profits that could have occurred if the contract had been followed through with. The remedy that would be less favorable would be consequential damages. Assuming from the theory that Chou had nothing in place directly depending on the completion of his contract, there is nothing that would be affected indirectly from the unfulfillment of the contract. Consequential damages compensate foreseeable indirect losses.
Melvin, S. P. (2011). The Legal Environment of Business: A Managerial Approach: Theory to Practice. Retrieved from The University of Phoenix eBook Collection. Melvin, Sean P. (2011). The Legal Environment of Business: A Managerial Approach: Theory to Practice. Retrieved from The University of Phoenix eBook Collection.
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