Big Time Toymaker

Answer: Big Time Toymaker and Chou had an oral contract. In a meeting that included Big Time Toymaker and Chou an agreement was reached. Additionally, an e-mail was sent by Big Time Toymaker to Chou that confirmed the terms of the agreement that were discussed during the meeting.

What facts may weigh in favor of or against Chou in terms of the parties’ objective intent to contract? Answer: There are three facts that are in favor of Chou. The first fact is, three days prior to the end of the 90 day exclusive negotiation rights agreement, Both parties came to an oral agreement. Secondly, an email from Big Time Toymaker was sent to Chou that outlined what was discussed at the meeting. Thirdly, Big Time Toymaker sent Chou a fax asking him to send a draft distribution contract. There is one fact that weighs against Chao. Big Time Toymaker and Chao never signed an actual contract.

Does the fact that the parties were communicating by e-mail have any impact on your analysis in Questions 1 and 2 (above)? Answer: Yes, the fact that they communicated via email does have bearing on my analysis. By sending the email to Chou Big Time Toymaker acknowledged that they meeting occurred and there are terms that were agreed to. Additionally, email is widely accepted in the business world as a communication method; it is actually the preferred method of communication for many organizations.

What role does the statute of frauds play in this contract?
Answer: Fraud does not play a role in this because it is a contract for distribution rights. The Statute for fraud is only valid when it is a contract for goods.
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? Answer: No, Big Time Toymaker cannot avoid this contract under the doctrine of a mistake. Big Time Toymaker did not indicate a mistake was made in any of the agreements with Chou. If they would have sent a separate email or communication indicating that a mistake had been made, they would have grounds for this. Neither party has grounds for the contract to be avoided.

Assuming, arguendo, that this e-mail does constitute an agreement, what consideration supports this agreement? Answer: Both parties would benefit from this. Firstly, Chou would benefit by having his product distributed and sold. Big Time Toymaker would benefit through the sales and profits generated through the sales of this game. Question 7

At the end of the scenario, BTT states that it is not interested in distributing Chou’s new strategy game, Strat. Assuming BTT and Chou have a contract, and BTT has breached the contract by not distributing the game, discuss what remedies might or might not apply. Answer: If we assumed that there actually was a contract between Big Time Toymaker and Chao, Big Time Toymaker would be in default because they failed to distribute the product. Because of this, Chao could seek damages for all losses including future losses.