Theory to practice Essay

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Theory to practice Essay
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  • University/College:
    University of California

  • Type of paper: Thesis/Dissertation Chapter

  • Words: 820

  • Pages: 3

Theory to practice

Big Time Toymaker (BTT) develops, manufactures and distributes toys and board games. An inventor named Chou created a board game called Strat. Chous invention caught the attention of BTT and they sought out to negotiate with Chou. During the time of communication between both Chou and BTT an agreement was made. Both parties agreed to BTT having exclusive negotiating wrights for a 90-day period in exchange for $25,000.00. The agreement stated that no contract exist unless in writing. After a meeting when an oral agreement was made Chou was emailed a document subject Strat deal by a manager of BTT. This email can be considered the contract in writing and Chou assumed so, later to find that BTT was now run by new management who claimed they were uninterested in his invention.

The point where parties entered a contract was when the BTT manager sent Chou an email subject “Strat Deal”. This was the point where a contract was mad because BTT had received an exclusive 90day negotiating period, and distribution agreement wasn’t going to be in effect until received in writing. This email also included terms discussed during the oral agreement and pricing. The agreement of a contract was that it had to be in writing in order to exist. Never did BTT stress the form of writing. An email consist of written words, therefore it was a written agreement. A contract is an agreement with specific terms between two or more people or entities in which there is a promise to do something in return for something else. When the email was sent that was the completion of the exchange and fulfilled contract requirements. The oral agreement that both parties had before the email was sent was establishing objective intent to contract. BTT also sent a fax to Chou a month after the 90day period passed requesting the draft to be sent. This action also showed intent to contract. What weighs in Chous favor in terms of parties objective to contract is the fact that BTT paid him. They exchanged money for exclusive negotiating rights. Chou could always state an unilateral mistake was made and he misunderstood the terms of an agreement. The fact that both parties communicated by email has no impact on the decision of Chou rightfully still having a contract.

Email is just as sufficient as a letter or hand written draft. With a subject email sent saying “Strat deal”. “The law governing which contracts must be in writing in order to be enforceable” is also known as the statue of frauds according to University of Phoenix The Legal Environment of Business (2011) . The contract was emailed to Chou before the 90day deadline right after an oral agreement. The statue of frauds supports Chou still having a valid contract. BTT could avoid this contract under mistake. Chou had mistaken the email as the contract agreement. BTT specified that the distribution deal would only be valid if contract was in writing. BTT could argue their meaning of a contract in writing is a contract on paper. This would be a mutual mistake. Both parties had a different understanding of what a contract consist of. Mutual mistake shows both parties at fault instead of only one. If the email does constitute an agreement, the thing that support this agreement is the fact that Chou was within the 90 day period when the email was sent. Although the email said nothing about a contract it was titled Strat Deal. During the verbal agreement Chou was lead to believe that both parties had finally agreed on the terms of the contract.

Assuming that Chou did have a contract and BTT decided to breach the contract Chou could obtain remedies for his lost. The proper remedy would be compensatory damages. “Compensatory damages are an attempt to put the nonbreaching party in the same position she would have been in if the other party had performed as agreed (melvin, 2011, Chapter Chapter 7, Contract Performance:Conditions, Breach, and Remedies).” By the new management breaching the contract Chou misses out on potential profits that could have occurred if the contract had been followed through with. The remedy that would be less favorable would be consequential damages. Assuming from the theory that Chou had nothing in place directly depending on the completion of his contract, there is nothing that would be affected indirectly from the unfulfillment of the contract. Consequential damages compensate foreseeable indirect losses.

Work cited
Melvin, S. P. (2011). The Legal Environment of Business: A Managerial Approach: Theory to Practice. Retrieved from The University of Phoenix eBook Collection. Melvin, Sean P. (2011). The Legal Environment of Business: A Managerial Approach: Theory to Practice. Retrieved from The University of Phoenix eBook Collection.

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Theory to Practice Essay

Facebooktwittergoogle_plusredditpinterestlinkedinmail
Theory to Practice Essay
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  • University/College:
    University of California

  • Type of paper: Thesis/Dissertation Chapter

  • Words: 1606

  • Pages: 6

Theory to Practice

The two parties involved never had a valid written contract. In the scenario, the parties negotiated for a period of 90 days and 3 days before the deadline set in the original negotiation contract they reached a verbal distribution agreement. In the original negotiation contract, it states that there would be no distribution contract unless it was in writing. When the BTT manager sent the e-mail to Chou, he mentioned the terms of a distribution agreement, but it does not make the email a contract due to the fact that neither party signed it. Only an oral agreement was reached. Without a legally binding draft and both parties signatures no contract exists. Though the contract was in process even the details had been identified, however; it fell through the cracks because of the management change at BTT.

Initially, BTT paid Chou $25,000 for exclusive negotiation rights to his board game for a 90-day period and held meetings where details were discussed and agreed upon. This lead Chou to believe they were serious about finalizing an agreement on a distribution contract. Chou received an e-mail with the details of the contract, however; nowhere on the e-mail did it note that it was in-fact a contract. Chou received a fax from BTT requesting a draft for a distribution agreement contract. Chou immediately responded and then did not hear back from BTT for several months.

New management at BTT took over and made the decision to inform Chou that they are no longer interested. Since the contract was not drafted within the original 90-day period, the new management was not obligated to distribute the board game, and therefore, had every right to turn Chou away instead of honoring the oral contract. However, the statute of frauds also constitutes the e-mail as a sign document. “Case 6.3 Stevens v. Public is a great example of the court awarding the contract since the e-mails contained the name at the end of each message that signaled the author’s intent to validate its contents,” (Melvin, 2011, p. 152).

The fact that both parties were communicating by email did not have an impact on my analysis of the situation. In the paperless world that has evolved, electronic communication is just as effective as paper communication. This e-mail shows an agreement by both parties on the key terms of the distribution agreement made in the meeting. Even though the e-mail never stated the word “contract,” this e-mail still shows an acknowledged contract of terms between BTT and Chou. Using the Mailbox rule, this e-mail had a name at the bottom of the page is considered a signature on an electronic document (Melvin, 2011, p. 137).

Under the Uniform Commercial Code (UCC), the statute of frauds applies to any contract for the sale of goods for $500 or more, and any lease transaction for goods amounting to $1,000 or more (Melvin, 2011, p. 151). Chou received the $25,000 under the negotiation agreement, which should be considered under the sale of goods of the Strat game. Under UCC laws, the statue of fraud applies when a contract cannot be fulfilled within one year’s time. Under these stipulations, the statute would apply.

However, there is one element required to meet this stipulation, and that is the signature of the party in the contract. The e-mail from BTT shows the acknowledged agreement between the two parties with a name at the bottom of the e-mail showing an electronic signature from the company. The issue of Chou being misled by the money, verbal agreement, and the e-mail could also be used in this scenario.

BTT cannot avoid this contract with the doctrine of mistake because there was no unilateral mistake in the scenario (Melvin, 2011, p. 141). A mistake is defined under contract law as “The belief that is not in accord with the facts.” They have not done anything to indicate there were any mistakes on the agreements with Chou. Chou may have a unilateral mistake because his 90-days were up in just three days. He managed to get an oral agreement with BTT in a timely manner. Before Chou could type up their agreement, a BTT manager sent him the e-mail that stating the agreed information, he made the mistake of thinking this was the contract from BTT.

Assuming arguendo that the e-mail constituted an agreement between BTT and Chou, both parties were in agreement to the terms of the distribution agreement even though it was only verbal. The verbal agreement was done within the 90-day period as specified by the negotiation agreement. Also, BTT gave a check for $25,000 for the exclusive negotiating rights shows that BTT intended to reach a contract with Chou. Both parties had been actively participating several months as if the agreement were in active status. Finally, BTT had also sent Chou a fax asking him to send them a draft of a contract for the distribution agreements.

BTT has stated they are no longer interested in distributing Chou’s new strategy game, Strat. By BTT making this decision, they are breach of contract with Chou. Chou could be entitled to sue BTT in an attempt to recover damages. Remedies at law would constitute compensatory damages against BTT. Some of the claims that might be legitimate to this case are: 1. Breach of contract- “There are some cases where the breach is not material, sometimes referred to as partial breach, where the nonbreaching party may not be relieved from performing. However, the nonbreaching party may still recover damages related to the breach from the breaching party” (Melvin, 2011, p.168 ). 2. Compensatory damages- “Cover a broad spectrum of losses for recovery of actual damages suffered by the nonbreaching party.

These damages are an attempt to put the nonbreaching party in the same position she would have been in if the other party had performed as agreed. This includes such sums as out-of-pocket damages and even potential profits that would have been earned if performance had occurred” (Melvin, 2011,p.171). 3. Injunctive relief- “A court order to refrain from performing a particular act is known as injunctive relief” (Melvin, 2011, p.173). 4. Promissory estoppel- “Theory allowing for the recovery of damages by the relying party if the promisee actually relied on the promise and the promisee’s reliance was reasonably foreseeable to the promisor” (Melvin, 2011, p.143). 5. Consequential damages- “Consequential damages compensate the nonbreaching party for foreseeable indirect losses not covered by compensatory damages. An aggrieved party is entitled to recover consequential damages if the damages are caused by unique and foreseeable circumstances beyond the contract itself.

In order to recover consequential damages, the damages must flow from the breach (i.e., the damages were a consequence of the breach)” (Melvin, 2011, p.171). 6. Restitution- “Restitution is a remedy designed to prevent unjust enrichment of one party in an agreement. In the event that one party is in the process of performing the contract and the other party commits a material breach, the nonbreaching party is entitled to rescind (cancel) the contract and receive fair market value for any services rendered” (Melvin, 2011, p.172). 7. Liquidated damages- “Liquidated damages are damages that the parties agree to ahead of time. In some cases it may be very difficult to determine actual damages, so parties may agree at the time of the contract that a breach would result in a fixed damage amount.

Liquidated damages provisions are commonly used in license agreements (such as a software-user’s license) whereby the parties agree” (Melvin, 2011, p.172). 8. specific performance- “Specific performance is a remedy whereby a court orders the breaching party to render the promised performance by ordering the party to take a specific action. This remedy is only available when the subject matter of the contract is sufficiently unique so that money damages are inadequate. 17 Therefore, specific performance is rarely available in a sale of goods case unless the goods are rare (such as a coin collection) or distinctive (such as a sculpture) where the buyer cannot reasonably be expected to locate the goods anywhere else (Melvin, 2011, p.172). 9. Reformation- “When the parties have imperfectly expressed their agreement and this imperfection results in a dispute, a court may change the contract by rewriting it to conform to the parties’ actual intentions. This contract modification is called reformation” (Melvin, 2011, p.173).

Technically a breach of contract only exists if BTT sent the e-mail within the 90 day period. If the e-mail was not sent within the 90 day period there is a possibility that the stipulations in the negotiation agreement will cause trouble for Chou’s case. However, BTT did eventually send the e-mail which I believe will hold up in court, and give Chou the remedies he needs and deserves. There are many rules that one must follow to make a contract a legal document. Whether a document is written or an oral agreement, these must be followed exact. People whether they are business owners or not, face issues with contract on a daily basis. This is why there are laws in place to protect them and punish them when fraud occurs.

References

Melvin, S. P. (2011). The Legal Environment of Business: A Managerial Approach: Theory to Practice. New York, NY: McGraw-Hill/Irwin

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