Big Time Toy Maker

Case Scenario: Bit Time Toymaker and Questions

Cassandra Cary

LAW/421

Pamela Weddell

June 17, 2013

Case Scenario: Bit Time Toymaker and Questions

A contract between two parties can be both verbal and written as long as there is an understanding of promise, acceptance, and consideration relating to the terms and agreement. If one party does not comply with the arrangements within the contract that party has breach the contract and therefore the aggrieved party may be subject to remedies. “For many contracts, the remedy at law will be money damages awarded by the court to the nonbreaching party. This is simply a legal mechanism for compelling the breaching party to compensate the innocent party for losses related to the breach” (Melvin, 2011. p. 171).

In the case scenario: Big Time Toymaker (BTT), BTT entered into a contract with Chou, the inventor of a game called “Strat.” They agreed on a distribution contract that stipulated the price, time frames, and the obligations of both parties. The contract was sent by sent by e-mail, which is enforceable by law. A few months after this agreement, BTT changed management and new management was no longer interested in the distribution of Strat. This unforeseen change caused a breach in contract on behalf of BTT.

Because there was nothing in the contract to cover breaches before hand, liquidated damages would not apply. “Liquidated damages are reasonable estimates of the actual damages resulting if the contract is breached, which is agreed to by the parties ahead of time” (Melvin, 2011. p. 177). Chou can place a claim for compensatory damages for the losses caused by BTT by not honoring the contract. Compensatory damage claims allows the nonbreaching party to be put in the same place he or she would have been if the breach had not occurred. The nonbreaching party is awarded any out-of-pocket expenses as well as any profits that may have been received if the breaching party had...