In the Big Time Toymaker Case Scenario, the 2 parties, Big Time Toymaker,which is the offeror and Chou which is the offeree were engaging in a goods or products type contract. Contracts that involved goods or products such as the strategy game that BTT was purchasing from Chou are governed by state statutory law. With the exception of Louisiana, state statutory law is based on the Uniform Commercial Code (UCC)(MELVIN, 2011).
In addition to Big Time Toymaker and Chou engaging in a goods or products contract, they formed a bilateral contract. A bilateral contract involves 2 promises and 2 performances (MELVIN, 2011).
” Big Time Toymaker and Chou actually engaged in a contract under the notion of mutual assent because they reached an agreement which utilized a combination of offer and acceptance (MELVIN, 2011).
Since Big Time Toymaker, the offeror, made a valid offer to Chou, the offeree whom accepted the offer of $25,000 to distribute the strategy game called Strat, the 2 parties became bound by the agreement’s terms. In addition, the agreement met the other 3 requirements of consideration, capacity, and legality for the formation of a valid contract.
There are several factors that will weigh in favor of Chou such as the offeror; Big Time Toymaker had an objective intent to contract when the company made the offer to Chou. In addition, under the circumstances, a reasonable person would have believed the language and intent of the offer that was made to Chou, the offeree as a reasonable intent to contract versus negotiating to contract (MELVIN, 2011).
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The type of communication used did have an impact on the analysis. Before signing an agreement, parties typically engage in preliminary negations that may involve discussion through letters, or memos via email.
The parole evidence rule provides that any writing intended by the parties to be the final expression of their agreement may not be contradicted by any oral or written agreements made prior to the writing (Melvin, 2011, p. 152).
The Big Time Toymaker made a valid offer, and Chou accepted the offer and therefore became bound by the written contract (the email).
The email stated that it was a written confirmation of the oral agreement they negotiated. The statute of frauds is, “the law governing which contracts must be in writing in order to be enforceable”(Melvin, 2011,p. 51).
The agreement had to be made in writing since the offer was over $500. Once Chou responded to the email providing his name in agreement to the offer, it became a contract. In this contract there is language that would allow you to conclude that the parties did indeed to form a contract and the merchant received a signed email from Chou that binds them to the contract and these are terms of the statue of frauds. BTT may not avoid this contract under the doctrine of mistake. A mistake generally in contract law is defined as a belief that is not in accord with the facts.
Chou was under the impression that even though the e-mail did not have the word contract in it, it did state that all terms had been agreed to and therefore was a contract for business. But after BTT requested a draft of the distribution agreement be faxed to them but never responded to Chou, BTT is under the impression that there was no final contract agreed upon and once management changed they decided not to go into contract with them. This would be considered a unilateral mistake and courts are less willing to allow a mistaken party to cancel a contract.
The Essay on Contract and Chou
... a contract agreement between the parties, but that according to E-contract law, Chou may be bound by the terms included in the original email ... Chou received the email, he did not respond to it, thereby giving Chou the defense that silence is never acceptance. However, in E-contact ... that all offers are to be open for a reasonable period of 90 days. Chou was under the impression that a contract had ...
In order for a contract to be valid and enforced legally it must meet a certain definition which is a set of promises enforceable by law. There are several types of contracts that can be enforced, some written, some expressed orally, and others can have neither and be simply implied by the actions of the parties. There are generally four categories of a contract which include the Offer and Acceptance, which is that the party can only accept what is offered. If there is more that is to be accepted or offered then terms and conditions are negotiated between parties in until the contract is accepted.
Acceptance usually comes in the form of writing, verbal, or an action that clearly expresses the intent to accept the offer. Secondly there is Consideration this is a requirement where a promise is made as part of the bargained for exchange. The third element of a contact is Capacity meaning that that each of the party involved in the contact have the legal capacity to do so. One example of this would be a person not being of legal age to enter into a contact would not have the legal capacity to do so. The fourth element is that the contract must support legal and public policy.
This element is to ensure that if a section of the contract is to be enforced by the courts it must be a legal act that is being enforced. In addition to this the courts can decide if the agreement was made under duress, fraud, or other detrimental matters. The elements in the contact outlined in the case scenario would be that the contract was drafted by Bit Time Toys in the form of an email. This agreement was then sent to Chou, the inventor of the board game outlined in the contact. The terms (as the book states) were agreed upon and Chou then sent a fax that outlined the agreement on the contact (or email).
The elements of the contract were met by the offer and acceptance, consideration, capacity, and it appeared the contact was based on legal terms and conditions. Although BTT did not respond, they received an acceptance from Chou in a thus fulfilling and accepting the contact in a timely manner. There have been several laws not followed during this particular scenario. This includes, the law of parole evidence rule when the BTT violated the intent of the original contract before Chou could respond reasonably and provide a drafted agreement. One remedy to consider may entitle Chou to recoup the $25,000 from BTT for the not acting in good faith.
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Additionally, Chou may also be allowed to sue for the loss of impending future profits. Because this was a contract that involved the service from one company for the other, there was a breach because the obligation to fulfill the contract was violated or broken. Another remedy that could be deemed valid is the possible ruling to restrict BTT from providing or manufacturing an identical game. This ruling would alleviate BTT from possible monetary gains and provide a safeguard for Chou. This safeguard would shield Chou from grief because of their distinct wisdom of commerce and know-how that deals with discovery during preliminary talks.
Consideration is when both parties are aware of a contract between them and when consideration is there, then a contract is valid. Since BTT paid Chou $25,000 in exchange for exclusive negotiation rights for a 90-day period then that shows that BTT was aware of a contract between the two parties. Also, since BTT requested that Chou send a draft for a distribution agreement contract also constitutes that BTT was aware of a contract between them and led Chou to believe that it was a valid agreement between both arties. When working with contracts, it is always best to know exactly what is going on and if there is ever any breach of contract against one party, it helps to know what kind of business laws can be considered. If Chou does not know about his rights under business law, then he might just agree and have a loss for his product but if he is aware of what can be done and what is owed to him, then he will be able to gain for lost damages. ?
