Read the “Theory to Practice” section at the end of Ch. 6 of the text. Answer Questions 1 through 6 based on the scenario in the “Theory to Practice” section, and complete the following in your response: •At the end of the scenario, BTT states that it is not interested in distributing Chou’s new strategy game, Strat. Assuming BTT and Chou have a contract, and BTT has breached the contract by not distributing the game, discuss what remedies might or might not apply.
At what point, if ever, did the parties have a contract?
I do not believe that the parties ever had a contract. The scenario stated that the parties reached an oral agreement 3 days before the 90-day deadline that was stipulated in the negation contract. The exclusive negotiation agreement stipulated that no distribution contract existed unless it was in writing. Although a BTT manager sent Chou an e-mail that repeated the key terms of the distribution agreement, I do not believe this counts as a contract as being in writing because there are no signatures and Chou did not agree to it after he saw the e-mail even though he agreed to it orally. No contract was ever officially drafted in writing and agreed upon by both parties (signatures). What facts may weight in favor of or against Chou in terms of the parties’ objective intent to contract? The fact that BTT paid Chou $25,000 for exclusive negotiation rights would leave Chou to believe that BTT was serious about following through with a distribution contract. This fact would weigh in Choi’s favor.
Unfortunately, even though the parties had an oral agreement, no written agreement was ever drafted within the timeframe stipulated on the negotiation agreement. The parties did have seem to have an objective intent to contract, but unfortunately, when new management came in, they were not interested in distributing Strat, and since there was no written contract, I believe they were within their rights to turn Chou away. Does the fact that the parties were communicating by e-mail have any impact on your on your analysis in Questions 1 and 2 (above)?
No, the fact that the parties were communicating by e-mail did not have any impact on my analysis. E-mail is just that, e-mail. It is not a written contract; it is just another form of communication. These e-mails just sound like written communications that need to be put in the written contract and signed by all parties. Just because BTT sent, an e-mail outlining their verbal agreement with Chou does not make it a valid contract until it is in writing and signed by the parties involved. What role does the statute of frauds play in this contract?
Under the UCC, the statue of frauds applies to any contract for the sale of goods for $500.00 or more. Obviously, the negotiations between BTT and Chou are for more than $500.00, so the statute of frauds would apply here. For common law contracts, in general, the statute of frauds applies to contracts that cannot be performed in less than one year. Therefore, the statute would apply to this contract. The one element that is uniformly required is a signature of the party against whom enforcement of the contract is sought. There were no signatures to finalize the contract between BTT and Chou. Some courts have ruled that e-mails constitute signed writings within the meaning of statute of frauds since the name at the end of the e-mail signifies intent to authenticate its content. In this scenario, it is somewhat hard to come to this conclusion because it did not say if Chao responded to the e-mail containing the outline of the contract, which would have passed for his signature according to some courts.
Could BTT avoid this contract under the doctrine of mistake? Explain. Would either party have any other defenses that would allow the contract to be avoided? BTT could not avoid this contract under the doctrine on mistake. A mistake is defined in contract law as a belief that is not in accord with the facts. I do not believe that the doctrine of mistake would have any bearing in this scenario. BTT’s best defense would be that Chou never signed any agreement in writing or via e-mail. They could say that Chou never agreed to this contract because there was no signature as according to the statute of frauds. Chou could argue that he did not believe there was an agreement since several months had passed since he heard from BTT.
Assuming, argue do, that this e-mail does not constitute an agreement, what consideration supports this agreement? I think the fact that BTT gave Chou $25,000 for exclusive negotiating rights shows that BTT had the intent of signing a contract with Chou. The two parties also reached an initial oral agreement although oral agreements are hard to prove in court. BTT also sent Chou a fax asking him to send a draft for a distribution agreement contract. At the end of the scenario, BTT states that it is not interested in distributing Chou’s new strategy game, Strat. Assuming BTT and Chou have a contract, and BTT has breached the contract by not distributing the game, discuss what remedies might, or might not apply.
If BTT and Chou had a contract and BTT had breached the contract by not distributing the game, certain remedies might apply; specifically equitable remedies. Specific performance could be used to order BTT to render the promised performance by ordering them to take a specific action. Chou would also be able to seek compensatory damages. This would include out-of-pocket damages and potential profits that would have been earned if performance had occurred.