July 7, 2014
Big Time Toymaker
1. At what point, if ever, did the parties have a contract?
In this scenario I believe there are two different times the Big Time Toymaker and Chou entered into agreement. When Chou and Big Time Toymaker (BTT) discussed a verbal agreement 3 days before the deadline would be the first instance. Second would be the email Chou received from BTT. In the email it provided Chou with a time frame, terms, price that BTT would pay and Chou’s obligations. Even though Chou had not signed an agreement Chou felt this email was a valid contract. In business email is used daily by companies. Chou felt the verbal agreement and the email were confirmation enough for a contract. Although the definition of contact is that you have a signature.
2. What facts may weigh in favor of or against Chou in terms of the parties’ objective intent to contract?
I believe the facts in this “Theory to Practice” scenario weigh in favor of Chou. Chou has “the ball in his court” so to speak. Chou not only has a verbal commitment but also email verification that a deal was agreed upon. In Ch. 6 Lo 7-6 Chou is in the “duty to mitigate.” Since BTT changed management any damages or loses that Chou has incurred before he received the “letter on non interest” Chou could have recouped those loses.
3. Does the fact that the parties were communicating by e-mail have any impact on your analysis in Questions 1 and 2 (above)?
The fact that there was a verbal agreement before an email does help Chou I believe. Companies use emails to conduct business daily which does not affect my analysis. Chou should have followed up with BTT to make sure he received a written contract. Chou thought the email was intent for a written contract and that the email its self was a valid contract. The email included terms, prices and other obligation for Chou.
4. What role does the statute of frauds play in this contract?
Statue of fraud states “must be in writing in order to be enforceable.” Under the statue
of fraud courts have upheld email’s in the past an “intent to authenticate.” Chou has
email documentation from BTT that validates he had received a contract via email
that contained terms, pricing, and obligations. If Chou ever went to court over this
matter, the court could side with Chou. This is because the statue of fraud verifies
Chou’s email can be used as a contractual document.
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?
The only way the BTT could use the mistake defense would be if it were a unilateral
mistake. That mistake would have been in the contact but there was no mistake
made. Since there was no written contract there was no mistake there either.
However, if a written contract existed the strict liability could be used. Also that fact
Chou assumed it was a valid contract through