Case Scenario: Big Time Toymaker - Law421

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Case Scenario: Big Time Toymaker

Case Scenario: Big Time Toymaker
Big Time Toymaker (BTT) develops, manufactures, and distributes board games and other toys in North America, Chou is the inventor of a new strategy game he calls Strat. BTT had an interest in distributing Strat and entered into an agreement with Chou, offering him $25,000 in exchange for exclusive negotiation rights for a 90-day period. This agreement stipulated that no distribution contract existed unless it was in writing. On day 87 of the agreement, the parties held a negotiation meeting and came to an oral agreement on the terms of the distribution agreement. Chou offered to draft the written distribution agreement and send to BTT. Before Chou could draft the contract, BTT’s manager sent Chou an e-mail with the subject line “Strat Deal” that outlined the key terms of the distribution agreement, including price, time frames, and responsibilities of both parties and their acceptance of the agreement. Chou, believing that this e-mail was the final written agreement, let one-month pass before BTT sent a fax requesting he fax over the draft distribution agreement contract. Chou immediately faxed the draft contract to BTT; however several months passed without a response from BTT. After a change in management at BTT, Chou was advised that BTT was not interested in distributing his game. This paper will review the case scenario and highlight why Chou has a case against BTT for breach of contract by answering the following questions posted within this case scenario and course syllabus. 1. At what point, if ever, did the parties have a contract? To determine at what point, if ever, Big Time Toymaker (BTT) and Chou ever had a contract we must first look to see if the parties had mutual assent. This means in order for the contract to be valid, the parties must reach an agreement through the concept of offer and acceptance. In this case we first see BTT making an offer of $25,000 to Chou in exchange for exclusive negotiation rights for a 90-day period. Chou’s acceptance of the offer constitutes mutual assent. One party must make a valid offer to a second party, who in turn must accept the offer in order for the parties to have a binding agreement. Mutual assent does not consider the intention of the parties in their minds (subjective standard) to enter the agreement, only that their actions or words lead the other party reasonably to believe (objective standard) that an agreement has been reached. In addition, the agreement must be supported by consideration, this means that either “1) the promissee suffers a legal detriment by giving up something of value or some legal right, and 2) the promisor makes his promise as part of a bargained exchange” (Melvin, 2011, p. 130). Three days before the negotiation period was up, BTT and Chou came to an oral agreement on the terms and conditions of the written distribution agreement that Chou offered to draft. Here we see the requirement for consideration has been met in that Chou as the promissee suffers a legal detriment by giving his rights to distribute his game to BTT and in exchange BTT has promised to make monetary payment to Chou based on specific terms and condition. In order for the contact to be valid both parties entering into the agreement must have the mental capacity to do so. They must be aware of the consequences of the agreement at the time they enter it. Third, the subject matter and performance of the contract must be legal and consistent with public policy. In this case, there is no reason to believe that either party did not have the capacity to enter into the agreement and clearly the nature of the contract was legal. In order for the contract to be enforceable, the agreement must also be the product of genuine assent and in some cases, certain terms must be in writing as required by the statute of frauds, including “contracts that cannot (that is, not able, by its terms) to be...
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