Read the Theory to Practice section at the end of Ch. 6 of the text.
Answer Questions 1 through 6 based on the scenario in the Theory to Practice section, and complete the following in your response:
- At the end of the scenario, BTT states that it is not interested in distributing Chous 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.
- Explain your answers and refer to Section 7-6 in Ch. 7 for support.
Submit your answers.
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Theory to Practice
Big Time Toymaker (BTT) develops, manufactures, and distributes board games and other toys to the United States, Mexico, and Canada. Chou is the inventor of a new strategy game he named Strat. BTT was interested in distributing Strat and entered into an agreement with Chou whereby BTT paid him $25,000 in exchange for exclusive negotiation rights for a 90-day period. The exclusive negotiation agreement stipulated that no distribution contract existed unless it was in writing. Just three days before the expiration of the 90-day period, the parties reached an oral distribution agreement at a meeting. Chou offered to draft the contract that would memorialize their agreement. Before Chou drafted the agreement, a BTT manager sent Chou an e-mail with the subject line Strat Deal that repeated the key terms of the distribution agreement including price, time frames, and obligations of both parties. Although the e-mail never used the word contract, it stated that all of the terms had been agreed upon. Chou believed that this e-mail was meant to replace the earlier notion that he should draft a contract, and one month passed. BTT then sent Chou a fax requesting that he send a draft for a distribution agreement contract. Despite the fact that Chou did so immediately after receiving the BTT fax, several more months passed without response from BTT. BTT had a change in management and informed Chou they were not interested in distributing Strat.
- At what point, if ever, did the parties have a contract?
- What facts may weigh in favor of or against Chou in terms of the parties objective intent to contract?
- Does the fact that the parties were communicating by e-mail have any impact on your analysis in Questions 1 and 2 (above)?
- What role does the statute of frauds play in this contract?
- 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?
- Assuming, arguendo, that this e-mail does constitute an agreement, what consideration supports this agreement?
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