Case Scenario: Big Time Toymaker.
The parties did have a contract for exclusive negotiation rights as stated in the case scenario. Big Time Toymaker (BTT) paid Chou $25,000 for a 90-day period of exclusivity, thus prohibiting Chou from soliciting or entertaining offers from other parties. The agreement stipulated that unless it was written no distribution contract existed. Prior to the 90-days elapsing, the parties reached an oral agreement and BTT sent Chou an e-mail titled “Strat Deal” covering the key terms of the distribution agreement reaffirming the oral agreement. This e-mail does not constitute a contract for several reasons. First, this was part of the negotiation process and Chou failed to draft the contract to “memorialize" the deal. Second, the requirement of a signature is in compliance with the statute of frauds. This is the one element uniformly required to compel a court to enforce. Factors that weigh in for Chou are first, the e-mail sent by BTT’s manager clearly shows delineates the terms of the distribution agreement. Second, BTT’s request for the draft contract even after a month had elapsed. These actions go to show that BTT intended to continue the deal even after a month. Factors that weigh against are first, Chou failed to send the draft contract as he stated. Second, Chou assumed the e-mail sent by BTT took the place of a written distribution agreement contract. Third, he failed to follow up and get an agreement in writing signed. BTT’s e-mail to Chou caused further investigation in the analysis of the first two questions. First, the case scenario states the e-mail was sent by “a BTT manager,” not the chief executive officer or the like. The e-mail on its own is not sufficient to constitute “signed writings” within the meaning of Statute of Frauds. Last, the e-mail lacked the typed name of the person at BTT authorized to make the deal. BTT could not back out of the contract under the doctrine of mistake. Under this doctrine there has...
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