Big Time Toymaker and Chou Over an Essay

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Big Time Toymaker and Chou over an agreement to distribute a new strategy game. Some of the areas covered are whether or not a contract existed between the two parties, objective intent, and how e-mail comes in to play with enforceability. Also we see if the statute of frauds applies to this scenario and the defenses that either party has in the case. Lastly, we look at the different remedies that can be sought out to reimburse the party harmed by the breaching of the contract.

Case Scenario: Big Time Toymaker

In the Theory to Practice scenario between Chou and Big Time Toymaker (BTT), the parties were trying to come to an agreement to distribute the new strategy game invented by Chou called Strat. Between meetings, emails and oral agreements, the parties tried to draft a contract for BTT to distribute the game. In the end it didn't work out and BTT passed on the opportunity. This paper will go over the scenario and see which party would is more at fault for the deal not working out.

Existence of a Contract

Between BTT and Chou it is questionable whether there was a valid contract or not. They had an agreement made right before the 90-day deadline that was set in the original negotiation agreement, which stated that "no distribution contract existed unless it was in writing" (Melvin, 2011). The manager of BTT sent an e-mail to Chou stating the terms of the distribution agreement and requested that Chou replied back to him with a draft for contract. Melvin (2011) stated that to have an enforceable contract there needs to be mutual assent between the parties (Melvin, 2011, p. 130). Mutual asset contains an offer and acceptance from both parties, which was clearly made known through the e-mails. Now the question is if the e-mail is sufficient enough to consider the agreement to be "in writing."

Objective Intent

In terms of the parties' objective intent, Chou would be in favor with the oral agreement and also the email that he immediately sent to BTT after their request for a distribution agreement contract.

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BTT had paid Chou $25,000 for exclusive negotiation rights so obviously BTT was serious about making an agreement on a distribution contract. According to Melvin (2011), "the law requires only that the parties' acts or words lead the other party to reasonable believe (objective standard) that an agreement has been reached (Melvin, 2011. p.130). The fact that would weigh against Chou is that there is no technical written agreement that was signed by either party. There was only an oral agreement but it was not drafted before the 90-day period that was given in the original agreement. For this reason, the new manager of BTT was not obligated to distribute since there was no valid contract.

Communication through Email

The fact that the two parties were communicating by e-mail does have an impact on my analysis. In today's world communications and business transactions are done in large part with e-mail. According to section 7 of the Uniform Electronic Transaction Act (UETA), "any law that requires a writing will be satisfied by an electronic record. A contract may not be denied legal effect or enforceability solely because an electronic record was used in its formation," ("Uniform law commission:," 2011, para. 6). Both BTT and Chou communicated their intent and also they both agreed through e-mail.

Statute of Frauds

The statute of fraud applies to this scenario because of the agreement that BTT paid Chou $25,000 in exchange for exclusive negotiation rights for a 90-day period. Not only did the agreement between the two parties state that no distribution contracted existed unless it was in writing but also as stated by Melvin (2011) under the Uniform Commercial Code (UCC), "the statute of frauds applies to any contract for the sale of goods for $500 or more, and any lease transaction for goods amounting to $1,000 or more," (Melvin, 2011). Even though the e-mail….....

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