Big Time Toymaker Case Scenario Essay
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1. At what point, if ever, did the parties have a contract? I do not think the two parties involved ever had a contract. In the scenario, the parties reached an agreement only three days before the end of a 90-day deadline set in the original negotiation contract. In the original negotiation contract, it states that there would be no distribution contract unless it was in writing. When the BTT manager sent the e-mail to Chou, he mentioned the terms of a distribution agreement, but it does not make the email a contract as neither party signed it.
Only an oral agreement was reached. Without a legally binding draft and the signature of both parties present, no contract existed. 2. What facts may weigh in favor of or against Chou in terms of the parties’ objective intent to contract? BTT had paid Chou $25,000 for the exclusive negotiation rights to his board game which lead Chou to believe they were serious about coming to an agreement on a distribution contract.
This is a fact that would weigh in favor of Chou. However, both parties only made an oral agreement, and not a written contract to show this fact. Since the contract was not drafted within the original 90-day period, the new management was not obligated to distribute the board game and therefore, had every right to turn Chou away instead of honoring the oral 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)? No, it did not have any impact on my analysis of the situation. E-mail is a form of electronic communication, not a written and signed contract. While both parties may have communicated their intentions and terms of the contract, they never printed and signed any form of a written agreement. This factor makes all of the difference when it comes to enforceable contracts. What BTT and Chou had was not a binding or enforceable contract.
4. What role does the statute of frauds play in this contract? Under the UCC, the statue of fraud applies to a contract for the sales of goods in excess of $500. The negotiations between BTT and Chou were over $500, so the statues of fraud would apply here. Under UCC laws, the statue of fraud applies when a contract cannot be fulfilled within one year’s time. Under these stipulations, the statute would apply. 5. 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 would not be able to avoid this contract under the doctrine of mistake. A mistake is defined under contract law as the belief that is not in accord with the facts. A “mistake” was not defined anywhere within this scenario.
BTT has only one real defense and that would be that no contract was ever reached in writing nor signed by both parties. The fact that no signatures on a contract ever existed would be a defense that Chou never agreed to the terms and conditions. Chou could argue that there was no existed agreement due to the time passed between communications of the two parties involved. 6. Assuming, arguendo, that this e-mail does constitute an agreement, what consideration supports this agreement? The fact that BTT gave a check for $25,000 for the exclusive negotiating rights shows that BTT intended to reach a contract with Chou. The two parties also reached an oral agreement, but oral agreements are hard to enforce in court. BTT had also sent Chou a fax asking him to send them a draft of a contract for the distribution agreements.
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. Equitable remedies may have applied in this case. Chou would be able to seek compensatory damages for his losses. These losses could include out-of-pocket expenses and even loss of potential profits had BTT honored their portion of the contract.