Case Scenario: Big Time Toymaker

Case Scenario: Big Time Toymaker

Charles L Currier

LAW/421

August 31, 2015

John Huschen

Case Scenario: Big Time Toymaker

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. (Melvin, 2011, p. 155)

1. At what point, if ever, did the parties have a contract?

The moment the BTT manager sent Chou an e-mail repeating key terms of the distribution agreement, including price, time frames and obligations of both parties. The e-mail was titled "Strat Deal" in the subject line and though the word "contract," was never used Chou believed this e-mail was meant to replace the earlier...