1) At what point, if ever, did the parties have a contract not including the "negotiation rights" contract?
According to Melvin (2011) the word “contract” is often used to describe a written document. Sometimes contracts are not in writing but are still enforceable. A valid contract exists when there is mutual assent between the two parties and an offer has been made and accepted. In the Big Time Toymaker Case, the only time there was a valid contract was at the very beginning when the agreement was made which stipulated that BTT has exclusive distribution negotiation rights for a period of 90 days. BTT made a valid offer and Chou’s acceptance of the $25,000 check signaled his acceptance of the offer and bound the parties to the agreement terms. This initial agreement stipulated that if distribution terms were agreed upon then a written contract had to follow. At the end of 90 days, there was talk of a contract but there was nothing in writing, only an email which at best could be considered a draft and was not signed by either party. Consequently, there was no contract after the initial “negotiation rights” contract.
2) What facts may weigh in favor of or against Chou in terms of the parties’ objective intent to contract?
One fact that weighs heavily in Chou’s favor is that by giving Chou the $25,000 check, BTT showed great interest and intent to enter into a formal contract. The second detail in Chou’s favor was that the parties had in fact reached an oral agreement which was further followed up with by the email. It certainly hurts Chou’s case that there was no actual contract signed.
3) Does the fact that the parties were communicating by e-mail have any impact on your analysis in Questions 1 and 2 (above)?
In today’s business world, virtually every type of business activity is conducted through email and this should be viewed as normal delivery of a contract between two parties. Chou could think that the fact that the manager sent him an email indicated his intent to enter into a contract. BTT could argue that the original agreement indicated that without a signed contract there was no agreement past 90 days and Chou could try to refute this by saying that the electronic signature should be deemed as the signing of the contract. Chou’s argument could further be supported by the Uniform Electronic Transaction Act which provides that electronic signatures and documentation satisfy the need for actually written records. I feel this does not apply here as the original “negotiation rights” contract was so specific in requiring it be in writing it does not seem reasonable that any kind of substitution would have been acceptable.
4) What role does the statute of frauds play in this contract?
According to the Uniform Commercial Code, the statue of frauds covers contracts that are in excess of $500. Therefore given the initial $25,000 check it would have fallen under the statue. However, if it is deemed that there was no contract it is a mute point.
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 could not avoid the contract under the doctrine of mistake. Both parties were clear in regard to the terms and in fact in his email, BTT’s manager repeated the key terms and indicated that all terms had been agreed upon. In addition, there…