Chou and BTT had a contract at the point they agreed to all the terms. By including the obligations of the parties and the terms of the agreement, the manager showed objective intent. A written contract was not necessary since this was a contract primarily dealing with services to distribute the game, not a production contract or a sales contract.
Had it involved a goods contract to buy or sell, which under the Statutes of Frauds would not be a contract until all the terms were laid out in writing; that occurred when the manager from BTT emailed the terms which would have included his electronic signature and thus would have sealed the contract between the two. Also, if the contract is under common law, then the mailbox rule would say it went into effect when it was sent, not received. What facts may weigh in favor of or against Chou in terms of the parties’ objective intent?
There are a few facts that weigh in favor of Chou. First, three days prior to the end of the 90 day exclusive negotiation rights agreement, they reached an oral agreement and then shortly thereafter, a business email from a BTT management representative was sent to Chou with the specifics of the agreement. The email stated “that all of the terms had been agreed upon. ” BTT also subsequently requested Chou to send them a draft distribution contract spelling out the specifics of the agreement that the email from the BBT manager sent to Chou.
Finally, distribution of Strat would have exceeded the 500. 00 limit (Amended UCC § 2-201(1)) of the Statute of Frauds. The fact that may weigh against Chou is that the contract never had an actual signature on it. Does the fact that the parties were communicating by e-mail have any impact on your analysis in questions 1 and 2? Yes, communication via email in today’s business world is considered a normal mode of business communication.
The UETA, the Uniform Electronic Transaction Act states that electronic correspondence is a valid form of communications while conducting business, and that electronic signatures and documentation satisfy the need for written records or signatures. When the terms and specifics of the agreement were laid out via email and both parties agreed upon the agreement through email, it then became a written agreement, and therefore enforceable. What role does the statute of frauds play in this contract? None, since it is a services contract for distribution rights.
The Statute of Frauds only comes into play if it is a goods contract. If it is deemed by the court to be a goods contract then the written requirement, the all terms included requirement and the signed by the sender all have been met by the email with its electronic signature of the manager representing BTT. Could BTT avoid this contract under the doctrine of mistake? Explain. Would either party have any other defense that would allow the contract to be avoided? No, since a mistake is required to involve a “basic” assumption involving the terms on which the contract was made.
BTT would not try to argue that they were mistaken on the price, time frame and obligations of both parties since their manager had sent an email stating that both parties where in agreement in all those areas. Generally, in the absence of disagreement on one or several of the essential terms, the courts will not allow a unilateral Mistake to be considered and expects mutual mistake. Chou might try to avoid the contract if he had a better offer he could just let the matter be dropped since BTT wanted out of the contract
Assuming, arguendo, that this e-mail does constitute an agreement, what consideration supports this agreement? Chou would benefit by having his product distributed for sale throughout the network of retail and wholesale outlets that BTT as a board game company had at their disposal. BTT would benefit by charging their cut for distributing the game to these outlets. 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.
Compensatory damages – Chou could recover actual out of pocket which may include the original $25,000 due to BBT not acting in good faith but would also include loss of estimated potential profits. b. Specific Performance – Since this is a services contract the court may order BTT because of their total breach to fulfill their obligation to distribute the game OR substitute performance under the doctrine of accord and satisfaction where they might agree to product the game instead of distribute it OR they could agree to a discharge through novation where BTT finds an acceptable 3rd party who agrees to distribute the game. . Delegation – BTT could substitute another company to distribute the game but as delegator BTT would still be liable if their delegate failed to perform. d. Injunctive Relief – The court could issue and injunction forbidding BTT from distributing a similar game, producing a similar game or financially benefiting from a similar game to protect Chou from suffering due to their intimate knowledge and trade secrets relating to the disclosures during initial negotiations.