09/30/2014 Robert Shulman
A contract is an agreement between two parties that is enforceable in court. In order to have a valid contract, there are several criteria that must be met that will be explained throughout this analysis. A verbal or written agreement may result in a binding contract if the required contract criteria are met (Melvin, 2011). Contracts are put in place to protect both parties on either end of the agreement. A Big Time Toymaker (BTT) was interested in a new game that was invented by Chou. BTT entered into an agreement with Chou for exclusive rights to his inventory for a 90-day period at the cost of $25,000. This paper will discuss some pros and cons of a contract, if and when a contract should apply to a situation, and some remedies for a breach of contract.
1. The Contract
BTT and Chou had a negotiation agreement for 90days. This arrangement had conditions that an actual contract had to be in writing within the specific period of time. During a meeting an oral agreement was reached. An email from BTT was sent to Chou reiterating their oral agreement in writing. This electronic document reiterated the key terms of what was agreed upon in the meeting between the parties (Melvin, 2011, p. 155). The stipulations were agreed upon so the parties should be considered under contract.
2. Agreement parts in Favor and Against Chou
There are several areas in this simulation that show favorable and negative facts for Chou. There are many points in favor of Chou. There was a fax requesting a draft for the contract as well as a meeting that was concluded with an oral agreement. The email from BTT with the key points of the agreed upon terms was also a pro for Chuo.
Some stipulations that did not weigh in Chou’s favor are as follows. There was no written contract and no signatures to have it legally bonded. The 90 day period of time came and went with only an oral agreement. The term “contract” was not used in BTT’s email to Chau.
3. Electronic Agreements
In this day and age the route of paperless communication for conducting business is trending and in many cases is faster and more effective. The email sent to Chou reflects agreement terms verbally discussed in the meeting with BTT. The term “contract” was not used in the e-mail however; the email still reflects an agreement with specific terms was met. Using the Mailbox rule, this e-mail had a name at the bottom of the page is considered a signature on an electronic document (Melvin, 2011, p. 137).
4. Statute of Frauds
The e-mail from BTT shows the acknowledged agreement between the two parties with a name at the bottom of the e-mail showing an electronic signature from the company. 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, p. 151). Chou received the $25,000 under the negotiation agreement, which should be considered under the sale of goods. The issue of Chou being misled by the money, verbal agreement, and the e-mail could also be used in this scenario.
5. BTT and the Doctrine of Mistake
BTT cannot avoid this contract with the doctrine of mistake because there was no unilateral mistake in the scenario (Melvin, 2011, p. 141). They have not done anything to indicate there were any mistakes on the agreements with Chou. Chou may have a unilateral mistake because his 90-days were up in just three days. He managed to get an oral agreement with BTT in a timely manner. Before Chou could type up their agreement, a BTT manager sent him the e-mail that stating the agreed information, he made the mistake of thinking this was the contract from BTT.